IN THE HIGH COURT OF JUDICATURE ANDHRA PRADESH AT HYDERABAD TUESDAY THE TWENTYNINETH DAY OF APRIL TWO THOUSAND AND FOURTEEEN PRESENT HONOURABLE SRI JUSTICE S. RAVI KUMAR
CRIMINAL PETITION NO. 13995 OF 2013
Between :
M/s. Ghanshyam Das Nagpai HUF represented by its Kartha Sri Ghanshyam Das Nagpai Having its office Near SDM Court, Ward No.20, Anoopgarh, Rajasthan & Ors. … Petitioners/A-1 to A-5 V/s.
M/s. Karvy Comtrade Limited, A Ltd.Company, registered under the Companies Act, 1956 having its regd. Office at Karvy House, 46, Avenue-4, Street No.1, Banjara Hills, Hyderabad Represented by its authorized signatory Sri M.Uma Maheswar Reddy & Anr. .. Respondents/Complainant Counsel for Petitioners : Sri B.Chinnapa Reddy Counsel for Respondents : Public Prosecutor The court made the following : [order follows] HONOURABLE SRI JUSTICE S. RAVI KUMAR
CRIMINAL PETITION NO. 13995 OF 2013
O R D E R :
This Criminal Petition is filed under section 482 Cr.P.C., to quash proceedings in CC.No. 975 of 2012 on the file of XIX Additional Chief Metropolitan Magistrate, Hyderabad.
2. Brief facts of the case are as follows:
First respondent herein filed a complaint before XIX Additional Chief Metropolitan Magistrate, Hyderabad alleging that first petitioner herein as HUF opened account on 08/03/2011 with the first respondent and during business transaction issued cheque bearing No.566004, dated 26/12/2011 for Rs.29,14,917/- drawn on Oriental Bank of Commerce in favour of the complainant i.e., first respondent herein and the second petitioner herein as kartha of HUF signed the cheque. When the cheque was presented for collection it was returned with an endorsement “insufficient funds”. Thereafter, legal notice was issued demanding payment of the cheque amount and as the petitioners have not complied with the demand under the legal notice, complaint is filed to punish them for offence under section 138 of Negotiable Instruments Act.
3. Heard both sides.
4. Advocate for petitioners submitted that there are no allegations against petitioners 3 to 5 and they are only to harass them impleaded as they belong to same family. He further submitted that without specific allegation the court cannot proceed with the offence against A-3 to A-5 i.e., petitioners 3 to 5. He further submitted that these petitioners have not signed the cheque and only A-2 signed the cheque and as per section 141 of the Negotiable Instruments Act, persons in-charge of the transaction alone are responsible for the acts done on behalf of the company. He further submitted that legal notice is not as per procedure contemplated under section 138 of Negotiable Instruments Act and it is only a notice claiming money under civil liability.
4. On the other hand, learned counsel for the respondent submitted that A-3 to A-5 are not arrayed in their individual capacity and there is specific plea in the complaint i.e., members of HUF they have agreed for the terms and conditions at the time of opening of the account, which is opened by the second accused on behalf of them. He further submitted that the bank account is in the name of HFU and A-2 as kartha of HUF issued the cheque and therefore petitioners 3 to 5 being members are also liable. He further submitted that in the grounds there is no where urged that petitioners 3 to 5 are not responsible for the affairs of HUF and a notice was issued after dishonour of the cheque under section 138 (b) of the Negotiable Instruments Act and that there was no reply for the said notice.
5. Now the point for determination is whether there are any grounds to quash the proceedings in CC.No. 975 of 2012 on the file of XIX Additional Chief Metropolitan Magistrate, Hyderabad ?
6. P O I N T : Admittedly, second petitioner on behalf of HUF entered into an agreement with the first respondent and executed necessary documents and he is given client code No.50552. It is also an admitted fact that there are business transactions between the first respondent and the HUF and in connection with that business transaction the cheque in question was issued. Now the main objection of the petitioners is that there is no allegation against petitioners 3 to 5, therefore taking cognizance against them is illegal and unwarranted. Learned counsel for the petitioner has drawn my attention to the provisions of section 141 of the Negotiable Instruments
Act, 1881.
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) Nothing withstanding 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 shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation :- For the purpose 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.
7. Provision under section 141 of Negotiable Instruments Act is with reference to offence by companies and it is not disputed that it equally applies to HUF. According to Sub-clause (2) of Section 141 of Negotiable Instruments Act, if the offence is committed by company and if 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 officials of the company are liable to be proceeded with. When the allegation is that A-2 on behalf of petitioners 3 to 5 being members of HUF has signed the cheque, at this stage, it cannot be decided whether the cheque was issued in individual capacity or on behalf of all the members of HUF and on the basis of evidence only the court has to arrive whether petitioners have knowledge or not about issue of cheque and also as to the correctness of the allegations that were mentioned in the complaint. Therefore, the objection of counsel for petitioners that there is no allegation at all against petitioners 3 to 5 herein cannot be accepted particularly when agreement and other necessary documents are signed by the second accused on behalf of all other members. Further before filing the complaint as per the requirement of the provisions a notice was issued to petitioners 3 to 5 also. As seen from the record they have received notice and no reply is given denying their involvement or liability for the acts done by the second accused on their behalf. So considering the material on record and also submissions of both sides, I am of the view that there are no grounds to quash the proceedings and this criminal petition is devoid of merits.
8. For the above reasons, this Criminal Petition is dismissed.
JUSTICE S. RAVI KUMAR .
29/04/2014 I s L.
HONOURABLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION NO. 13995 OF 2013 Circulation No.292 Date:29/04/2014 Court Master: I s L Computer No.43