Karnataka High Court
Sri. Arpith Gowda B.C vs Subhadra on 14 February, 2022
Bench: K.S.Mudagal
Crl.A.No.650/2015
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF FEBRUARY 2022
BEFORE
THE HON'BLE MRS JUSTICE K.S.MUDAGAL
CRIMINAL APPEAL No.650/2015
BETWEEN:
SRI ARPITH GOWDA B C
S/O M CHANDRE GOWDA
AGED ABOUT 27 YEARS
R/AT NO.85/16, G-2
SUSHEELA MANSION
3RD MAIN, 3RD CROSS
BASAVESHWARA LAYOUT
VIJAYANAGAR, BANGALORE - 560 040 ...APPELLANT
(BY SRI V.F.KUMBAR FOR SMT.USHA M.V., ADVOCATES)
AND:
SUBHADRA
MAJOR
CLOTHISQUE CREATION PVT. LTD.,
NO.90, MUNESHWARA LAYOUT
1ST MAIN, ATTUR LAYOUT
NEAR VIVEKANANDA HIGH SCHOOL
YELAHANKA, BANGALORE - 560 064 ...RESPONDENT
(BY SRI S.G.MUNISWAMY GOWDA, ADVOCATE)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED
20.12.2014 PASSED BY THE XXII ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BANGALORE CITY IN
C.C.NO.16319/2012 ACQUITING THE RESPONDENT/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF
NEGOTIABLE INSTRUMENTS ACT.
THIS CRIMINAL APPEAL COMING ON FOR HEARING THIS
DAY, THE COURT THROUGH VIDEO CONFERENCING
DELIVERED THE FOLLOWING:
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JUDGMENT
Aggrieved by the order of acquittal passed by the
trial Court, the complainant in C.C.No.16319/2012 on the
file of XXII Additional Chief Metropolitan Magistrate,
Bengaluru has preferred the above appeal.
2. The respondent is the Managing Director of
Company called Clothisque Creations Pvt. Ltd. He said to
have issued cheque Ex.P1 dated 17.10.2011 in favour of
the appellant for Rs.8,50,000/- drawn on Yes Bank
Limited, Kasturba Road Branch, Bengaluru for discharge
of legal liability. The appellant presented the said cheque
for realization through his account in Karnataka Bank
Limited, Basaveshwarnagar Branch. The cheque was
returned with banker's memo as per Ex.P2 with
endorsement 'stop payment'.
3. The appellant got issued statutory notice
Ex.P3 dated 09.01.2012 to the respondent informing the
respondent about dishonour of cheque and calling upon
her to pay the cheque amount within fifteen days or to
face the prosecution for the offence punishable under
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Section 138 of the Negotiable Instruments Act, 1881 ('the
Act' for short). The notice was served on the respondent
under the postal acknowledgement Ex.P5. The respondent
did not reply the notice.
4. The appellant filed the complaint as per Ex.P6
before XVI Additional Chief Metropolitan Magistrate,
Bengaluru in P.C.R.No.6031/2012 seeking prosecution for
the offence punishable under Section 138 of the Act. The
trial Court on taking cognizance of the offence, registered
the case in C.C.No.16319/2012 and secured the presence
of the respondent for trial. During the pendency of the
proceedings, the case was transferred to XII Additional
Chief Metropolitan Magistrate, Bengaluru. Since the
respondent disputed the substance of accusation and
claimed trial, the trial was conducted. To prove his case,
the appellant got examined himself as PW.1 and got
marked Exs.P1 to P8. In support of defence, the
respondent got examined himself as DW.1 and got
marked Exs.D1 to D7.
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5. The respondent claimed that the cheque was
drawn on the company's account, unless the company is
made party, the prosecution is bad in law. He further
claimed that the cheque was issued for purchasing car
from the appellant and the said transaction did not
materialize. She claimed that despite requesting for
return of cheque on cancellation of transaction for
purchase of car, the appellant did not return the cheque
and misused them and implicated the respondent in the
case.
