Karnataka High Court

Sri Srinivas vs State Of Karnataka on 30 March, 2022

Bench: M.Nagaprasanna

                               1



      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 30TH DAY OF MARCH, 2022

                          BEFORE

        THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

            CRIMINAL PETITION No.2944 OF 2022

BETWEEN

1. SRI. SRINIVAS,
   AGED 69 YEARS,
   OCCUPATION: BUSINESS,
   R/O. PLOT NO.969,
   'PUNARVASU', 5TH C-CROSS,
   BEHIND IIM,
   VIJAYA BANK LAYOUT,
   BANNERUGHATTA ROAD,
   BANGALORE-560 076.

2. SMT. PUSHPALATHA,
   W/O. M. SRINIVAS,
   AGED 62 YEARS,
   OCCUPATION: BUSINESS,
   R/O. PLOT NO.969,
   'PUNARVASU', 5TH C-CROSS,
   BEHIND IIM,
   VIJAYA BANK LAYOUT,
   BANNERUGHATTA ROAD,
   BANGALORE-560 076.                    ... PETITIONERS

(SRI. C.H. JADHAV, SENIOR ADVOCATE FOR
 SRI. CHETAN JADHAV, ADVOCATE)

AND

1. STATE OF KARNATAKA,
   REPRESENTED BY JAYANAGARA P.S.,
                                  2



  BANGALORE,
  REPRESENTED BY THE
  STATE PUBLIC PROSECUTOR,
  HIGH COURT OF KARNATAKA,
  BANGALORE-560 001.

2. CHANDRAIAH,
   S/O. LATE SWAMINATHAN NAIDU,
   AGED ABOUT 75 YEARS,
   NO.98, 7TH CROSS,
   7TH MAIN, J.P. NAGAR 3RD PHASE,
   BANGALORE-560 078.                               ... RESPONDENTS.

[BY SRI. ROHIT B.J, HCGP FOR R1)
                             -----

     THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED 22.02.2016 IN
SPL.C.C.NO.97/2016 PASSED BY THE PRINCIPAL CITY CIVIL AND
SESSIONS JUDGE, BENGALURU (CCH-1) AND CONSEQUENTLY
QUASH THE ENTIRE PROCEEDINGS IN SPL.C.C.NO.97/2016
PENDING AGAINST THE PETITIONERS IN THE COURT OF THE XLVII
ADDL. CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE
FOR CBI CASES (CCH-48), BENGALURU.

     THIS CRIMINAL PETITION COMING ON FOR ORDERS, THIS
DAY, THE COURT MADE THE FOLLOWING:

                             ORDER

This petition is akin to what is decided by this Court in

Crl.P.Nos.9701/2017 and 9703/2017 disposed of on 23.09.2021

and Crl.P.No.1836/2022 disposed of on 15.03.2022. This Court

has passed the following order in the said case in

Crl.P.No.1836/2022:

"Identical criminal petitions in Crl.P.Nos.5230/2018 and 6526/2018 were allowed by this Court on 14.09.2021 reserving liberty to proceed in accordance with law. This Court has held as follows:

"6. The common ground inter alia taken up in these proceedings are that the Company which ran the chit fund is not made a party to these proceedings and unless, the Company is a party, the petition would not be maintainable.

7. The issue with regard to whether the proceedings could be initiated against the petitioner alone who is an employee of the Company and not the Company, is no longer res integra, as the issue stands covered by the judgment of the Apex Court in the case of ANEETA HADA v. GODFATHER TRAVELS AND TOURS PRIVATE LIMITED1 wherein the Hon'ble Apex Court has held as follows:-

"39. The word "deemed" used in Section 141 of the Act applies to the company and the persons responsible for the acts of the company. It crystallizes the corporate criminal liability and

(2012) 5 SCC 661

vicarious liability of a person who is in charge of the company. What averments should be required to make a person vicariously liable has been dealt with in S.M.S. Pharmaceuticals Ltd. [(2005) 8 SCC 89 : 2005 SCC (Cri) 1975] In the said case, it has been opined that the criminal liability on account of dishonour of cheque primarily falls on the drawee (sic drawer) company and is extended to the officers of the company and as there is a specific provision extending the liability to the officers, the conditions incorporated in Section 141 are to be satisfied.

