Gujarat High Court
Champion Agro Ltd., Thro' Dhirajbhai ... vs Kotak Mahindra Bank Ltd. Thro' ... on 30 September, 2025
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Reserved On : 19/09/2025
Pronounced On : 30/09/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 1723 of 2017
With
R/SPECIAL CRIMINAL APPLICATION NO. 1726 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
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Approved for Reporting Yes No
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CHAMPION AGRO LTD., THRO' DHIRAJBHAI GHUSABHAI HIRPARA &
ORS.
Versus
KOTAK MAHINDRA BANK LTD. THRO' AUTHORISED OFFICER & ORS.
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Appearance:
MR VISHWAS K SHAH(5364) for the Applicant(s) No. 1,2,3,4
MR ANAND B GOGIA(5849) for the Respondent(s) No. 2
MR BB GOGIA(5851) for the Respondent(s) No. 2
MR VIVEK B GUPTA(5611) for the Respondent(s) No. 1
MS MUSKAN A GOGIA(6624) for the Respondent(s) No. 2
MR. CHINTAN DAVE, APP for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
CAV JUDGMENT
1. The captioned petitions, involving identical questions of law
and fact inter se between the same parties, albeit arising out of two
distinct criminal complaints, are, with the consent of learned
counsel appearing on either side, heard analogously and are being
disposed of by this common order.
2. At the request of the learned advocates for both parties,
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Special Criminal Application No. 1723 of 2017 is treated as the lead
matter for the purpose of adverting to and extracting the relevant
factual matrix.
3. Both petitions have been instituted by the accused persons
invoking jurisdiction of this Court under Section 482 of the Code,
assailing the legality, validity, and propriety of the order passed by
the learned Trial Court whereby Kotak Mahindra Bank Ltd.
(hereinafter referred to as 'the bank') has been permitted to be
substituted in place of original complainant- Capital First Ltd.,
consequent upon the assignment of business in favour of the said
Kotak Mahindra Bank Ltd. in proceedings arising under Section
138 of the Negotiable Instruments Act, 1881 (for short, "the NI
Act").
BRIEF FACTS OF THE CASE:-
4. The Petitioner No.1 is a Company incorporated under the
Companies Act, 1956, while Petitioners No.2 to 4 are its Directors.
It is the case of Respondent No.2, a Non-Banking Finance
Company duly registered with the Reserve Bank of India, that the
Petitioner No.1 availed financial assistance of Rs.5,48,00,000/-, for
which Petitioners No.2 to 4 allegedly stood guarantors. Towards
part discharge of the said liability, a cheque bearing No.026353
dated 11.12.2014 drawn on Axis Bank, Rajkot, was issued,
purportedly signed by Petitioner No.2 as the authorised signatory of
the Company. The said cheque, when presented for encashment,
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came to be dishonoured with the endorsement "Account Block".
Consequently, Respondent No.2 issued statutory notice dated
17.12.2014 and thereafter instituted Criminal Complaint No.895 of
2015 before the Court of the Ld. Chief Judicial Magistrate, Rajkot,
under Section 138 of the NI Act.
4.1. During the pendency of the said complaint, Respondent No.2,
without notice to the Petitioners, executed a registered Deed of
Assignment dated 28.12.2015 (registered on 21.04.2016), thereby
assigning the alleged debt in favour of Respondent No.1 Bank.
Pursuant thereto, Respondent No.1 moved an application dated
19.08.2016 before the Ld. Chief Judicial Magistrate seeking
substitution of its name in place of Respondent No.2 in Criminal
Complaint No.895 of 2015. Despite the Petitioners' objections, the
Ld. Magistrate, vide order dated 17.01.2017, allowed such
substitution, which order is impugned in the present proceedings.
4.2. Identical facts are stated for another criminal case, where,
except for the serial number of the cheque, all other aspects remain
the same. In the second criminal case, the serial number of the
cheque is 026356.
