IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JANUARY, 2019 BEFORE THE HON'BLE MR.JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.1168 OF 2017 C/w CRIMINAL PETITION NOS.1169 OF 2017, 1170 OF 2017, 1171 OF 2017, 1172 OF 2017, 1173 OF 2017, 1174 OF 2017, 1175 OF 2017 AND 1176 OF 2017 In Crl.P.No.1168/2017 Between:
1. “My Store Private Limited”, A Company incorporated under the The Companies Act, 1956, Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh-460 003.
Represented by its Group Director, Mr.Rishab Garg.
2. Mr.Saurabh Garg, Director, My Store Private Limited, No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh-460 003.
3. Smt. Manju Garg (Sic. Smt) Director, My Store Private Limited, No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh-460 003. … Petitioners (By Sri.S.G.Bhagavan, Advocate) And:
Nike India Private Limited, A Company incorporated under the Companies Act, 1956, Having its registered office at Ground Floor & First Floor, Olympia Building, No.66/1, C.V.Raman Nagar, Bengaluru-560 093. Represented by its Authorised Representative Prateek Hiremath. … Respondent (By Sri. Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundararaman, Advocate) This Criminal Petition is filed under Section 482 of Cr.P.C praying to quash the proceedings in C.C.No.55195/2016 pending on the file of XIV A.C.M.M. Bengaluru.
In Crl.P.No.1169/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
4. Mr.Rishab Garg, Group Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55196/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1170/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55197/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1171/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
4. Mr.Rishab Garg, Group Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55198/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1172/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
4. Mr.Rishab Garg, Group Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55199/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1173/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55200/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1174/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55201/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1175/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. … Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri. Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55202/2016 pending on the file of XIV ACMM, Bengaluru.
In Crl.P.No.1176/2017 BETWEEN:
1. My Store Private Limited A Company incorporated under the Companies Act, 1956 Having its registered office at No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
Represented by its Group Director- Mr.Rishab Garg.
2. Mr.Saurabh Garg Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
3. Smt.Manju Garg (sic.Smt) Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003.
4. Mr.Rishab Garg, Group Director, My Store Private Limited No.2, Malviya Nagar, Opp. Old Vidhana Sabha, Bhopal, Madhya Pradesh – 460 003. …Petitioners (By Sri.S.G.Bhagawan, Advocate) AND:
Nike India Pvt. Ltd., A Company incorporated under the Companies Act, 1956 Having its registered office at Ground Floor & First Floor Olympia Building No.66/1, C.V.Raman Nagar, Bengaluru – 560 093.
Represented by its authorised representative Prateek Hiremath … Respondent (By Sri.Arun Kumar.K, Senior Advocate a/w Sri.M.V.Sundaraman, Advocate) This petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.55203/2016 pending on the file of XIV ACMM, Bengaluru.
These petitions coming on for Admission, this day, the Court made the following:
ORDER These petitions are filed by the respective accused in criminal cases which has been initiated at the instance of the respondent herein. A complaint under Section 200 of Cr.P.C read with Section 138 of Negotiable Instruments Act, 1881, came to be filed, upon which learned jurisdictional Magistrate took cognizance and directed the Registry to register the respective complaints as private complaint and ordered for listing the matters for recording sworn statements of the complainant. On sworn statement being recorded, process has been issued to the petitioners in the respective complaints and aggrieved by the issuance of process, petitioners- accused have challenged the very initiation of the proceedings before the learned Magistrate by invoking the extraordinary jurisdiction and have sought for quashing ofthe proceedings.
2. I have heard the arguments of Sri.S.G.Bhagavan, learned counsel appearing for the petitioners and Sri.Arun Kumar, learned Senior Counsel appearing on behalf of M.V.Sundaraman, for respondent. Perused the case papers.
3. Respondents in all these petitions have filed private complaints under Section 200 of Cr.P.C read with Sections 138, 141 and 142 of N.I. Act, alleging, for the debt owned by them. Cheques came to be issued and on its presentation, they came to be dishonored and thereby petitioners had committed an offence punishable under Sections 138, 141 and 142 of N.I. Act. Hence, they sought for accused persons being tried and convicted for the said offences.
4. The contentions raised by the learned counsel Sri S.G.Bhagavan is two fold namely i) that learned Magistrate has not conducted any enquiry as contemplated under Section 202 of Cr.P.C.; ii) averments made in the complaint do not disclose that all the accused persons are vicariously liable and it does not satisfy the ingredients prescribed under Section 141 of N.I.Act, by relying upon the following judgments ABHIJIT PAWAR VS. HEMANT MADHUKAR NIMBALKAR AND ANOTHER reported in AIR 2017 SC 299 and in the case of MEHMOOD UI REHMAN Vs.