... ... ... ...

50. However, it is noticeable that the Bench thereafter referred to the dictum in Sheoratan Agarwal [(1984) 4 SCC 352: 1984 SCC (Cri) 620] and eventually held as follows: (Anil Hada case [(2000) 1 SCC 1: 2001 SCC (Cri) 174] , SCC p. 10, para 21) "21. We, therefore, hold that even if the prosecution proceedings against the company were not taken or could not be continued, it is no bar for proceeding against the other persons falling within the purview of sub-sections (1) and (2) of Section 141 of the Act."

In the light of the aforesaid judgment of the Apex Court, the proceedings without making the Company a party was not maintainable.

8. The said judgment is followed in plethora of orders passed by the Co-ordinate benches of this Court, one of which is cited herein is, in the case of MR. ARVIND MEDIRATTA v. STATE OF KARNATAKA2 - wherein this Court has held as follows:

"8. I have given my careful consideration to the submissions of the learned senior counsel and the learned High Court Government Pleader.

9. In the light of the submissions of the parties, the point that arises for consideration of this court is;

Whether the impugned orders passed by the learned Magistrate taking cognizance of the offences mentioned in the complaints filed by the Labour Department against the petitioner as an individual without making the company, in which he is a member on Board, are maintainable?

Crl.R.P. No.344/2017 and connected cases dd. 16-03-2017

10. The Hon'ble Supreme court in the case of ANEETA HADA (supra) while considering a case arising out of Section 138 of the Negotiable Instruments Act, 1881, has held as follows:

"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 responsibility. 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".

The said authority has been following by this Court in the case of SANJAY JAIN (supra).

11. A perusal of the complaints show that the petitioner is arraigned as an accused in his

individual capacity, although his position as a Director in the company is mentioned. It is one thing to say that the company is the accused represented by its Director and it is another to say that an individual being described as a Director in a particular company satisfies the requirement of law. An individual can be a member on the Board of several companies. Unless a company, which is a juristic person, is arraigned as a party, the Labour Department could not have initiated prosecution only against an individual. In the circumstances, respectfully following the Authority in the case of ANEETA HADA (supra), in my view, the complaints filed by the Senior Labour Inspector qua an individual without the Corporate entity being made as a member, were not maintainable. In the circumstances, these petitions merit consideration and are accordingly allowed."

In the light of the judgments as noticed hereinabove, the complaint itself was not maintainable without the corporate entity being made as a party but having brought only the Board of Directors or the officers of the Company as accused.

9. Therefore, in the light of the aforesaid judgment of the Apex Court, as followed by this Court (supra), both the petitions deserve to be allowed. For the aforesaid reasons, the following:

ORDER

(i) The Criminal Petitions are allowed.

     (ii)    The impugned order dated 15.02.2016,
             passed    in       C.C.No.4950/2016       and

C.C.No.5285/2016 by the VII Additional Chief Metropolitan Magistrate, Bangalore stands quashed and all further proceedings taken pursuant thereto also stands quashed.

(iii) The respondent - State shall be at liberty to take appropriate action in accordance with law.

2. The present petition also raised a similar issue where the proceedings are instituted against the petitioners, who are Directors of the Company (accused Nos.1 and 2) without the proceedings are instituted without making the Company a party.

3. The aforesaid criminal petitions were allowed following the judgment of the Apex Court in the case of ANEETA HADA v. GODFATHER TRAVELS AND TOURS PRIVATE LIMITED3.

4. Therefore, the criminal petition is allowed in the same terms as is directed in Criminal Petition Nos.5230/2018 and 6526/2018 disposed on 14.09.2021."

2. In the light of the proceedings standing covered by the

aforesaid judgment with regard to the issue that is decided in

the aforesaid cases, the petition stands disposed of in terms of

what is ordered in the earlier case.

I.A.No.1/2022 is disposed of as a consequence.

Sd/-

JUDGE

(2012) 5 SCC 661