Kerala High Court

Rajith Kumar K vs State Of Kerala on 4 January, 2024

        IN THE HIGH COURT OF KERALA AT ERNAKULAM
                         PRESENT
        THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR
THURSDAY, THE 4TH DAY OF JANUARY 2024 / 14TH POUSHA, 1945
                CRL.M.C. NO. 3103 OF 2022
   C.C.NO.192/2021 OF THE JUDICIAL MAGISTRATE OF FIRST
                   CLASS -II, HOSDRUG
CRIME NO.138/2019 OF MELPARAMBA POLICE STATION, KASARGOD
PETITIONERS/ACCUSED 1 TO 4:

    1    RAJITH KUMAR K
         AGED 43 YEARS
         SON OF RAGHAVAN, LAYAM NIVAS, KUNHADUKKAM,
         PERUMBALA, KASARAGOD DISTRICT, PIN - 671317.

    2    DEEPESH MELATH,
         AGED 36 YEARS,
         SON OF RAGHAVAN, LAYAM NIVAS, KUNHADUKKAM,
         PERUMBALLA , KASARAGOD DISTRICT, PIN - 671317.

    3    UNNIKRISHNAN K.,
         AGED 40 YEARS,
         SON OF NARAYANAN NAIR KUKKAL HOUSE,
         PALLIPPURAM, PARAVANADUKKAM, CHEMMANADU,
         KASARAGOD DISTRICT, PIN - 671317.

    4    NITHESH ADUKKAM,
         AGED 34 YEARS,
         SON OF NARAYANAN NAIR KUKKAL HOUSE,
         PALLIPPURAM, PARAVANADUKKAM, CHEMMANADU,
         KASARAGOD DISTRICT, PIN - 671318.

         BY ADVS.
         P.V.ANOOP
         M.P.PRIYESHKUMAR
         PHIJO PRADEESH PHILIP
                               2
Crl.M.C.No.3103 of 2022



RESPONDENTS/STATE & COMPLAINANT:

     1      STATE OF KERALA
            REPRESENTED BY PUBLIC PROSECUTOR,HIGH COURT OF
            KERALA, PIN - 682031.

     2      SHAKUNTHALA,
            AGED 36 YEARS,
            WIFE OF KRISHNAN, UPPIRAMKULAM, Y C NAGAR,
            PERUMBALA KASARAGOD DISTRICT, PIN - 671317.

            R1 BY SMT.PUSHPALATHA MK, SR.PUBLIC PROSECUTOR




         THIS CRIMINAL MISC. CASE HAVING COME UP FOR FINAL
HEARING ON 18.12.2023, THE COURT ON 04.01.2024 PASSED THE
FOLLOWING:
                                   3
Crl.M.C.No.3103 of 2022



                    P.G. AJITHKUMAR, J.
   -----------------------------------------------------------
                   Crl.M.C.No.3103 of 2022
   -----------------------------------------------------------
          Dated this the 4th day of January, 2024

                               ORDER

This is a petition filed under Section 482 of the Code of

Criminal Procedure, 1973 (Code) seeking to quash the entire

proceedings in C.C.No.192 of 2021 on the files of the Judicial

Magistrate of the First Class-II, Hosdurg. The offences alleged

against the petitioners are punishable under Sections 406,

418 and 420 read with Section 34 of the Indian Penal Code,

1860 (IPC).

2. In the final report, following allegations were

levelled against the petitioners. They are the Directors of M/s

Chandragiri Chitty Fund Private Ltd., having its office at Nayax

Road, Kasaba Village, Kasaragod. The Chit Fund had

permission to conduct five chits. Under that guise, the

petitioners commenced several other chits unauthorisedly. The

de facto complainant and similar others were deceived and

lured to join such chits. The de facto complainant subscribed a

chit and the amount she prized of Rs.2,48,000/- was

deposited in the said chit funds. On maturity, a cheque was

issued to the de facto for repayment, but it was dishoboured

for want of funds in the account of the said chit funds. It was

thus alleged that the petitioners have committed the said

offences.

3. Heard the learned counsel for the petitioners and

the learned Public Prosecutor. Despite service of notice, the

2nd respondent did not choose to appear before this Court.