KHAZIR MOHAMMAD TUNDA reported in AIR 2015 SC 2195. Hence, he has prayed for allowing the petitions and to quash the proceedings.
5. Per contra, Sri.Arun Kumar K, learned Senior Counsel appearing for the respondent would support the order passed by the learned Magistrate and would contend that both the grounds urged by the petitioners are without any substance and has elaborated his submissions by contending that enquiry has been held by the learned Magistrate as contemplated under Section 202 of Cr.P.C and averments made in the complaint would clearly indicate that all the accused persons are vicariously liable and as such, they should also be tried and convicted by the learned Magistrate. Hence, he would support the order passed by the learned Magistrate in issuing processes to the petitioners. Hence, he prays for rejection of all the petitions.
6. Having heard learned counsel appearing for the parties and on perusal of the complaints filed by the respondent before the learned Magistrate, it would clearly emerge therefrom that complainant is common and accused persons being different are the Company and its Directors. Allegations or averments made in the respective complaints is to the effect that the accused persons have committed an offence punishable under Sections 138, 141 and 142 of N.I.Act. Since common question of law has been canvassed, they are all taken up together and disposed of by this common order.
7. There cannot be any dispute with regard to the proposition canvassed by learned counsel for the petitioner Sri.S.G.Bhagavan, that in so far as enquiry contemplated under Section 202 of Cr.P.C being mandatory post 2006 amendment. In fact, said issue is no more res-integra in the light of law laid down by the Hon’ble Apex Court in the case of ABHIJITH PAWAR VS. HEMANT MADHUKAR NIMBALKAR AND ANOTHER reported in AIR 2017 SC 299 wherein, their lordships have held that it is mandatory for the Magistrate to conduct an enquiry or direct investigation before issuing process against the accused persons. Hon’ble Apex Court in the case of VIJAY DHANUKA V/S NAJIMA MUMTAJ reported in (2014) 14 SCC 638 = AIR 2014 SC (Supp) 756, has held that requirements of conducting enquiry or directing investigation before issuing process is therefore, not an empty formality and as to what kind of enquiry is needed to be held has also been explained: It has been held:
12. The use of the expression ‘shall’ prima facie makes the inquiry or the investigation, as the case may be, by the Magistrate mandatory. The word ‘shall’ is ordinarily mandatory but sometimes, taking into account the context or the intention, it can be held to be directory. The use of the word ‘Shall’ in all circumstances is not the legislature; we find that it is aimed to prevent innocent persons from harassment by unscrupulous persons from false complaints. Hence, in our opinion, the use of the expression “shall’ and the background and the purpose for which the amendment has been brought, we have no doubt in our mind that inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate. In view of the decision of this Court in the case of Udai Shankar Awasthi V/s State of Uttar Pradesh, (2013) 2 SCC 435, this point need not detain us nay further as in the said case, this Court has clearly held that the provision aforesaid is mandatory. It is apt to reproduce the following passage from the said judgment:
“40. The Magistrate had issued summons without meeting the mandatory requirement of Section 202, Crpc, though the appellants were outside his territorial jurisdiction. The provisions of Section 202, CrPC were amended vide the Amendment Act, 2005, making it mandatory to postpone the issue of process where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned. The same was found necessary in order to protect innocent persons from being harassed by unscruptulous persons and making it obligatory upon the Magistrate to enquire into the case himself, or to direct investigation to be made by a police officer, or by such other person as he thinks fit for the purpose of finding out whether or not, there was sufficient ground for proceeding against the accused before issuing summons in such cases”.
13. In view of out answer to the aforesaid question, the next question which falls for our determination is whether the learned Magistrate before issuing summons has held the inquiry mandated under Section 202 of the Code. The word “inquiry” has been defined under Section 2(g) of the Code, the same reads as follows:
“2.xxx xxx xxx (g) “inquiry” means every inquiry, other than a trial, conducted under this Code by a Magistrate or Court;
Xxx xxx xxx 14. It is evident from the aforesaid provision, every inquiry other than a trial conducted by the Magistrate or Court is an inquiry. No specific mode or manner of inquiry is provided under Section 202 of the Code. In the inquiry envisaged under Section 202 of the Code, the witnesses are examined whereas under Section 200 of the Code, examination of the complainant only is necessary with the option of examining the witnesses present, if any. This exercise by the Magistrate, for the purpose of deciding whether or not there is sufficient ground for proceeding against the accused, is nothing but an inquiry envisaged under Section 202 of the Code. In the present case, as we have stated earlier, the Magistrate has examined the complainant on solemn affirmation and the two witnesses and only thereafter he had directed for issuance of process.
