Mrs Minal Sameer Sata vs M/S Vandana Wind Energy Private ...
2023 Latest Caselaw 2732 Kant

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                                                     CRL.P No. 1742 of 2023
                                                 C/W CRL.P No. 1745 of 2023




                  IN THE HIGH COURT OF KARNATAKA AT BENGALURU
                        DATED THIS THE 1ST DAY OF JUNE, 2023
                                        BEFORE
                     THE HON'BLE MR JUSTICE M.NAGAPRASANNA
                        CRIMINAL PETITION NO. 1742 OF 2023
                                          C/W
                        CRIMINAL PETITION NO. 1745 OF 2023


               IN CRL.P.No.1742/2023

               BETWEEN:

               MRS. MINAL SAMEER SATA,
               W/O SAMEER SATA,
               AGED ABOUT 60 YEARS,
               RESIDING AT NO.39, 'ASHAR KUTIR',
               NEAR LAKSHMI NARAYAN MANDIR,
               TAGORE ROAD, SANTACRUZ WEST,
               MUMBAI - 400 054.
                                                                ...PETITIONER
               (BY SRI. SHAIK ISMAIL ZABIULLA, ADVOCATE)
Digitally signed by
PADMAVATHI B K AND:
Location: HIGH
COURT OF
KARNATAKA           M/S. VANDANA WIND ENERGY PRIVATE LIMITED,
               A COMPANY REGISTERED UNDER COMPANIES ACT,
               NO.5, TULSI REST HOUSE, CRESENT ROAD,
               BANGALORE - 560 001.
               REPRESENTED BY ITS
               MANAGING DIRECTOR,
               MRS. VANDANA JAIN,
                                                     ...RESPONDENT
               (BY SRI. VENKATESHA T S., ADVOCATE)
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                                         CRL.P No. 1742 of 2023
                                     C/W CRL.P No. 1745 of 2023




       THIS CRL.P. IS FILED U/S 482 OF CR.P.C. PRAYING TO
QUASH     THE      CRIMINAL    CASE         IN   C.C.NO.2411/2022
REGISTERED      AGAINST THE PETITIONER FOR THE ALLEGED
OFFENCE    P/U/S    138   OF   THE    N.I    ACT   FILED   BY   THE
RESPONDENT AT ANNEXURE - A AND CONSEQUENTLY QUASH
ALL FURTHER PROCEEDINGS PURSUANT THERETO PENDING
ON THE FILE OF XI ADDL.SMALL CAUSES JUDGE AND A.C.M.M
AT BENGALURU CITY.
IN CRL.P.No.1745/2023

BETWEEN:

MRS. MINAL SAMEER SATA,
W/O SAMEER SATA,
AGED ABOUT 60 YEARS,
RESIDING AT NO.39, 'ASHAR KUTIR',
NEAR LAKSHMI NARAYAN MANDIR,
TAGORE ROAD, SANTACRUZ WEST,
MUMBAI - 400 054.
                                                     ...PETITIONER
(BY SRI. SHAIK ISMAIL ZABIULLA, ADVOCATE)
AND:

M/S. VANDANA WIND ENERGY PRIVATE LIMITED,
A COMPANY REGISTERED UNDER COMPANIES ACT,
NO.5, TULSI REST HOUSE, CRESENT ROAD,
BANGALORE - 560 001.
REPRESENTED BY ITS
MANAGING DIRECTOR,
MRS. VANDANA JAIN,
                                        ...RESPONDENT
(BY SRI. VENKATESHA T S., ADVOCATE)
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                                         CRL.P No. 1742 of 2023
                                     C/W CRL.P No. 1745 of 2023




     THIS CRL.P. IS FILED U/S 482 OF CR.P.C. PRAYING TO
QUASH    THE   CRIMINAL    CASE   IN  C.C.NO.14253/2022
REGISTERED AGAINST THE PETITIONER FOR THE ALLEGED
OFFENCE P/U/S 138 OF THE N.I ACT FILED BY THE
RESPONDENT AT ANNEXURE - A AND CONSEQUENTLY QUASH
ALL FURTHER PROCEEDINGS PURSUANT THERETO PENDING
ON THE FILE OF XXVIIITH ADDITIONAL CHIEF METROPOLITAN
MAGISTRATE COURT, BENGALURU.

     THESE PETITIONS, COMING ON FOR ADMISSION, THIS
DAY, THE COURT MADE THE FOLLOWING:

                            ORDER

The petitioner is before this Court calling in question

proceedings in C.C.No.2411/2022 and 14253/2022 registered

for the offence punishable under Section 138 of the Negotiable

Instruments Act, 1881. ('Act' for short).

2. Heard Sri. Shaik Ismail Zabiulla, learned counsel

appearing for the petitioner and Sri. Venkatesha T.S. learned

counsel appearing for the respondent.

