M/S Concept Horizon Infra Pvt.Ltd vs Aparna Nagesh Prakash
2021 Latest Caselaw 5171 Kant

 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 01 S T DAY OF DECEMBER, 2021

                         BEFORE

THE HON'BLE MR. JUSTICE SREENIVAS HARISH KUMAR

       CRIMINAL PETITION NO.6538 OF 2020

BETWEEN:

1.    M/s Concep t Horizon Infra Pvt. Ltd.,
      No.8/13, 1 s t Floor,
      Jangpura Extension,
      New Delhi-110014.
      Represented by
      Director/Authorized Signatory
      Jeevesh Sab harwal.

2.    Jeevesh Sab harwal,
      S/o Naresh Sabharwal,
      Aged about 36 years,
      Director,
      M/s Concep t Horizon Infra Pvt. Ltd.,
      No.8/13, 1 s t Floor, Jangpura Extension,
      New Delhi-110014.

      Both are also at:
      No.F-63, Preet Vihar,
      New Delhi-110092,
      Having its Corporate Office at
      No.B-131, Sector-2, Noid a,
      Uttar Prad esh-201301.
                                              ...Petitioners
(By Sri Ajay J Nand alike, Advocate)

AND:

Ap arna Nagesh Prakash,
Aged about 55 years,
W/o Krishnamurthy Nagesh Prakash,
                           :: 2 ::


R/at No.P-12, Green Skies Blue Forest
Ap artment, Doresanip alya,
Krishnamraju Layout,
Bilekahalli, Beng aluru-560076,
Represented through her PA Holder,
Sri Krishnamurthy Nag esh Prakash.
                                               ...Respondent
(By Sri Akash V.T., Advocate)


     This Criminal Petition is filed under Section 482
of Cr.P.C., p raying to quash the entire proceed ings in
C.C.No.333/2018 against the petitioner herein p ending
before the Hon'b le XII Additional Small Causes Judge,
ACMM, (SCCH-8) Beng aluru.

      This Criminal Petition coming on for admission
this d ay, the Court made the following:


                          ORDER

The petitioners being accused 1 and 2 in C.C.

333/2018 on the file of XII Additional Small

Causes Judge and ACMM (SCCH8), Bengaluru, have

invoked jurisdiction of this court under section 482

of Cr.P.C for quashing the proceedings.

2. Heard Sri Ajay J Nandalike for the

petitioners and Akash V.T for the respondent.

3. The material facts are that the respondent

has initiated criminal action against the petitioners :: 3 ::

under section 138 of the Negotiable Instruments

Act (for short hereinafter referred to as 'the Act').

The first petitioner is a company and the second

petitioner is its director. The contention of the

petitioners is that since the complaint has not

been filed under section 141 of the Act, vicarious

liability cannot be fastened on the directors. In

para 3 of the complaint, it is just mentioned that

the first accused is the company represented by

its directors and that the accused 2 and 3 are

actively participating in the day-to-day activities

of the company. Learned counsel for the

petitioners has placed reliance on the judgment of

the Supreme Court in the case of S.M.S.

Pharmaceuticals Limited Company vs Neeta

Bhalla and Another [(2005) 8 SCC 89] to

substantiate his contention that in the absence of

complaint being filed under sections 141 and 138

of the Act, the directors cannot be held vicariously :: 4 ::

liable and for this reason the entire complaint is

not maintainable and it is to be quashed.

4. On the other hand, Sri Akash V.T

contended that the first accused is a company of

which accused 2 and 3 are the directors. The

cheques in question have been signed by accused

2 and 3 on behalf of the company and in this view

question of fastening vicarious liability on them

does not arise. The case on hand falls under the

scope of Section 141 (2) of the Act and he too

refers to S.M.S. Pharmaceuticals (supra) in

support of his argument.

5. It is undisputed that the cheques in

question have been signed by accused 2 and 3.

Here in this petition, first accused is petitioner

No.1 and the second accused is petitioner No.2.

Since the first petitioner is a legal entity, it has to

be represented by person or persons who are

responsible for the day-to-day affairs of the :: 5 ::

company on the day when the offence is

committed. That means even though there are

several directors of a company, all of them cannot

be arrayed as accused, only those who are in

charge of the affairs of the company on the day

when the offence is committed can be prosecuted.

It can also be said that in addition to prosecuting

the person who has signed the cheque on behalf of

the company, the other directors who have not

signed the cheque can be prosecuted if they are in

charge of the affairs of the company on the date of

commission of the offence. The scope of sub-

section (2) is that whenever an offence is

committed by a company and if proof is provided

that the offence has been committed with the

consent or connivance of, or the offence is

attributable to any neglect on the part of any

director, manager, secretary or other officer of the

company, they are deemed to be guilty of the

offence. The Supreme Court considered a :: 6 ::

reference made by two judge bench. Reference

(c) is extracted here : -

"(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."

6. The answer to this reference is as below :

"19. (c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, :: 7 ::

these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."

7. Therefore in view of the above principle,

the petitioner No.2 and another accused being

authorized signatories to the cheques in question,

are liable for prosecution for dishonour of cheques.

They get covered under section 141(2) of the Act.

8. It is not necessary that in a complaint

filed under section 200 Cr.P.C, in relation to

offence under section 138, very specifically a

reference must be there to section 141. This

section is just an enabling section for fastening

vicarious liability and what is required is to state

in the complaint that the directors who are made :: 8 ::

parties in the complaint are responsible for the

day-to-day affairs and business of the company on

the date of commission of offence. This averment

suffices requirement of section 141(1) of the Act.

But, here section 141(2) is applicable.

9. Therefore from the above discussion I

come to the conclusion that this petition is devoid

of merits and accordingly it is dismissed.

Consequently, I.A.1/2020 filed for stay is also

dismissed.

Sd/-

JUDGE

ckl/-