6. The trial Court on hearing both side by the
impugned judgment and order acquitted the respondent
on the ground that the respondent has rebutted the
presumption under Section 139 of the Act and that the
appellant has failed to prove the existence of legal
liability.
7. To hold that a person is guilty of the offence
under Section 138 of the Act, the cheque should be drawn
by a person on the account maintained by him. Secondly
the said cheque should be issued towards discharge of
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debt or other liability. Admittedly, in this case, the cheque
was not drawn on the account of the respondent. The
cheque was drawn on Clothisque Creations Pvt. Ltd a
company registered under the Companies Act. The
respondent was only the Managing Director of the said
Company.
8. Section 141(1) of the Act which deals with
offence by the company reads as follows:
"141. Offences by companies
(1) If the person committing an offence under
section 138 is a company, every person who, at the
time the offence was committed, was in charge of,
and was responsible to the company for the conduct
of the business of the company, as well as the
company, shall be deemed to be guilty of the offence
and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-
section shall render any person liable to punishment
if he proves that the offence was committed without
his knowledge, or that he had exercised all due
diligence to prevent the commission of such offence:
Provided further that where a person is
nominated as a Director of a company by virtue of
his holding any office or employment in the Central
Government or State Government or a financial
corporation owned or controlled by the Central
Government or the State Government, as the case
may be, he shall not be liable for prosecution under
this Chapter.
(2) Notwithstanding anything contained in
sub-section (1), where any offence under this Act,
has been committed by a company and it is proved
that the offence has been committed with the
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consent or connivance of, or is attributable to, any
neglect on the part of, any director, manager,
secretary or other officer of the company, such
director, manager, secretary or other officer shall
also be deemed to be guilty of that offence and shall
be liable to be proceeded against and punished
accordingly.
Explanation: For the purpose, of this
section,--
(a) "company" means any body corporate and
includes a firm or other association of individuals;
and
(b) "director", in relation to a firm, means a
partner in the firm.
9. Interpreting Section 141 of the Act, the
Hon'ble Supreme Court in paras 58 and 59 of the
judgment of the Aneeta Hada vs. Godfather Travels &
Tours Pvt. Ltd1 in this regard held as follows:
"58. Applying the doctrine of strict
construction, we are of the considered opinion that
commission of offence by the company is an express
condition precedent to attract the vicarious liability of
others. Thus, the words "as well as the company"
appearing in the Section make it absolutely
unmistakably clear that when the company can be
prosecuted, then only the persons mentioned in the
other categories could be vicariously liable for the
offence subject to the averments in the petition and
proof thereof. One cannot be oblivious of the fact
that the company is a juristic person and it has its
own respectability. If a finding is recorded against it,
it would create a concavity in its reputation. There
can be situations when the corporate reputation is
affected when a director is indicted.
59. In view of our aforesaid analysis, we arrive
at the irresistible conclusion that for maintaining the
(2012) 5 SCC 661
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prosecution under Section 141 of the Act, arraigning
of a company as an accused is imperative. The other
categories of offenders can only be brought in the
dragnet on the touchstone of vicarious liability as the
same has been stipulated in the provision itself. We
say so on the basis of the ratio laid down in C.V.
Parekh which is a three-Judge Bench decision. Thus,
the view expressed in Sheoratan Agarwal does not
correctly lay down the law and, accordingly, is
hereby overruled. The decision in Anil Hada is
overruled with the qualifier as stated in para 51. The
decision in Modi Distillery has to be treated to be
restricted to its own facts as has been explained by
us hereinabove."
(Emphasis supplied)
10. Reading of the above judgment goes to show
that in view of Section 141 of the Act to maintain
prosecution against the Director for the offence under
Section 138 of the Act, arraigning the company as an
accused is imperative, otherwise the complaint is not
maintainable.
11. In the case on hand, the appellant did not
arraign the Company as accused in the complaint.
Therefore the complaint is not maintainable. Under the
circumstances, the impugned order of acquittal warrants
no interference. Therefore the appeal is dismissed.
Sd/-
JUDGE
KSR