SUBMISSION OF THE PETITIONER:-
5. Learned counsel appearing for the petitioners has vehemently
contended that the Court below has fallen into manifest error in
permitting substitution of the complainant, which, according to him,
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has gravely prejudiced the rights of the accused. It is urged that the
petitioners, being the accused, possess a legitimate right to question
the personal knowledge of the original complainant with respect to
the underlying transaction between the parties. However, the
substitution of the Bank in place of the erstwhile complainant,
Capital First Ltd., has effectively divested the accused of their right
to test, through cross-examination, the personal knowledge of the
authorized signatory of the substituted complainant insofar as the
transaction inter se Capital First Ltd. and Champion Agro Ltd. is
concerned.
5.1. In support of this proposition, learned counsel has placed
reliance on the authoritative pronouncements of the Hon'ble
Supreme Court in Ashwin Nanubhai Vyas v. State of Maharashtra
and Another, AIR 1967 SC 983, and A.C. Narayanan v. State of
Maharashtra and Another, (2014) 11 SCC 790, to buttress his
submission that substitution of the complainant is not envisaged or
recognized under any provision of law. Ergo, the impugned order of
the learned Trial Court permitting the bank to be arrayed as
complainant is ex facie bad in law and contrary to the settled
principles of criminal jurisprudence.
5.2. It is further submitted that even qua the bank, no natural
person has been nominated or authorized to prosecute the complaint
proceedings. In the absence of arraigning any living person as
complainant, the continuation of prosecution at the behest of a
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juristic entity alone would stand in direct contravention of the
statutory mandate.
5.3. Thus, it is urged that the learned Trial Court has committed a
grave error, nay, an error amounting to misappreciation of the
factual and legal position, and therefore, this Court may be pleased
to quash and set aside the impugned order and allow the present
petition.
SUBMISSION OF THE RESPONDENT:-
6. Learned counsel appearing for respondent No.1 - the bank, as
also learned counsel representing respondent No.2 - Capital First
Ltd., have invited the attention of this Court to the Deed of
Assignment, particularly Clause 5.1.2 thereof, which expressly
authorizes the bank to continue all legal proceedings initiated
against Champion Agro Ltd. Reliance has been placed upon the
judgment of the Hon'ble Supreme Court in Bansal Milk Chilling
Centre v. Rana Milk Food Private Ltd. & Another, 2025 INSC
899, wherein it has been held that even at the post-cognizance
stage, amendment of the complaint is legally permissible.
6.1. It is further submitted that in the instant case, by virtue of the
contract executed between Capital First Ltd. and the bank dated
28.12.2015 (Annexure P2), the receivables and underlying security
interests were duly assigned in favour of the bank. By reason of
such assignment, the bank has stepped into the shoes of Capital
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First Ltd., not only with respect to the receivables but also with
respect to the subsisting proceedings. Specific reliance is placed
upon Clause 5.1.2 of the Deed of Assignment to fortify the
contention that the right to prosecute pending proceedings also
stood validly transferred to the Bank.
6.2. Learned counsel has further drawn support from the recent
decision of the Hon'ble Supreme Court in M/s Naresh Potteries v.
M/s Aarti Industries & Another, AIR 2025 SC 886, to contend that
the bank being a juristic entity, is competent in law to continue with
the proceedings in its own name, and there is no legal requirement
that it must necessarily be represented by a natural person being
impleaded as complainant. Ergo, it is contended that the learned
Trial Court has rightly appreciated the factual matrix as well as the
legal position, and the impugned order permitting the bank to
continue the complaint cannot be faulted.
7. Learned APP for the respondent-State has also adopted the
submissions advanced by the learned counsel for respondent No.1
and has prayed for passing of appropriate orders in accordance with
law.
FINDINGS, ANALYSIS AND CONCLUSION OF THE
COURT:-
8. I have heard the rival submissions advanced on behalf of both
the sides and have meticulously perused the material available on
record.