8. Keeping the aforesaid authoritative principles laid down by the Hon’ble Apex Court in mind, when the facts on hand are examined, it would clearly indicate that on a complaint being presented at the first stage, learned Magistrate, on being satisfied with the contents of the documents produced, would take cognizance of the alleged offence. It is trite law that order taking cognizance of an offence need not be by an elaborate and lengthy order. The satisfaction arrived at by the learned Magistrate has to be discerned from the order taking cognizance. In the instant case, such an exercise has been taken by the learned Magistrate and thereafter respective complaints have been ordered to be listed for recording sworn statement of the complainant. On recording of sworn statement of the complainant, learned Magistrate has scrutinized the material which came to be placed and on being satisfied that there is prima-facie material to proceed against the accused for the offence punishable under Section 138 of N.I Act, has proceeded to issue process to the accused. The exercise which was undertaken by the learned Magistrate would meet the criteria prescribed under Section 202 of Cr.P.C. The very purport of conducting an inquiry as comtemplated under Section 202 of Cr.P.C is for the purpose of deciding as to whether or not there is sufficient ground for proceeding against the accused and it is this inquiry which has been envisaged or contemplated under Section 202 of Cr.P.C. In the instant cases, such inquiry has been held by the learned Magistrate and as such contention raised by Sri.S.G.Bhagavan, learned counsel appearing for petitioners/accused cannot be accepted and it stands rejected.
9. Section 141 of N.I. Act clearly stipulates that where accused is a company, which is said to have committed the alleged offence, then in such an event persons incharge of the company would be deemed to have committed the offences and liable to be punished under Section 138 of N.I. Act.
10. A plain reading of Section 138 of N.I. Act, makes it clear that functionaries of the company would be liable by deeming fiction or in other words, the company-principal offender and the remaining persons are made offenders by virtue of the legal fiction. Thus, “every person who, at the time the offence was committed” used under sub Section (1) of Section 141 of the Act would clearly indicate that criminal liability of such “every person” has to be determined on the date of the offence alleged to have been committed. To put it differently, unless a specific averment is made in the complaint that at the time when the offence was committed, the person accused was in charge of and responsible for the conduct of the business of the company, the requirements of Section 141 of the Act, would not be attracted.
11. In this background, when averments made in the respective complaints in the instant case, is perused it would not detain this Court for too long to repel said contention raised by the learned counsel Sri.S.G.Bhagavan, in as much as, in the respective complaints, at more than one place it has been clearly and specifically averred that apart from 1st accused- Company other accused persons were managing the day to day affairs of said company; they are responsible to the company for running its day to day affairs, business, administration, management and decision making in the accused company. The complainant has also further alleged that apart from the signatories to the cheque, other accused persons who are also managing day to day affairs of the company have committed offence by consent and connivance. At the stage of issuing of process, it would not be in the domain of learned Magistrate to examine as to what was in actual role. It would suffice to issue processes if the averments made in the complaint indicate such accused persons apart from the signatories to the cheque were also responsible for the day to day affairs of the accused company and had knowledge as to the affairs of the company. In other words, if the averments made in the complaint prima facie indicate that all the accused persons had knowledge of issuing the cheque they were also part of decision making process, it would be sufficient for issuance of process and it is always open to accused persons, after evidence is tendered, to establish as to how they had no role in such decision making process or they had no role in day to day affairs of the company. On such evidence being tendered learned Magistrate would evaluate the same and then arrive at a conclusion as to whether other accused persons would fall within definition of Section 141(2) of the Act and then proceed in accordance with law. Such an exercise which ought to be undertaken by the learned Magistrate after receiving the evidence cannot be preempted at the stage of issuance of process on the mere say of the accused persons, that too, when evidence has not been tendered and particularly, when accused persons are being depicted as directors and had role in the day to day affairs of the company, as has been alleged by the complainant in the instant cases. Hence, second contention also cannot be accepted. It stands rejected.
For the aforesaid reasons, these petitions stand dismissed. However, it is made clear that no opinion is expressed with regard to the merits of the case and It is open for the learned Magistrate to examine all the issues including the one raised in these petitions.
SD/- JUDGE ag