Allowed

Mr Sijin Joseph v. M/S Raitha Seva Gramodyoga

Karnataka HC2 Mar 2026CRL.P/1732/2019

Case brief

AI extract

What is this about?

Company officers prosecuted for cheque dishonour where the company was neither named as accused nor noticed. The High Court held the officers, being merely vicariously liable servants of the company, could not be prosecuted without their principal being arraigned, and quashed the proceedings.

What did the court decide?

Further proceedings against petitioners in C.C.No.172/2016 under Section 138 NI Act quashed.

Mr Sijin Joseph Vs M/S Raitha Seva Gramodyoga — Cheque Dishonour | Karnataka HC (2026)

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NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 2^ND DAY OF MARCH, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE R. NATARAJ CRIMINAL PETITION NO.1732 OF 2019

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BETWEEN:

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MR. SIJIN JOSEPH S/O. JOSEPH M. M. AGED 41 YEARS EX. THE EXECUTIVE OFFICER KASARAGOD GRAMINA SUPER MARKET LTD. R/O. VRINDAVAN COMPLEX CHERKALA POST CHINGALA KASARAGOD DISTRICT-671 541

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Digitally signed by MARKONAHALLI RAMU PRIYA Location: HIGH COURT OF KARNATAKA

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PANDURANGA BHAT S/O. ACHUTHA BHAT AGED 51 YEARS EX. MANAGING DIRECTOR KASARAGOD GRAMINA SUPER MARKET LTD. R/O. KUDINGILA HOUSE YETHADKA POST KASARAGOD DISTRICT-671 551

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RAJESH KRISHNA S/O. KRISHNA ALVA AGED 44 YEARS EX. CHAIRMAN KASARAGOD GRAMINA SUPER MARKET LTD. R/O. B.P 10/596 MOOLADKA HOUSE, PERDALA POST KASARAGOD DISTRICT-671 551

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K. G. AJITHKUMAR S/O. K. G. GANANADHAN

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2 - NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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AGED 43 YEARS EX. DIRECTOR KASARAGOD GRAMINA SUPER MARKET LTD. R/O. SHANKARAMPADY SHAJI MANDIR, CHENGALA(VIA) KASARAGOD DISTRICT-671 541

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…PETITIONERS

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(BY SRI S. B. MANJUNATH, ADVOCATE)

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AND:

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M/S. RAITHA SEVA GRAMODYOGA KANYANA HEBRI-576 112 KARKALA TALUK REPRESENTED BY ITS MANAGING PARTNER MR. LAXMINARAYANA S/O. S. NARASIMHA NAYAK R/O. NEAR T. B. HEBRI-576 112

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…RESPONDENT

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(BY SRI K. CHANDRANATHA ARIGA, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C PRAYING TO QUASH THE ENTIRE FURTHER PROCEEDINGS IN C.C.NO.172/2016 REGISTERED BY THE RESPONDENT PENDING ON THE FILE OF II ADDITIONAL CIVIL JUDGE AND J.M.F.C., KARKALA AGAINST THE PETITIONERS FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT.

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THIS CRIMINAL PETITION IS COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE R. NATARAJ

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3 - NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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ORAL ORDER

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The accused in C.C.No.172/2016 on the file of the II Additional Civil Judge and JMFC, Karkala (henceforth referred to as 'Trial Court') are before this Court challenging the prosecution launched against them.

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(i) The respondent lodged a private complaint alleging commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (henceforth referred to as 'N.I. Act'). The respondent alleged that the petitioners are the Executive Officer, Director, Managing Director and Chairman of Kasaragod Gramina Super Market Ltd., which had drawn three cheques for a sum of Rs.1,00,00/each. The cheques were dishonoured on presentation. A notice under Section 138 of the N.I. Act was issued by the respondent to the petitioners herein, who replied denying that they were liable, following which, a private complaint was lodged against the petitioners for an offence punishable under Section 138 of the N.I. Act. The Trial Court took cognizance and issued process to the petitioners.

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NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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(ii) Being aggrieved by the same, the petitioners are before this Court in this petition.

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The learned counsel for the petitioners submitted that the private complaint lodged by the respondent was not maintainable against the Director, Managing Director, Chairman and Executive Officer unless the company itself was arraigned as accused. He contends that a demand notice under Section 138 of the N.I. Act was not issued to the company but was issued to the petitioners herein. In the private complaint, the company was not arraigned as accused. He therefore, contends that the Trial Court could not have taken cognizance and issued process. He also contends that Kasaragod Gramina Super Market Ltd. is a public limited company and therefore, the liability alleged is that of the company and not of the petitioners. He further claims that the petitioner No.1 is neither a Director of Kasaragod Gramina Super Market Ltd., and is not signatory to cheques allegedly drawn in favour of the respondent. He thus, contends that unless there was sufficient pleading to justify how the petitioners are liable for the day-today affairs of the company, the Trial Court could not have

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5 - NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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taken cognizance and issued process. He therefore, prayed that the order taking cognizance and issuing process be quashed.

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Per contra, learned counsel for the respondent submitted that the petitioners are either Directors or Managing Director of the company and therefore, they can be prosecuted for an offence punishable under Section 138 of the N.I. Act. He contends that the issuance of the cheques by Kasaragod Gramina Super Market Ltd., is not in dispute and hence, the petitioners being the servants of the company are liable to be prosecuted.

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I have considered the submissions of the learned counsel for the petitioners as well as the learned counsel for the respondent.

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An offence under Section 138 of the N.I. Act is said to be committed when a cheque drawn from an account maintained by a person towards discharge of any debt or liability is returned unpaid on the ground that the amounts standing to his credit is insufficient or it exceeds arrangements. However, he can escape prosecution, if he pays the amount mentioned in the cheque within fifteen days from the date of

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6 - NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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receipt of a notice of demand by the payee or holder in due course. Therefore, whenever an offence is committed, it is "the person who issues a cheque" who is responsible and liable to be prosecuted. A person includes both juristic and natural person.

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In the case on hand, the respondent described the petitioners herein as the Directors/Managing Director and Executive Officer of a company, which issued the cheques in question. A perusal of the statutory notice enclosed along with the private complaint shows that the notice of demand was not issued to the company but was issued to the petitioners and in the private complaint, the company was not arraigned as an accused. Therefore, in the event of a conviction, the petitioners who are merely servants of the company and who are vicariously liable in view of their relation with the company, cannot be sentenced, as their principal namely, the company is not arraigned as an accused. In that view of the matter, the prosecution of the petitioners by the respondent for an offence punishable under Section 138 of the N.I. Act, is liable to be halted.

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NC: 2026:KHC:12762 CRL.P No. 1732 of 2019

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HC-KAR

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Hence, this petition is allowed . The impugned prosecution of the petitioners in C.C.No.172/2016 on the file of the II Additional Civil Judge and JMFC, Karkala, for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, is quashed.

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Sd/-

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(R. NATARAJ)

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JUDGE

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PMR

Mr Sijin Joseph v. M/S Raitha Seva Gramodyoga

Case brief

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Mr Sijin Joseph v. M/S Raitha Seva Gramodyoga

Case brief

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What did the court decide?

What the court decided

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