Dismissed

M/S Concept Horizon Infra Pvt.Ltd v. Aparna Nagesh Prakash

Karnataka HC1 Dec 2021CRL.P/6538/2020

Case brief

AI extract

What is this about?

High Court Bench dismissed a Criminal Petition invoking Section 482 Cr.P.C. to quash proceedings under Section 138 NI Act. Court held directors of a company are liable under Section 141 when in charge of affairs on the date of commission of offence, rejecting the plea that specific Section 141 prayer was absent in complaint.

What did the court decide?

Petition to quash proceedings under Section 138 NI Act was dismissed along with the interim application for stay.

M/S Concept Horizon Infra Pvt.Ltd Vs Aparna Nagesh Prakash — Cheque Dishonour | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 01^ST DAY OF DECEMBER, 2021

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BEFORE

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THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR

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CRIMINAL PETITION NO.6538 OF 2020

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BETWEEN:

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M/s Concept Horizon Infra Pvt. Ltd., No.8/13, 1^st Floor, Jangpura Extension, New Delhi-110014. Represented by Director/Authorized Signatory Jeevesh Sabharwal.

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Jeevesh Sabharwal, S/o Naresh Sabharwal, Aged about 36 years, Director, M/s Concept Horizon Infra Pvt. Ltd., No.8/13, 1^st Floor, Jangpura Extension, New Delhi-110014.

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Both are also at: No.F-63, Preet Vihar, New Delhi-110092, Having its Corporate Office at No.B-131, Sector-2, Noida, Uttar Pradesh-201301.

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…Petitioners

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(By Sri Ajay J Nandalike, Advocate)

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AND:

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Aparna Nagesh Prakash, Aged about 55 years, W/o Krishnamurthy Nagesh Prakash,

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:: 2 ::

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R/at No.P-12, Green Skies Blue Forest Apartment, Doresanipalya, Krishnamraju Layout, Bilekahalli, Bengaluru-560076, Represented through her PA Holder, Sri Krishnamurthy Nagesh Prakash.

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…Respondent

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(By Sri Akash V.T., Advocate)

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This Criminal Petition is filed under Section 482 of Cr.P.C., praying to quash the entire proceedings in C.C.No.333/2018 against the petitioner herein pending before the Hon’ble XII Additional Small Causes Judge, ACMM, (SCCH-8) Bengaluru.

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This Criminal Petition coming on for admission this day, the Court made the following:

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ORDER

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The petitioners being accused 1 and 2 in C.C. 333/2018 on the file of XII Additional Small Causes Judge and ACMM (SCCH8), Bengaluru, have invoked jurisdiction of this court under section 482 of Cr.P.C for quashing the proceedings.

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Heard Sri Ajay J Nandalike for the

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petitioners and Akash V.T for the respondent.

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The material facts are that the respondent

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has initiated criminal action against the petitioners

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under section 138 of the Negotiable Instruments Act (for short hereinafter referred to as ‘the Act’). The first petitioner is a company and the second petitioner is its director. The contention of the petitioners is that since the complaint has not been filed under section 141 of the Act, vicarious liability cannot be fastened on the directors. In para 3 of the complaint, it is just mentioned that the first accused is the company represented by its directors and that the accused 2 and 3 are actively participating in the day-to-day activities of the company. Learned counsel for the petitioners has placed reliance on the judgment of the Supreme Court in the case of S.M.S.

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Pharmaceuticals Limited Company vs Neeta Bhalla and Another [(2005) 8 SCC 89] to substantiate his contention that in the absence of complaint being filed under sections 141 and 138 of the Act, the directors cannot be held vicariously

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liable and for this reason the entire complaint is not maintainable and it is to be quashed.

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On the other hand, Sri Akash V.T

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contended that the first accused is a company of which accused 2 and 3 are the directors. The cheques in question have been signed by accused 2 and 3 on behalf of the company and in this view question of fastening vicarious liability on them does not arise. The case on hand falls under the scope of Section 141 (2) of the Act and he too refers to S.M.S. Pharmaceuticals (supra) in support of his argument.

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It is undisputed that the cheques in

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question have been signed by accused 2 and 3. Here in this petition, first accused is petitioner No.1 and the second accused is petitioner No.2. Since the first petitioner is a legal entity, it has to be represented by person or persons who are responsible for the day-to-day affairs of the

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company on the day when the offence is committed. That means even though there are several directors of a company, all of them cannot be arrayed as accused, only those who are in charge of the affairs of the company on the day when the offence is committed can be prosecuted. It can also be said that in addition to prosecuting the person who has signed the cheque on behalf of the company, the other directors who have not signed the cheque can be prosecuted if they are in charge of the affairs of the company on the date of commission of the offence. The scope of subsection (2) is that whenever an offence is committed by a company and if proof is provided that the offence has been committed with the consent or connivance of, or the offence is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, they are deemed to be guilty of the offence. The Supreme Court considered a

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reference made by two judge bench. Reference (c) is extracted here : -

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“(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against.”

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The answer to this reference is as below :

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“19. (c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director,

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these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.”

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Therefore in view of the above principle,

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the petitioner No.2 and another accused being authorized signatories to the cheques in question, are liable for prosecution for dishonour of cheques. They get covered under section 141(2) of the Act.

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It is not necessary that in a complaint

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filed under section 200 Cr.P.C, in relation to offence under section 138, very specifically a reference must be there to section 141. This section is just an enabling section for fastening vicarious liability and what is required is to state in the complaint that the directors who are made

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parties in the complaint are responsible for the day-to-day affairs and business of the company on the date of commission of offence. This averment suffices requirement of section 141(1) of the Act. But, here section 141(2) is applicable.

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Therefore from the above discussion I come to the conclusion that this petition is devoid of merits and accordingly it is dismissed. Consequently, I.A.1/2020 filed for stay is also dismissed.

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Sd/JUDGE

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ckl/-

M/S Concept Horizon Infra Pvt.Ltd v. Aparna Nagesh Prakash

Case brief

What is this about?

What did the court decide?

M/S Concept Horizon Infra Pvt.Ltd v. Aparna Nagesh Prakash

Case brief

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