Karnataka High Court
Mr Kamal Sagar vs M/S Starworth Inrastructure And on 20 April, 2023
Bench: R. Nataraj
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CRL.P No. 6872 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF APRIL, 2023
BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
CRIMINAL PETITION NO. 6872 OF 2017
BETWEEN:
MR. KAMAL SAGAR
RESIDING AT NO.1,
NO.403, FOOTPRINTS, 7TH CROSS,
7TH MAIN, HAL 2ND STAGE,
BENGALURU-560008.
...PETITIONER
(BY SRI. SRIDHAR G., ADVOCATE)
Digitally AND:
signed by
SUMA M/S STARWORTH INFRASTRUCTURE
Location: AND CONSTRUCTION LTD.,
HIGH
COURT OF (INCORPORATED UNDER
KARNATAKA THE COMPANIES ACT, 1956)
HAVING REGISTERED OFFICE
AT NO.301, 3RD FLOOR,
SUNRISE CHAMBER, ULSOOR ROAD,
BENGALURU-560042.
REPRESENTED BY ITS DEPUTY MANAGER,
MR.SAHEB SADHIK HASAN.
...RESPONDENT
(BY SRI.SANDESH J.CHOUTA, SENIOR ADVOCATE FOR
SRI.SHIRISH KRISHNA, ADVOCATE)
THIS CRL.P IS FILED UNDER SECTION 482 THE CODE OF
CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE COMPLAINT
AND ALL FURTHER PROCEEDINGS AS AGAINST ACCUSED NO.4 IN
CRIMINAL COMPLAINT NO.54737/2017 PENDING BEFORE THE LVIII
ADDL.C.M.M., BANGALORE AND ETC.
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CRL.P No. 6872 of 2017
THIS PETITION COMING ON FOR HEARING, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The petitioner has challenged the prosecution initiated
against him in C.C.No.54737/2017 pending trial before the LVII
Additional Chief Metropolitan Magistrate, Mayohall, at
bengaluru, (henceforth to be referred to as 'trial Court') for the
offence punishable under Section 138 of Negotiable Instrument
Act, 1881 (henceforth referred to be as N.I.Act,) and the order
dated 19.09.2017 issuance of process against him.
2. A private complaint was filed by the respondent
herein in PCR No.53798/2017 alleging the commission of an
offence punishable under Section 138 of N.I.Act. The
respondent had arrayed all the directors of the drawer-
Company and alleged that all of them were responsible for the
business and day to day activities of the Company.
3. Respondent further alleged that the Company and
its directors had furnished corporate guarantee for a sum of
Rs.2,00,00,000/- on 12.03.2015 and passed on a cheque for
sum of Rs.2,00,00,000/- dated 27.07.2016 towards repayment.
The said cheque when presented was dishonored due to
CRL.P No. 6872 of 2017
insufficient funds which prompted the respondent to issue a
notice of demand on 05.08.2016, which was served on the
petitioner herein, who was purportedly one of the directors of
the Company. On the failure of the drawer-Company to re-pay
the amount, proceedings to prosecute Company and its
directors for the offence punishable under Section 138 of
N.I.Act was initiated.
4. The trial Court after recording the pre summons
evidence of the respondent, took cognizance of the offence and
issued process in terms of the order dated 19.09.2017. Being
aggrieved by the order issuing process, the petitioner is before
this Court primarily contending that he resigned from the
directorship of the accused-company on 22.06.2015 and
corresponding DIR-12 was filed before the Registrar of
Companies. He further claimed that the cheque in question
was issued long after he had retired from the Company and
therefore, he was neither responsible for the conduct of the
business of the Company nor was he incharge and responsible
to the company in any manner whatsoever.
5. Learned counsel for petitioner relied upon the
judgment of the Apex Court in the case of "Harshendra
CRL.P No. 6872 of 2017
Kumar D Vs. Rebatilata Koley and Others" reported in
(2011) 3 SCC 351 and invited the attention of this Court to
paragraph No.17, he contended that the instant prosecution is
only to strong arm the petitioner and force him to pay the
amount covered under the cheque in question.