3. The petitioner is the accused No.2. The respondent

is the complainant. The two have a transaction, it is alleged

that the complainant had paid a sum of Rupees Two crores to

the accused No.2 and for repayment of the same, accused No.2

had issued certain cheque. On the cheques being presented for

its encashment were dishonored, as the payment had been

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stopped withdrawing. The proceedings were instituted by the

respondent under the Act by registering a private complaint

invoking Section 200 of the Cr.P.C. The Court has taken

cognizance, which leads the petitioner to this Court to the

subject petition, as she is arrayed as accused No.2 in the

proceedings.

4. Learned counsel appearing for the petitioner

contends that the cheque is not issued by the petitioner, but it

is her husband and she has nothing to do with the business or

taking of the funds from the respondent and would submit that

a non signatory to the cheque cannot be called into the web of

crime under the Act.

5. Learned counsel for the respondent would though

seek to refute the submissions made by the learned counsel

would admit the fact that the petitioner is not a signatory to the

cheque.

6. I have given my anxious consideration to the

submissions made by the respective learned counsel and have

perused the material available on record.

CRL.P No. 1742 of 2023 C/W CRL.P No. 1745 of 2023

7. The afore-narrated facts are not in dispute. The

issue lies in a narrow compass, as to whether a non signatory

to the cheque can be hauled into the proceedings under the

Act. The said issue need not detain this Court for long and

delve deep into the matter, as the Apex Court considering the

very issue as in the cases of APARNA A. SHAH Vs. SHETH

DEVELOPERS PRIVATE LIMITED AND ANOTHER 1 and in

the case of ALKA KHANDU AVHAD Vs. AMAR SYAMPRASAD

MISHRA AND ANOTHER2.

In the case of APARNA A. SHAH (supra) has held as

follows:

"12. In order to understand the rival contentions, it is useful to refer Section 138 of the NI Act which reads as under:

"138.Dishonour of cheque for insufficiency, etc. of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an

(2013) 8 SCC 71

(2021) 4 SCC 675

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arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless--

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation.--For the purposes of this section, 'debt or other liability' means a legally enforceable debt or other liability."

13. In order to constitute an offence under Section 138 of the NI Act, this Court in Jugesh Sehgal v. Shamsher Singh Gogi [(2009) 14 SCC 683 : (2009) 5 SCC (Civ) 482 : (2010) 2 SCC (Cri) 218] noted the following ingredients which are required to be fulfilled: (SCC pp. 687-88, para

13) "(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a

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certain amount of money to another person from out of that account;

(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;

(iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;

(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.

Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act."

Considering the language used in Section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, we are of the view that it is only the "drawer" of the cheque who can be made liable for the penal action under the provisions of the NI Act. It is settled law that strict interpretation is required to be given to penal statutes.

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14. In Jugesh Sehgal [(2009) 14 SCC 683 : (2009) 5 SCC (Civ) 482 : (2010) 2 SCC (Cri) 218] , after noting the ingredients for attracting Section 138 on the facts of the case, this Court concluded that there is no case to proceed under Section 138 of the Act. In that case, on 20-1-2001, the complainant filed an FIR against all the accused for the offence under Sections 420, 467, 468, 471 and 406 of the Penal Code, 1860 (hereinafter referred to as "IPC") and there was hardly any dispute that the cheque, subject- matter of the complaint under Section 138 of the NI Act, had not been drawn by the appellant on an account maintained by him in Indian Bank, Sonepat Branch. In the light of the ingredients required to be fulfilled to attract the provisions of Section 138, this Court, after finding that there is little doubt that the very first ingredient of Section 138 of the NI Act enumerated above is not satisfied and concluded that the case against the appellant for having committed an offence under Section 138 cannot be proved.

15. In S.K. Alagh v. State of U.P. [(2008) 5 SCC 662 : (2008) 2 SCC (Cri) 686] this Court held: (SCC p. 667, para

19) "19. ... If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself. (See Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [(2006) 10 SCC 581 : (2007) 1 SCC (Cri) 621] .)"

16. In Sham Sunder v. State of Haryana [(1989) 4 SCC 630 : 1989 SCC (Cri) 783] , this Court held as under: (SCC p. 632, para 9)

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"9. ... The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not."

17. As rightly pointed out by the learned Senior Counsel for the appellant, the interpretation sought to be advanced by the respondents would add words to Section 141 and extend the principle of vicarious liability to persons who are not named in it.