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9. At the very outset, this Court deems it apposite to advert to
the authoritative pronouncement of the Hon'ble Supreme Court in
U.P. Pollution Control Board v. Modi Distillery and Others,
(1987) 3 SCC 684, wherein while adverting to Sections 2(d), 203
and 204 of the Code of Criminal Procedure, 1973 (hereinafter, "the
Code"), unequivocally held that prosecution and trial cannot be
permitted to be thwarted merely on account of a technical or
curable defect in the complaint.
10. The seminal issue pertaining to the permissibility of
amendment in a private complaint, even at the stage of its
maintainability, recently engaged the attention of the Apex Court
in Bansal Milk Chilling Centre (supra). After a detailed
exposition of the statutory scheme, particularly Sections 216 and
217 of the Code, the Court enunciated that an amendment, if
necessitated, can indeed be permitted, provided the same does not
transgress into the realm of an incurable irregularity.
11. Reverting to the factual milieu of the case on hand, the private
complaint under Section 138 of the NI Act came to be instituted by
Capital First Ltd., pursuant whereto, the learned Magistrate was
pleased to issue process against the petitioner. Significantly, the
issuance of such process was never impugned by the petitioner
either through a revisional jurisdiction, or by invoking the inherent
jurisdiction of this Court under Section 482 of the Code, or even
under the supervisory jurisdiction enshrined in Article 227 of the
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Constitution of India.
12. During the pendency of the said criminal proceedings, Capital
First Ltd., by way of a duly registered deed of assignment executed
in respect of receivables and underlying securities, divested its
rights in favour of the Bank (Annexure P-2). The said assignment
deed is the governing instrument delineating the rights and
obligations of the Bank, wherein Clause 5.1.2 assumes
significance. The said clause, in explicit terms, provides as under:-
"It shall, at the cost of the Assignee, co-operate with the
Assignee in any legal proceedings that may be necessary or
incidental to the enforcement of the Receivables or the
underlying Security Interests and will co-operate in any
recovery proceedings with the Assignee through courts or
otherwise."
13. The aforesaid clause unequivocally empowers Kotak
Mahindra Bank Ltd. to substitute its name in place of Capital First
Ltd. as the complainant, by virtue of a lawfully recognized
instrument, thereby clothing the Bank with the legal right to
recover the receivables and enforce the underlying securities. In
this backdrop, it cannot be said that the learned Trial Court
committed any error in passing the impugned order.
14. Learned counsel for the petitioner, however, canvassed an
argument that since the petitioner stands arraigned as an accused
for the offence punishable under Section 138 of the NI Act, he
would be deprived of the opportunity to cross-examine an
authorised representative of Capital First Ltd., who is purportedly
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possessed of personal knowledge of the transaction. This
contention, in the considered view of this Court, is thoroughly
misconceived and rests on a misplaced assumption, nay, a
misnomer, qua the factual matrix of the present case.
15. It is apposite to note that Champion Agro Ltd. had availed a
loan facility involving crores of rupees and, towards repayment
thereof, issued the cheques in question. The substratum of the
transaction, thus, rests upon a series of duly executed loan and
security documents, forming part of the record, leaving but little
scope for oral testimony. That being so, the complainant, now the
bank, retains the prerogative to adduce evidence by summoning a
witness competent to depose on the basis of records and, if deemed
expedient, even a person having personal knowledge of the
transaction.