6. Per contra, learned Senior counsel representing the
respondent submitted that there were specific assertions made
in the complaint that the petitioner along with other directors
were responsible for the business of the drawer-Company and
that the petitioner was one of the persons who had executed
the corporate guarantee. He submits that there were e-mail
correspondence by the petitioner even after he allegedly retired
from the company and therefore, the claim of the petitioner
that he was not a director of the company was a smoke screen
created by the petitioner to escape being prosecuted.
7. Learned Senior counsel relied upon the judgment of
the Apex Court in the case of "Standard Chartered Bank Vs.
State of Maharashtra and Ors." reported in (2016) 6 SCC
62. He further contended that the petitioner who was served
with the statutory notice under Section 138 of N.I.Act failed to
respond and claim that he was no longer a director of the
CRL.P No. 6872 of 2017
Company and therefore was not responsible for the affairs of
the Company. He therefore submits that it is for the petitioner
to appear before the trial Court and establish his defence
before the trial Court.
8. I have considered the submissions made by the
learned counsel for the petitioner as well as learned Senior
counsel representing the respondent.
9. Section 141 of the N.I.Act, deals with the person
who has to be prosecuted in the event of commission of an
offence under Section 138 of Negotiable Instruments Act, 1881
committed by a Company and 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 the
punished accordingly;
Provided that nothing contained in this sub-
section shall render any person liable to
punishment if he proves that the offence was
CRL.P No. 6872 of 2017
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
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 for the other officer
shall also be deemed to be guilty of that offence
and shall be liable to be proceed against and
punished accordingly".
10. Perusal of the above leaves no doubt that in order
to avoid any doubt as to who should be prosecuted, when a
Company is accused of an offence, Section 141 of the N.I.Act,
CRL.P No. 6872 of 2017
delineates that every person who at the time of commission of
offence was incharge of and was responsible to the Company
for the conduct of the business of the Company and the
company shall be deemed to be guilty and shall be liable to be
proceeded and punished. The first proviso to Section 141 of
N.I.Act, grants an opportunity to the person responsible to
prove that the offence committed was without his knowledge,
or that he had exercised due diligence to prevent the
commission of such offence and thereby escape being
punished.
11. It is relevant to note that Section 141 of N.I.Act
does not restrict the prosecution to a director of a company but
indicates that "every person who, at the time of offence was
committed, was in charge of" thereby giving an impression
that any person even if he is not a director of the company
could be prosecuted, if it is shown that he was incharge and
was responsible to the conduct of the business of the company.
12. In the case on hand, petitioner was arrayed as one
of the directors of the drawer-company. It is claimed that
petitioner too was incharge and responsible for the affairs of
the company in as much as he was one of the person who had
CRL.P No. 6872 of 2017
executed the corporate guarantee. The respondent claimed
that despite service of a notice of demand, which is refuted by
the learned counsel for petitioner, the petitioner did not reply to
the claim that he was not director of the Company and was no
longer responsible for the affairs of the Company. The e-mail
correspondence which are placed on record, demonstrate that
notwithstanding his alleged retirement from the Company, the
petitioner continued to correspond over official matters of the
Company. The contention of the petitioner that these
correspondences were based on personal level and not even in
official capacity, is a matter of trial and the petitioner has to
establish the same before the trial Court and he is also bound
to establish before the trial Court that he has retired from the
company and was incharge or responsible to the company for
the conduct of the business.
13. As rightly contended by the learned Senior counsel
for the respondent, there are shades of evidence, which
indicates that the petitioner was corresponding with the
respondent over the matters concerning the drawer-Company
and therefore, the contention of the petitioner that he retired
from the directorship of the Company and therefore was
CRL.P No. 6872 of 2017
insulated from prosecution cannot be accepted at this stage
and in that view of the matter, the petition fails and the same
is dismissed.
It is open for the petitioner to appear before the trial
Court and establish his defence in accordance with law. Any
observation made herein is only for the limited purpose of
disposing of this petition and shall not affect the trial Court in
deciding the case on merits.
The petitioner shall appear before the trial Court on
21.04.2023 and adduce his evidence and the respondent shall
without fail cross-examine the petitioner tomorrow i.e., on
21.04.2023 itself and the trial Court may proceed to pass
orders in accordance with law.
Sd/-
JUDGE
GPG
