Shreesha L S vs M/S Bolas Agro Private Limited
2025 Latest Caselaw 3955 Kant

Karnataka High Court

Shreesha L S vs M/S Bolas Agro Private Limited on 13 February, 2025

Author: S.R.Krishna Kumar

Bench: S.R.Krishna Kumar

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                                                           NC: 2025:KHC:6729
                                                      CRL.P No. 123 of 2025




                        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 13TH DAY OF FEBRUARY, 2025

                                          BEFORE
                          THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
                              CRIMINAL PETITION NO. 123 OF 2025
                 BETWEEN:

                 SHREESHA L.S.,
                 (AS PER AADHAR CARD),
                 MENTIONED AS LAKKAVALLY SIDAPPA NAIK
                 SRISHA IN PCR,
                 S/O SIDDAPPA NAIK,
                 AGED ABOUT 42 YEARS,
                 R/AT KATTINAMANE ESTATE,
                 SURYADEVASTHANA POST,
                 HIREKODIGE, KOPPA,
                 CHICKMAGALUR - 577 126.
                                                                  ...PETITIONER
                 (BY SRI. NISHIT KUMAR SHETTY, ADVOCATE)

                 AND:
Digitally
signed by        M/S. BOLAS AGRO PRIVATE LIMITED,
KAVYA R
                 CIN NO.: U15490KA2020PTC133036,
Location: High   REGD. OFFICE: GROUND FLOOR,
Court of
Karnataka        BLOCK NO.K-56, KEDINJE,
                 KARKALA TALUK,
                 UDUPI DISTRICT - 574 110.

                 REPRESENTED BY THEIR
                 SPECIAL POWER OF ATTORNEY HOLDER,
                 MR. PRASADA BABRAYA ACHAR,
                 S/O BABRAYA ACHAR,
                 AGED 32 YEARS,
                 R/AT 1-76/1, RAGINDHODI,
                 PALADKA VILLAGE AND POST,
                                -2-
                                              NC: 2025:KHC:6729
                                          CRL.P No. 123 of 2025




MANGALORE,
D.K. DISTRICT - 574 226.
                                                 ...RESPONDENT
(BY SRI. CHANDRANATH ARIGA K., ADVOCATE)

      THIS CRL.P. IS FILED U/S 482 CR.P.C (U/S 528 BNSS)
PRAYING TO ALLOW THE PETITION AND QUASH THE ENTIRE
PROCEEDINGS AGAINST THE PETITIONER IN CC.NO.1459/2024,
FOR THE OFFENCE P/U/S 138 R/W 142 OF NI ACT, PENDING
BEFORE THE COURT OF PRL. CIVIL JUDGE AND JMFC, KARKALA,
UDUPI DISTRICT.

      THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:

CORAM:     HON'BLE MR JUSTICE S.R.KRISHNA KUMAR


                           ORAL ORDER

1. This petition by accused No.2 in C.C.No.1459/2024 seeks

quashing of the impugned proceedings instituted by the respondent

- complainant against the petitioner and accused No.1 for offences

punishable under Sections 138 r/w 142 of the Negotiable

Instruments Act, 1881.

2. Heard learned counsel for the petitioner and learned counsel

for the respondent.

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3. Perusal of the material on record will indicate that the

respondent - complainant instituted the aforesaid proceedings

against the petitioner - accused No.2 as well as one Lakkavally

Siddappa Nayak Harsha - accused No.1. It is a matter of record

and undisputed fact that both the petitioner and accused No.2 as

well as aforesaid Lakkavally Siddappa Nayak Harsha are partners

of Hyper Market Services on whose behalf the accused No.1

issued the subject cheque in favour of the complainant, who has

initiated the proceedings under the provisions of the Negotiable

Instruments Act, 1881 (hereinafter referred to as 'the NI Act', for

brevity). In this context, the impugned private complaint in PCR

No.348/2024 filed by the respondent would read as under:

"IV. That the complainant firm supplied Cashew Kernel to the accused as per Invoice No.GTI/45097/23-24 dated 13.03.2024 for Rs.27,71,475/-. That the accused promised to pay the amount of the said Cashew Kernel supplied to it on a future date. That in discharge of the part payment of the amount due in respect of the said Cashew Kernel supplied by the complainant, the accused issued a cheque bearing No.947822 dated 22.08.2024 drawn on the State Bank of India, Girinagar 3rd Phase, Bengaluru Branch for Rs.4,00,000/- (Rupees Four lakh only) in favour of the complainant's Company.