16. Be that as it may, the apprehension canvassed by the
petitioner can by no means be treated as a legitimate ground for
nullifying or quashing the impugned order. Suffice it to state that
the Hon'ble Supreme Court has, in M/s Naresh Potteries (supra),
recently addressed an analogous issue and laid down the governing
principles. The relevant paragraphs thereof are extracted
hereinbelow:-
"20. More recently, in the case of TRL Krosaki Refractories
Limited (supra) similar facts as the present matter arose for
consideration by this Court. In the said case, a complaint
came to be filed by the payee company through its General
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Manager (Accounting) under Sections 138 and 142 of the
NI Act. The complaint was registered based on the affidavit
filed on behalf of the complainant, in lieu of an oral sworn
statement. Upon being satisfied that there was sufficient
material and the complaint under Section 138 of the NI Act
against the accused was in accordance with law, the SDJM
took cognizance of the complaint and issued summons to
the accused-firm therein. Assailing the summoning order,
the accused-firm filed a petition before the High Court
under Section 482 of the Cr.P.C. for quashing of the
summoning order, being aggrieved by the fact that the
complaint had been filed by an incompetent person
inasmuch as the complainant neither had knowledge about
the alleged transaction, nor had he witnessed the same, nor
was there any averment in the complaint that the
complainant had been duly authorized by the payee-firm to
initiate criminal proceedings on its behalf. The High Court
had allowed the petition under Section 482 of the Cr.P.C.
and set aside the summoning order, which led to an appeal
being filed before this Court. A three-Judge Bench of this
Court upon a thorough consideration of the judgments of
this Court by which the law on the subject-matter at hand
has been crystallised, allowed the appeal and set aside the
judgment of the High Court. This Court held as follows:
"21. A meaningful reading of the above would indicate
that the company having authorised the General Manager
(Accounting) and the General Manager (Accounting)
having personal knowledge had in fact been clearly
averred. What can be treated as an explicit averment,
cannot be put in a straitjacket but will have to be gathered
from the circumstance and the manner in which it has
been averred and conveyed, based on the facts of each
case. The manner in which a complaint is drafted may
vary from case to case and would also depend on the skills
of the person drafting the same which by itself, cannot
defeat a substantive right. However, what is necessary to
be taken note of is as to whether the contents as available
in the pleading would convey the meaning to the effect
that the person who has filed the complaint, is stated to be
authorised and claims to have knowledge of the same. In
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addition, the supporting documents which were available
on the record by themselves demonstrate the fact that an
authorised person, being a witness to the transaction and
having knowledge of the case had instituted the complaint
on behalf of the "payee" company and therefore, the
requirement of Section 142 of the NI Act was satisfied. In
Vinita S. Rao v. Essen Corporate Services (P) Ltd. [Vinita
S. Rao v. Essen Corporate Services (P) Ltd., (2015) 1 SCC
527 : (2015) 1 SCC (Civ) 558 : (2015) 1 SCC (Cri) 726] ,
to which one of us (the Hon'ble CJI) was a member of the
Bench has accepted the pleading of such a nature to
indicate the power to prosecute the complaint and
knowledge of the transaction as sufficient to maintain the
complaint."
17. In view of the foregoing discussion, the contention advanced
by the learned advocate for the petitioner does not merit acceptance
and, ergo, does not survive for further consideration.
18. It is further noteworthy that the very issue canvassed in the
present proceedings has already been vividly deliberated upon by a
Coordinate Bench of this Court in Gulf Asphalt Pvt. Ltd. known as
ASPAM Petronergy Pvt. Ltd. v. Dipesh Sinh Kishanchandra,
Special Criminal Application No. 5562 of 2014, reliance
whereupon has also been appropriately placed by the learned Trial
Court while passing the impugned order.
19. As a last-ditch effort, it was urged that the bank has not been
represented by any natural person and, therefore, the application
filed for its substitution would be legally untenable. This Court
finds itself wholly unpersuaded by such submission. The bank,
being a juristic entity, is duly entitled to act and appear before the
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Court through its authorised representative, and no infirmity can be
attached to such a course of action.
20. In light of the aforesaid discussion, this court is of the
considered view that both these petitions are devoid of merit and,
accordingly, stand DISMISSED. Rule/Notice, if issued, stands
discharged. No order as to costs.
21. The learned Trial Court is directed to expedite the
proceedings and conclude the trial at the earliest, preferably within
a period of six months from the date of receipt of a copy of this
order. Both parties are hereby enjoined to extend their fullest
cooperation to the learned Trial Court so as to ensure expeditious
and efficacious disposal of the matter.
(J. C. DOSHI,J)
MANISH MISHRA
