Karnataka High Court
Smt Jyotsn A vs Sri V Subramani on 6 February, 2025
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CRL.A No. 151 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE RAJESH RAI K
CRIMINAL APPEAL NO. 151 OF 2017 (A)
BETWEEN:
SMT JYOTSNA
W/O RAJESH RAJPAL
AGED ABOUT 44 YEARS
OCC: BUSINESS
R/AT NO. 241/242
NANDI MANSION,
ARELUGUDI COMPOUND
COTTONPET MAIN ROAD,
BANGALORE - 560 005.
...APPELLANT
(BY SRI. MADHUSUDHAN M.N, ADVOCATE)
AND:
SRI. V. SUBRAMANI
Digitally signed by
MAYAGAIAH THE PROPRIETOR AND
VINUTHA AUTHORISED PERSON OF
Location: HIGH
COURT OF M/S SANJANA GROUP
KARNATAKA HAVING ITS REGISTERED
OFFICE AT NO 1616, 8TH MAIN,
JAYANAGAR 3RD BLOCK
BANGALORE - 560 011.
...RESPONDENT
(BY SRI. S.N. MAHESH, ADVOCATE)
THIS CRL.A. IS FILED U/S.378(4) OF CR.P.C PRAYING TO
SET ASIDE THE JUDGMENT AND ORDER DATED 05.12.2016
PASSED BY THE XXII ADDL.C.M.M., BANGALORE IN
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CRL.A No. 151 of 2017
C.C.NO.26638/2015 ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 OF N.I. ACT.
THIS APPEAL, COMING ON FOR HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE RAJESH RAI K
ORAL JUDGMENT
This appeal is directed against the judgment dated
05.12.2016 passed in C.C.No.26638/2015 by the XII
Additional Chief Metropolitan Magistrate, Bangalore City,
wherein the learned Judge acquitted the
respondent/accused for the offence punishable under
Section 138 of Negotiable Instruments Act, 1881 (for short
'NI Act').
2. The parties are referred to as per their ranking
before the Trial Court.
3. The facts apposite for consideration of this
appeal as borne out from the pleadings are as under:
The complainant's husband and accused were
acquainted to each other since 2012. The complainant had
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purchased an immovable property bearing Flat No.401 on
the 4th floor of Sanjana Castle Krishna Mahal situated at
2nd Main road, Sriramapuram, Bangalore from the
accused through a registered sale-deed. Owing to such
acquaintance, the accused approached the complainant
and her husband for a hand loan of Rs.15,00,000/-.
Accordingly, the complainant paid a sum of
Rs.10,00,000/- by way of cash and her husband Rajesh
Rajpal further paid a sum of Rs.5,00,000/- reckoning to
total a sum of Rs.15,00,000/- on 13.01.2015. At the time
of receiving a sum of Rs.10,00,000 from the complainant
the accused had agreed to repay the said amount within a
period of six months. Following the lapse of the stipulated
period, the complainant approached the accused for
repayment of the said amount and the accused issued post
dated cheques for a sum of Rs.5,00,000/- dated
14.08.2015 vide cheque No. 783861 and another cheque
for a sum of Rs.5,00,000/-dated 03.09.2015 cheque
No.783859 in favour of the complainant drawing on ICICI
Bank, Jayanagara branch, Bangalore. Upon presentation of
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the said cheuqes it returned dishonored with the bank
endorsement enumerating as "Funds insufficient" dated
03.09.2015 and 05.09.2015. Thereafter, the complainant
got issued legal notice on 05.09.2015 to the accused,
calling upon, the accused to pay the cheque amount.
Despite the issuance of legal notice, the accused failed to
reply to the notice. Hence, the complainant filed a private
complaint before the learned Magistrate under Section 200
of Cr.P.C for the offence punishable under Section 138 of
N.I. Act.
4. In order to prove the case of complainant, she
adduced her oral evidence as PW-1 by way of affidavit and
got marked Ex.P1 to Ex.P7. However the accused neither
examined any witness nor produced any documents.
5. On assessment of oral and documentary
evidence, the Trial Court acquitted the accused for the
offence punishable under Section 138 of NI Act.
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6. I have heard the learned counsel for the
appellant and the learned counsel for respondent; also, I
have carefully perused the entire evidence on record.