18. In the case on hand, we are concerned with criminal liability on account of dishonour of a cheque. It primarily falls on the drawer, if it is a company, then drawer company and is extended to the officers of the company. The normal rule in the cases involving criminal liability is against vicarious liability. To put it clear, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. For example, Section 141 of the NI Act is an instance of specific provision that in case an offence under Section 138 is committed by a company, the criminal liability for dishonour of a cheque will extend to the officers of the company. As a matter of fact, Section 141 contains conditions which have to be satisfied before the liability can be extended. Inasmuch as the provision creates a criminal liability, the conditions have to be strictly complied with. In other words, the persons who had nothing to do with the matter, need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, the officers of the company, who are responsible for the acts done in the name of the company, are sought to be made personally liable for the acts which

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result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub-section (1) of Section 141 enables certain persons to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. The liability under Section 141 of the NI Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability.

19. It is not in dispute that the first respondent has not filed any complaint under any other provisions of the Penal Code and, therefore, the argument pertaining to the intention of the parties is completely misconceived. We were taken through the notice issued under the provisions of Section 138, reply given thereto, copy of the complaint and the order issuing process. In this regard, Mr Mukul Rohatgi, learned Senior Counsel for the respondent after narrating the involvement of the appellant herein and her husband contended that they cannot be permitted to raise any objection on the ground of concealing/suppressing material facts within her knowledge. For the said purpose, he relied on Oswal Fats and Oils Ltd. v. Commr. (Admn.) [(2010) 4 SCC 728 : (2010) 2 SCC (Civ) 237] , Balwantrai Chimanlal Trivedi v. M.N. Nagrashna [AIR 1960 SC 1292] , J.P. Builders v. A. Ramadas Rao [(2011) 1 SCC 429 : (2011) 1 SCC (Civ) 227] . Inasmuch as the appellant had annexed the relevant materials, namely, copy of notice, copy of reply, copy of the complaint and the order issuing process which alone is relevant for consideration in respect of complaint under Section 138 of the NI Act, the argument of

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the learned Senior Counsel for Respondent 1 that the stand of the appellant has to be rejected for suppressing of material facts or relevant facts, cannot stand. In such circumstances, we are of the view that the case law relied upon by contesting Respondent 1 is inapplicable to the facts of the present case.

20. Mr Mukul Rohatgi, learned Senior Counsel for Respondent 1, by drawing our attention to the definition of "person" in Section 3(42) of the General Clauses Act, 1897 submitted that in view of the various circumstances mentioned, the appellant herein being wife, is liable for criminal prosecution. He also submitted that in view of the Explanation in Section 141(2) of the NI Act, the appellant wife is being prosecuted as an association of individual. In our view, all the above contentions are unacceptable since it was never the case of Respondent 1 in the complaint filed before the learned Magistrate that the appellant wife is being prosecuted as an association of individuals and, therefore, on this ground alone, the above submission is liable to be rejected. Since, this expression has not been defined, the same has to be interpreted ejusdem generis having regard to the purpose of the principle of vicarious liability incorporated in Section 141. The terms "complaint", "persons", "association of persons", "company" and "Directors" have been explained by this Court in Raghu Lakshminarayanan v. Fine Tubes [(2007) 5 SCC 103 : (2007) 2 SCC (Cri) 455] .

21. The above discussion with reference to Section 138 and the materials culled out from the statutory notice, reply, copy of the complaint, order, issuance of process, etc. clearly show only the drawer of the cheque being responsible for the same.

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23. The learned Single Judge of the Madras High Court in Devendra Pundir v. Rajendra Prasad Maurya [Devendra Pundir v. Rajendra Prasad Maurya, 2008 Cri LJ 777 (Mad)] , following decisions of this Court, has concluded thus:

"7. This Court is of the considered view that the above proposition of law laid down by the Hon'ble Apex Court in the decision of Fine Tubes [(2007) 5 SCC 103 : (2007) 2 SCC (Cri) 455] is squarely applicable to the facts of the instant case. Even in this case, as already pointed out, the first accused is admittedly the sole proprietrix of the concern, namely, 'Kamakshi Enterprises' and as such, the question of the second accused to be vicariously held liable for the offence said to have been committed by the first accused under Section 138 of the Negotiable Instruments Act not at all arise."

After saying so, the learned Single Judge, quashed the proceedings initiated against the petitioner therein and permitted the Judicial Magistrate to proceed and expedite the trial in respect of others.

24. In Gita Berry v. Genesis Educational Foundation [Gita Berry v. Genesis Educational Foundation, (2008) 151 DLT 155] , the petitioner therein was wife and she filed a petition under Section 482 of the Code seeking quashing of the complaint filed under Section 138 of the NI Act. The case of the petitioner therein was that the offence under Section 138 of the Act cannot be said to have been made out against her only on the ground that she was a joint account-holder along with her husband. It was pointed out that she has neither drawn nor issued the cheque in question and, therefore, according to her, the complaint against her was not maintainable. The learned Single Judge of the High Court of Delhi, after noting that the complaint was only under Section 138 of the Act and not under Section 420 IPC and pointing out that nothing was elicited

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from the complainant to the effect that the petitioner was responsible for the cheque in question, quashed the proceedings insofar as the petitioner therein.