4. The essential contentions of the petitioners are that

the transaction was only a debtor-creditor transaction

involving no criminal offence, no mens rea could be inferred

on the part of the petitioners, being the Directors of the

company, the petitioners cannot be personally prosecuted for

a criminal offence committed by the company and when

cheques were issued for the discharge of the debt due to the

de facto complainant, a prosecution for the offence or

cheating of breach of trust would not lie against the

petitioners.

5. The learned counsel for the petitioners would submit

that as held in Sunil Bharti Mittal v. Central Bureau of

Investigation [(2015) 4 SCC 604], no vicarious liability can

be fastened to the petitioners for the non-payment of money by

the company, which is an incorporated body. Further, it is

submitted that the de facto complainant could initiate a

prosecution for an offence under Section 138 of the Negotiable

Instruments Act, 1881 alone and that too, if she is able to

establish that the petitioners were in charge and responsible for

the affairs of the company. In that regard, the learned counsel

for the petitioner placed reliance on the decision of the Apex

Court in Aneeta Hada and others v. M/s Godfather Travels

& Tours Pvt.Ltd. and another [(2012) 5 SCC 661 : 2012

KHC 4244]. The learned counsel for the petitioners further

would submit that in the nature of the allegations in this case, a

trial would only be a futile exercise and therefore, the

proceedings are liable to be quashed. The law laid down by the

Apex Court in Pepsi Foods Ltd. v. Special Judicial

Magistrate [(1998) 5 SCC 749] is placed reliance on.

6. The learned Public Prosecutor, on the other hand,

would submit that from the very allegations that the chit in

question was commenced and conducted without permission,

deposit was received unauthorisedly and there occurred

failure to return the amount that was deposited, the intention

on the part of the petitioners to cheat its customers has been

established. A company can act only through a human agency

and when the acts of the petitioners as Directors, resulted in

the aforementioned consequence, they are answerable to the

charge levelled against them. Accordingly, the learned Public

Prosecutor seeks to dismiss this petition.

7. In Sunil Bharti Mittal (supra) the Apex Court held

that,-

"42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute

specifically provides so.

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision."

In Sunil Bharti Mittal (supra) it was further held,

"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 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."

8. When the petitioners admit that they are the

Directors of the company and the de facto complainant

specifically alleges that the petitioners had assured to return

the money, they cannot have a contention that the

prosecution is altogether illegal or a futile exercise.

9. It is the settled law that the facts constituting an

offence under Section 138 of the N.I.Act and the offences of

cheating and criminal breach of trust are totally distinct. The

Apex Court in Sangeetaben Mahendrabhai Patel v. State

of Gujarat & another [AIR 2012 SC 2844], held that,-

"27. Admittedly, the appellant had been tried earlier for the offences punishable under the provisions of Section 138 N.I. Act and the case is sub judice before the High Court. In the instant case, he is involved under Sections 406/420 read with Section 114 IPC. In the prosecution under Section N.I. Act, the mens rea i.e. fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. However, in the case under IPC involved herein, the issue of mens rea may be relevant. The offence punishable under Section 420 IPC is a serious one as the sentence of 7 years can be imposed. In the case under N.I.Act, there is a legal presumption that the cheque had been issued for discharging the antecedent liability and that presumption can be rebutted only by the person who draws the cheque. Such a requirement is not there in the offences under IPC. In the case under N.I.Act, if a fine is imposed, it is to be adjusted to meet the legally enforceable liability. There cannot be such a requirement in the offences under IPC. The case under N.I.Act can only be initiated by filing a complaint. However, in a case under the IPC such a condition is not necessary."

10. Therefore, the contentions of the petitioners that a

prosecution for offence under Section 138 of the N.I.Act alone

is possible against them is untenable. When the materials

produced by the prosecution make out sufficient grounds for a

prosecution of the petitioners, their contention based on the

proposition of law in Pepsi Foods Ltd. (supra) cannot be

accepted. In the circumstances, I am of the view that the

proceedings in C.C.No.192 of 2021 before the Judicial

Magistrate of the First Class-II, Hosdurg are not liable to be

quashed. This petition is accordingly dismissed.

Sd/-

P.G. AJITHKUMAR, JUDGE dkr