7. Before delving into the merits of the case, it
could be seen from the records while dismissing the
complaint, that the Trial Court had considered the cheques
in question were issued by the accused on behalf of the
Company i.e., Sanjana Group. Further, in the cross-
examination of the complaint, she has categorically
admitted that the accused-Company is proprietorship
company and the accused and his wife are the Directors of
the company. The complainant has filed the complaint
against the accused on the capacity of his being the
proprietor of the said company. However, the complainant
failed to array the company as party to the proceedings
before the Trial Court. The complainant also failed to issue
legal notice to the company of the accused. It is neither
stated in the legal notice nor in the complaint regarding
the specific role and designation held by the accused in the
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said company. In such circumstances, the complainant is
duty bound to array the company of the accused as a
necessary party to the proceedings.
8. The Apex Court in the case of Aneeta Hada v.
God fathers Travels Tours and Pvt. Limited reported
in (2012) 5 SCC 661 has held as follows:
48. In Anil Hada [(2000) 1 SCC 1: 2001
SCC (Cri) 174] the two-Judge Bench posed
the question: when a company, which
committed the offence under Section 138 of
the Act eludes from being prosecuted thereof,
can the Directors of that company be
prosecuted for that offence. The Bench
referred to Section 141 of the Act and
expressed the view as follows: (SCC pp. 7- 8,
paras 12-13)
"12. Thus when the drawer of the
cheque who falls within the ambit
of Section 138 of the Act is a human
being or a body corporate or even
firm, prosecution proceedings can
be initiated against such drawer. In
this context the phrase 'as well as'
used in sub-section (1) of Section
141 of the Act has some
importance. The said phrase would
embroil the persons mentioned in
the first category within the
tentacles of the offence on a par
with the offending company.
Similarly the words 'shall also' in
sub-section (2) are capable of
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bringing the third category persons
additionally within the dragnet of
the offence on an equal par. The
effect of reading Section 141 is that
when the company is the drawer of
the cheque such company is the
principal offender under Section
138 of the Act and the remaining
persons are made offenders by
virtue of the legal fiction created by
the legislature as per the section.
Hence the actual offence should
have been committed by the
company, and then alone the other
two categories of persons can also
become liable for the offence.
13. If the offence was committed by
a company it can be punished only if
the company is prosecuted. But instead
of prosecuting the company if a payee
opts to prosecute only the persons
falling within the second or third
category the payee can succeed in the
case only if he succeeds in showing that
the offence was actually committed by
the company. In such a prosecution the
accused can show that the company has
not committed the offence, though such
company is not made an accused, and
hence the prosecuted accused is not
liable to be punished. The provisions do
not contain a condition that prosecution
of the company is sine qua non for
prosecution of the other persons who
fall within the second and the third
categories mentioned above. No doubt
a finding that the offence was
committed by the company is sine qua
non for convicting those other persons.
But if a company is not prosecuted due
to any legal snag or otherwise, the
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other prosecuted persons cannot, on
that score alone, escape from the penal
liability created through the legal fiction
envisaged in Section 141 of the Act."
53. It is to be borne in mind that Section
141 of the Act is concerned with the offences
by the company. It makes the other persons
vicariously liable for commission of an offence
on the part of the company. As has been
stated by us earlier, the vicarious liability gets
attracted when the condition precedent laid
down in Section 141 of the Act stands
satisfied. There can be no dispute that as the
liability is penal in nature, a strict
construction of the provision would be
necessitous and, in a way, the warrant."
(Emphasis supplied)
9. In a later judgment, the Apex Court in the case of
Sunil Bharti Mittal vs.Central Bureau of Investigation
reported in (2015)1 SCR 377 has held as follows:
"60. It may be appropriate at this stage
to notice the observations made by
MacNaghten, J. in Director of Public
Prosecutions v. Kent and Sussex
Contractors Ltd. [1944 KB 146 : (1944) 1
All ER 119 (DC)] : (KB p. 156)
A body corporate is a "person" to
whom, amongst the various attributes it
may have, there should be imputed the
attribute of a mind capable of knowing and
forming an intention--indeed it is much too
late in the day to suggest the contrary. It
can only know or form an intention through
its human agents, but circumstances may
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be such that the knowledge of the agent
must be imputed to the body corporate.
Counsel for the respondents says that,
although a body corporate may be capable
of having an intention, it is not capable of
having a criminal intention. In this particular
case the intention was the intention to
deceive. If, as in this case, the responsible
agent of a body corporate puts forward a
document knowing it to be false and
intending that it should deceive, I
apprehend, according to the authorities that
Viscount Caldecote, L.C.J., has cited, his
knowledge and intention must be imputed
to the body corporate.
61. The principle has been reiterated
by Lord Denning in Bolton (H.L.)(Engg.) Co.
Ltd. v. T.J. Graham & Sons Ltd. [(1957) 1
QB 159 : (1956) 3 WLR 804 : (1956) 3 All
ER 624 (CA)] in the following words : (QB p.