25. In Bandeep Kaur v. Avneet Singh [(2008) 2 PLR 796] , in a similar situation, the learned Single Judge of the Punjab and Haryana High Court held that in case the drawer of a cheque fails to make the payment on receipt of a notice, then the provisions of Section 138 of the Act could be attracted against him only. The learned Single Judge further held that though the cheque was drawn to a joint bank account which is to be operated by anyone i.e. the petitioner or by her husband, but the controversial document is the cheque, the liability regarding dishonouring of which can be fastened on the drawer of it. After saying so, learned Single Judge accepted the plea of the petitioner and quashed the proceedings insofar as it relates to her and permitted the complainant to proceed further insofar as against others.

26. In the light of the principles as discussed in the earlier paragraphs, we fully endorse the view expressed by the learned Judges of the Madras [Devendra Pundir v. Rajendra Prasad Maurya, 2008 Cri LJ 777 (Mad)] , Delhi [Gita Berry v. Genesis Educational Foundation, (2008) 151 DLT 155] and Punjab and Haryana [(2008) 2 PLR 796] High Courts.

27. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains the name of the appellant and her husband, the fact remains that her husband alone had put his signature. In addition to the

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same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque.

28. We also hold that under Section 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint account-holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account-holder. The said principle is an exception to Section 141 of the NI Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as arm-twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to the dishonour of a cheque can, in no case "except in case of Section 141 of the NI Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage.

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29. Under these circumstances, the appeal deserves to be allowed and process in Criminal Case No. 1171/SS/2009 pending before the Court of learned Metropolitan Magistrate, 13th Court, Dadar, Mumbai deserves to be quashed, accordingly, quashed against the appellant herein. The appeal is allowed."

Later the Apex Court in the case of ALKA KHANDU

AVHAD (supra) has held as follows:

"8. We have heard the learned counsel appearing on behalf of the respective parties at length, considered material on record and also considered the averments and allegations in the complaint. It emerges from the record that the dishonoured cheque was issued by original Accused 1 husband of the appellant. It was drawn from the bank account of original Accused 1. The dishonoured cheque was signed by original Accused 1. Therefore, the dishonoured cheque was signed by original Accused 1 and it was drawn on the bank account of original Accused 1. The appellant herein-original Accused 2 is neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account. That the account in question was not a joint account. In the light of the aforesaid facts, it is required to be considered whether the appellant herein-original Accused 2 can be prosecuted for the offence punishable under Section 138 read with Section 141 of the NI Act?

9. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied:

9.1. That the cheque is drawn by a person and on an account maintained by him with a banker. 9.2. For the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability.

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9.3. The said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account.

10. Therefore, a person who is the signatory to the cheque and the cheque is drawn by that person on an account maintained by him and the cheque has been issued for the discharge, in whole or in part, of any debt or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have committed an offence. Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque.

11. Now, so far as the case on behalf of the original complainant that the appellant herein-original Accused 2 can be convicted with the aid of Section 141 of the NI Act is concerned, the aforesaid has no substance.

12. Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. The learned counsel appearing on behalf of the original complainant has submitted that "company" means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within "other association of individuals" and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly liable to pay the debt,

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can be prosecuted. The aforesaid cannot be accepted. Two private individuals cannot be said to be "other association of individuals". Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act. The criminal complaint filed against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quashed and set aside.

13. In view of the above and for the reasons stated above, the present appeal succeeds. The impugned judgment and order dated 21-8-2019 passed by the High Court in Alka Khandu Avhad v. Amar Syamprasad Mishra [Alka Khandu Avhad v. Amar Syamprasad Mishra, 2019 SCC OnLine Bom 1630] refusing to quash the criminal complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act is hereby quashed and set aside. The complaint case pending in the Court of the learned Metropolitan Magistrate filed by Respondent 1-original complainant being CC No. 2802/SS/2016 is hereby quashed and set aside. The appeal is allowed accordingly.

8. In the light of the admitted fact that the petitioner

is not the signatory to the cheque and had nothing to do with

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the transaction, permitting further proceedings against the

petitioner, accused No.2 would run foul of the afore-quoted

judgments. Therefore, the proceedings require to be

obliterated.

9. For the aforesaid reasons, the following:

ORDER

1) The Criminal Petitions are allowed.

2) Proceedings in C.C.No.2411/2022 pending on the file of XI Additional Small Causes Judge and Additional Chief Metropolitan Magistrate, Bangalore City and C.C.No.14253/2022 pending on the file of XXVIIIth Additional Chief Metropolitan Magistrate Court, Bangalore registered for the offence punishable under Section 138 of the Negotiable Instruments Act stands quashed.

Sd/-

JUDGE

JY CT: SN