V. That the complainant has presented the said cheque for encashment before his Banker the State Bank of India, Salmara, Karkala Branch. But the said cheque has been returned to the

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complainant on 26.08.2024 with an endorsement that 'Exceeds arrangement'. The accused has intentionally and deliberately defrauded the complainant.

VI. That the complainant later got issued a notice by RPAD to the accused on 14.09.2024 and the said notice issued to the 2 nd address was duly served to the accused on 19.09.2024. The accused has received the said notice without demure and the notice sent to the 1st address was returned on 18.09.2024 with endorsement that 'insufficient address'. That even after giving sufficient opportunity to the accused, the accused has intentionally failed to repay the said amount and committed default. That the accused has sent a false and frivolous reply to the said notice through his counsel to obtain unlawful gain. That contents of said reply notice sent by the counsel of the accused is an afterthought and the same is not tenable either under law or on facts."

4. Similar allegations are made in the notice dated 14.09.2024,

issued on behalf of the respondent to the petitioner as well as

accused No.1.

5. Perusal of the allegations made in the notice and the

complaint will clearly indicate that though the subject cheque was

signed only by accused No.1 as a partner of the partnership firm

M/s. Hyper Market Services, of which the petitioner was also a

partner, necessary averments as required under Section 141 of the

NI Act has not been made in the impugned complaint. In fact,

except stating that both accused persons issued the cheque, which

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had been dishonored, there is no specific averment in the

complaint to the effect that the petitioner was incharge for the

conduct of the business of the company as well as that the

petitioner was responsible for the conduct of the business of the

company. In recent judgment, Hon'ble Apex Court in the case of

HITESH VERMA VS. M/S. HEALTH CARE AT HOME INDIA PVT. LTD., in

Crl. Appeal No.462/2025 dated 29.01.2025 [Arising out of SLP

(Crl.) No.8368/2019], has categorically held that so long as the

complaint does not satisfy the twin requirement contained in

Section 141 of the NI Act by specific averments that the accused

person was incharge for the conduct of the business of the

company as well as was responsible to the company for the

conduct of the business of the company, proceedings under

Section 138 of the NI Act would not be maintainable against such a

person and in the light of the explanation appended to Section 141

of the NI Act by including a partnership firm within the meaning of

the expression 'Company', the impugned proceedings as against

the petitioner - accused No.2 would clearly not be maintainable in

the facts and circumstances of the instant case.

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6. In the case of HITESH VERMA (SUPRA), the Hon'ble Apex Court

has held as under:

"4. As the appellant is not a signatory to the cheque, he is not liable under Section 138 of the 1881 Act. As it is only the signatory to the cheque is liable under Section 138, unless the case is brought within the four corners of Section 141 of the 1881 Act, no other person can be held liable. Section 141 reads thus:

"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 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 purposes 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."

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5. There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no assertion in the complaints that the appellant, at the time of commission of the offence, was in charge of the business of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the aid of sub-Section (1) of Section 141 of the 1881 Act.

6. Accordingly, the impugned orders are set aside and the order taking cognizance of the complaints filed by the first respondent stands quashed and set aside only as against the present appellant who is arraigned as accused no.3. We make it clear that we have made no adjudication on the merits of the complaints and all issues are left open to be decided by the Trial Court."

7. In view of the aforesaid facts and circumstances and the

absence of necessary averments so as to incriminate the petitioner

for offences under Section 138 of the NI Act, particularly when the

petitioner had undisputedly not signed or issued the cheque which

had been signed and issued only by accused No.1 on behalf of the

partnership firm, without there being necessary averments that the

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accused person was incharge for the conduct of the business of

the company as well as was responsible to the company for the

conduct of the business of company, I am of the view that the

impugned proceedings qua the petitioner, deserves to be quashed.

8. In the result, I pass the following:

ORDER

The petition is hereby allowed.

The entire proceedings qua the petitioner in C.C.No.1459/2024 for the offence punishable under Sections 138 r/w 142 of the NI Act, pending before the court of Principal Civil Judge & JMFC, Karkala, Udupi District, is here quashed.

The trial court is directed to proceed further against accused No.1 and dispose of the proceedings in accordance with law.

Sd/-

(S.R.KRISHNA KUMAR) JUDGE

RD