172)
A company may in many ways be likened
to a human body. They have a brain and a
nerve centre which controls what they do.
They also have hands which hold the tools
and act in accordance with directions from
the centre. Some of the people in the
company are mere servants and agents who
are nothing more than hands to do the work
and cannot be said to represent the mind or
will. Others are Directors and managers
who represent the directing mind and will of
the company, and control what they do. The
state of mind of these managers is the state
of mind of the company and is treated by
the law as such. So you will find that in
cases where the law requires personal fault
as a condition of liability in tort, the fault of
the manager will be the personal fault of the
company. That is made clear in Lord
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Haldane's speech in Lennard's Carrying Co.
Ltd. v. Asiatic Petroleum Co. Ltd. [1915 AC
705 : (1914-15) All ER Rep 280 (HL)] (AC
at pp. 713 & 714). So also in the criminal
law, in cases where the law requires a guilty
mind as a condition of a criminal offence,
the guilty mind of the Directors or the
managers will render the company
themselves guilty. ]
62. The aforesaid principle has been
firmly established in England since the
decision of the House of Lords in Tesco
Supermarkets Ltd. v. Nattrass [1972 AC
153 : (1971) 2 WLR 1166 : (1971) 2 All ER
127 (HL)] . In stating the principle of
corporate liability for criminal offences, Lord
Reid made the following statement of law :
(AC p. 170 EG)
'I must start by considering the nature
of the personality which by a fiction the law
attributes to a corporation. A living person
has a mind which can have knowledge or
intention or be negligent and he has hands
to carry out his intentions. A corporation
has none of these : it must act through
living persons, though not always one or the
same person. Then the person who acts is
not speaking or acting for the company. He
is acting as the company and his mind
which directs his acts is the mind of the
company. There is no question of the
company being vicariously liable. He is not
acting as a servant, representative, agent
or delegate. He is an embodiment of the
company or, one could say, he hears and
speaks through the persona of the
company, within his appropriate sphere,
and his mind is the mind of the company. If
it is a guilty mind then that guilt is the guilt
of the company. It must be a question of
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law whether, once the facts have been
ascertained, a person in doing particular
things is to be regarded as the company or
merely as the company's servant or agent.
In that case any liability of the
company can only be a statutory or
vicarious liability.'
63. From the above it becomes
evident that a corporation is virtually in
the same position as any individual and
may be convicted of common law as
well as statutory offences including
those requiring mens rea. The criminal
liability of a corporation would arise
when an offence is committed in
relation to the business of the
corporation by a person or body of
persons in control of its affairs. In such
circumstances, it would be necessary to
ascertain that the degree and control of
the person or body of persons is so
intense that a corporation may be said
to think and act through the person or
the body of persons. The position of
law on this issue in Canada is almost
the same. Mens rea is attributed to
corporations on the principle of 'alter
ego' of the company.
64. So far as India is concerned, the
legal position has been clearly stated by the
Constitution Bench judgment of this Court
in Standard Chartered Bank v. Directorate
of Enforcement [(2005) 4 SCC 530 : 2005
SCC (Cri) 961] . On a detailed consideration
of the entire body of case laws in this
country as well as other jurisdictions, it has
been observed as follows : (SCC p. 541,
para 6)
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'6. There is no dispute that a company
is liable to be prosecuted and punished for
criminal offences. Although there are earlier
authorities to the effect that corporations
cannot commit a crime, the generally
accepted modern rule is that except for
such crimes as a corporation is held
incapable of committing by reason of the
fact that they involve personal malicious
intent, a corporation may be subject to
indictment or other criminal process,
although the criminal act is committed
through its agents.'"
40. It is abundantly clear from the above
that the principle which is laid down is to the
effect that the criminal intent of the "alter
ego" of the company, that is the personal
group of persons that guide the business of
the company, would be imputed to the
company/corporation. The legal proposition
that is laid down in the aforesaid judgment in
Iridium India case [Iridium India Telecom
Ltd. v. Motorola Inc., (2011) 1 SCC 74: (2010)
3 SCC (Cri) 1201] is that if the person or
group of persons who control the affairs of
the company commit an offence with a
criminal intent, their criminality can be
imputed to the company as well as they are
"alter ego" of the company."
(Emphasis supplied)
9. On careful perusal of the findings of the Hon'ble
Apex Court in the above judgment, the complaint filed by
the complainant against the accused is not maintainable.
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10. Against this backdrop, the appeal filed by the
complainant is liable to be dismissed on the sole ground
that the complainant failed to array the company as party
in the proceedings.
11. Accordingly, the appeal filed by the complainant
is dismissed.
SD/-
(RAJESH RAI K)
JUDGE
HKV
