IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF FEBRUARY, 2019 BEFORE THE HON'BLE MR.JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.7217/2017 AND CRIMINAL PETITION NO.7218/2017 Between:
M/s.Processors Systems (India) Pvt. Ltd., A Company incorporated under the provisions of the Companies Act, 1956 and having its Registered Office at No.24, Classic Building, Richmond Road, Bengaluru-560 025.
Represented by its Chairman & CEO Mr. V. K. Harindran. ... Petitioner (Common) (By Sri. Yashir Ali, Advocate) And:
In Crl.P.No.7217/2018 Mr. C. A. Nizamuddin Ahamed, S/o Sri.C.S.Ajaz Ahamed, Aged about 33 years, Residing at No.18, Aasra Manor, Chick Bazar Road Cross, Tasker Town, Shivajinagar, Bengaluru-560 051. ... Respondent In Crl.P.No.7218/2018 Smt. Farida Banu, W/o Sri. Ajaz Ahamed, Aged about 51 years, Residing at No.18, Aasra Manor, Chick Bazar Road Cross, Tasker Town, Shivajinagar, Bengaluru-560 051.
... Respondent These Criminal Petitions are filed under Section 482 of Cr.P.C praying to quash the complaint and proceedings in C.C.Nos.13101/2016 and 13100/2016 (Annexure B and C) on the file of learned XII Additional Chief Metropolitan Magistrate, Bengaluru as against the petitioner herein/accused No.4 therein.
These Petitions coming on for Admission, this day, the Court made the following:
ORDER Heard Mr.Yashir Ali, learned counsel appearing for petitioner and perused the records.
2. In both these petitions respondent herein have filed a complaint under Section 200 of Cr.P.C against accused persons alleging they are known to complainant for the past 11 years (prior to the filing of complaint) and had approached the complainants for financial assistance for keeping afloat the accused No.4-Company and believing the assurance given by accused about its financial capacity and also that the accused persons, complainant assured to extend financial assistance as requested by them and a sum of Rs.1,64,00,000/- was paid at regular intervals by way of cheque, RTGS Transfer as well as by payment of cash between 2010 to 2014 jointly in favour of accused Nos.1 to 4 by the complainants and it was not repaid. It is also alleged that on 13.10.2014, first and second accused have confirmed their liability and agreed to repay the loan borrowed by accused Nos.1 to 4 for keeping afloat accused No.4-Company. Accordingly, accused persons gave a letter of confirmation on 03.11.2014 admitting their liability to the tune of Rs.1,64,00,000/- towards principal and Rs.62,37,000/- towards interest. For discharge of said debt payable by accused Nos.1 to 4, accused Nos.1 to 4 together issued two different cheques for a sum of Rs.1,64,00,000/- and Rs.62,32,000/- and when said cheques came to be presented have been returned by the bank with an endorsement ‘Funds Insufficient’ and after issuing statutory notice as required under Section 138 of The Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act’) for non compliance of demand payment made thereunder, complaint in question came to be filed under Section 200 of Cr.P.C against the accused persons with a prayer to punish them for the offences committed under Sections 138 and 141 of NI Act. Accused No.4 which is the company registered under the Companies Act is before this Court for quashing of the said proceedings.
3. It is the contention of Sri.Yashir Ali, learned counsel appearing for the petitioner that cheques in question has been issued by accused No.1, which is also admitted by the complainant and as such vicarious liability cannot be fastened on accused No.4-Company and has prayed for quashing the proceedings. He would also elaborated his submissions that cheques were neither issued by the petitioner nor drawn by the account maintained by the petitioner so as to fasten the liability against the petitioner as per Section 138 of NI Act. Hence, he has sought for quashing of the proceedings against accused No.4 and in support of his submission, he has relied upon the following judgments:
1. P.J.Agro Tech Limited and others V/s Water Base Limited, reported in (2010) 12 SCC 146.
2. Aparna A.Shah V/s Sheth Developers Private Limited and another, reported in (2013) 8 SCC 71.
3. Jugesh Sehgal V/s Shamsher Singh Gogi, reported in (2009) 14 SCC 683.
4. As could be seen from the averments/allegations made in the complaint, the respondent-complainant has specifically contended that the amount of Rs.1,64,00,000/- was paid by cheque, RTGS Transfer as well as by cash between 2010 to 2015 jointly to accused No.1 to 4 by the complainant. Hence, complainants have implicated or arraigned Company as accused No.4.
5. When an offence is said to have been committed by a Company under Section 141 of NI Act vicarious liability is created under Section 141(1) namely liability is fixed on 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 and such persons would be deemed to be guilty of the offence and they would be liable to be proceeded against and punished accordingly. The expression ‘debt or other liability’ which is found in Section 138 of NI Act will have to be seen in the background of explanation to Section 138, where under it has been explained that for the purposes of said Section the expression ‘debt or other liability’ would means legally enforceable debt or other liability. Thus, where the complainant intends to allege that a legally enforceable debt payable by a company is not paid, such company would have to be necessarily made as accused or otherwise for want of such evidence being available on record or necessary party having not been arraigned as accused, would result in automatic acquittal of accused persons, which is not the purport and intent of law. On the other hand, where the company is made an accused including officers or such other officers as defined under Section 141 of NI Act, has arraigned as accused, they would be entitled to establish that neither they had knowledge of the offence committed or the debt was not due by the company.
6. In that view of the matter, this court is of considered view in the light of allegations/averments made in the complaint as already noticed herein above, accused No.4-Company cannot be heard to contend that proceedings cannot be continued against it. Hence, this Court finds it is not a fit case for being entertained by issuing notice to the respondent. No grounds, rejected.
It is made clear that all such defences which are available to the petitioner is kept open to be urged before trial Court and no opinion is expressed in that regard. Trial court shall not be influenced by any observation made in this order while considering the complaint on merits.
In view of dismissal of main petition, IA.No.1/2018 for stay does not survive for consideration. Accordingly, IA.No.1/2018 is dismissed.
Sd/- JUDGE UN