Allowed

Alladi Narasimha Rao, (A1) v. M/s. Core Tree Solutions Private Limited

Telangana HC19 Oct 2012CRLP/6986/2010

Case brief

AI extract

What is this about?

The Court allowed a criminal petition to quash proceedings regarding a cheque dishonour case. It held that petitioners not involved in the firm issuing the cheque cannot be liable under Section 141 of the Negotiable Instruments Act, as the cheque issuance was a specific firm transaction, not a business deal involving 'other association of individuals'.

What did the court decide?

Criminal petition allowed against petitioners A1 to A6 and A8; dismissed against A7 and A9.

Alladi Narasimha Rao, (A1) Vs M/s. Core Tree Solutions… — Cheque Dishonour | Telangana HC (2012)

¶1

THE HON’BLE SRI JUSTICE G. KRISHNA MOHAN REDDY

¶2

CRIMINAL PETITION No.6986 of 2010

¶3

October , 2012

¶4

Between:

¶5

Alladi Narasimha Rao, S/o.Late Sri Alladi Yadagiri And others

¶6

… Petitioners/ A1 to A8

¶7

AND

¶8

M/s.Core Tree Solutions Private Limited, AC Guards, Hyderabad And another

¶9

… Respondents

¶10

THE HON’BLE SRI JUSTICE G. KRISHNA MOHAN REDDY CRIMINAL PETITION No.6986 of 2010

¶11

ORDER:

¶12

This Criminal Petition has been preferred by the petitioners- A1 to A9 under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C) to quash proceedings in C.C. No.224 of 2010 (C.C) on the file of the Court of I Additional Chief Metropolitan Magistrate, Hyderabad registered for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (the Act) for dishonour of cheque bearing No.060794, dated 15.11.2009 for an amount of Rs.6,00,000/- drawn on HDFC Bank Limited, Begumpet, Hyderabad.

¶13

Whereas the petitioners herein are A1 to A9, the second respondent herein is the complainant in the C.C., who for convenience, be referred to as they are arrayed in the C.C.

¶14

On 12.10.2012 this Court disposed of the connected Criminal Petition No.4976 of 2010 (Connected Case) filed by A1 to A8 herein for quashing proceedings in another Calendar Case registered for the same offence with regards to another cheque bearing No.450993, dated 12.11.2009 for an amount of Rs.18,00,000/-. In both the cases the common facts are that A1 to A8 (in both the cases) issued two

¶15

cheques one for Rs.18,00,000/- and another (connected in this case) for Rs.6,00,000/- towards refund of the rentals of their buildings and security given, which were dishonoured when presented before the bankers of A7. On the wider consideration of various aspects the Connected Case was disposed of holding that by virtue of Section 138 of the Act, there should be account in the name of the drawer for the discharge of legally enforceable debt when the corresponding cheque was issued or presented before the bank for collection unless they would fall within the ambit of Sub-section (2) of Section 141 of the Act which provides that if the person committing an offence under Section 138 of the Act is a company, every person who, at the time of the offence was committed, was in charge of, and was responsible for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of that offence whereas as per the Explanation (a) to Section 141(2) “company” means any body corporate and includes a firm or other association of individuals; which ingredients were not satisfied in that context.

¶16

Learned counsel for the complainant has contended that A1 to A8 and the complainant executed a Memorandum of Understanding (MoU) in respect of the payment of security amount and also the rents due by reason of which A1 to A9 would fall within the purview of Section 138 read with 141 of the Act.

¶17

In the order passed in the Connected Case, it is observed as follows.

¶18

In Commissioner of Income Tax, Bombay v Indira Balkrishn a^[1] while dealing with Section 3 of the Income Tax Act, 1922 it was held that the word “Associate” means, according to the Oxford Dictionary, “To join in common purpose”. Therefore, an association of persons must be one in which two or more persons join in a common purpose or common action, and as the words occur in the Section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains”.

¶19

There is no specification in the Explanation (a) to Section 141 of the Act as to whether the words “Other association of individuals” should be in relation to a business enterprise or a business deal. The intendment of these words

¶20

can be gathered by examining in which context those words were employed. In order to have clear picture of this aspect it is also necessary to examine in what context the words “company” and “firm” are employed in the Section. These words associate with business enterprises. Thereby when the words “Association of individuals” are employed in the Explanation as per the legislative intendment those words should be taken to have same connotation with the other words subject to their ambit. This emphasizes that the very same words cannot be taken as meant just an association of individuals formed for any other purpose also in the present context.

¶21

The MoU was executed between all the accused on one hand and the complainant on the other with reference to the payment of rents for the buildings. Can that be termed as “Business deal”? Certainly not, because it is only an understanding with regards to the payment of rents which is different from the word “Business”; therefore, it cannot be held that there was “Other association of individuals” formed for a definite purpose of conducting or achieving something. Thereby it is not proper to bring the acts of A1 to A6 and A8 within the ambit of Section 138 read with Section 141 of the Act, which of course does not preclude the examination of the matter from a different angle if there is a scope to do so. In other words if the ingredients of cheating are satisfied with reference to the material available, the Court below is at liberty to proceed in that line as per law. That Court has to exercise its discretion judicially in accordance with the authority conferred upon it.

¶22

So far as this petition is concerned, there is one difference. Whereas the other cheque was issued by A7 alone, the cheque on hand was issued by A7 on behalf of A9 firm “M/s.Mata Marketing Associates Private Limited (now known as M/s.First League Info Tech Pvt. Ltd.,) represented by its Authorised Signatory Mr.A.Kiran Kumar”. According to A1 to A6 and A8, A9 firm is the exclusive firm of A7 only and in fact that cheque was issued with regards to the supply of UPSs and computer systems purchased from the complainant firm. There is absolutely no plea or basis to come to any conclusion that A9 firm was constituted by A1 to A6 and A8 also and the cheque was issued on behalf of all of them. Therefore it appears that the cheque was issued by A7 as the representative of A9 firm in respect of the amount payable by that A9 firm to the complainant towards the purchase of UPSs and computer systems. Even otherwise for the discussion made earlier A1

¶23

to A6 and A8 cannot be made liable here. No liability can be fastened against A1 to A6 and A8 on any ground. The analogy put forth in the Connected Case is applicable in this case also.

¶24

Subject to the observations made above, ultimately, the criminal petition is allowed so far as A1 to A6 and A8 are concerned, and is dismissed so far as A7 and A9 are concerned. Miscellaneous petitions pending if any shall stand closed.

¶25

__________________________________ (G. KRISHNA MOHAN REDDY, J) October , 2012 YS

¶26

[1] AIR 1960 SC 1173 : (1960) 3 SCR 513

Alladi Narasimha Rao, (A1) v. M/s. Core Tree Solutions Private Limited

Case brief

What is this about?

What did the court decide?

Alladi Narasimha Rao, (A1) v. M/s. Core Tree Solutions Private Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Sri Sairam Granites repby its Proprietrix Inturi Bhramaramba Vs M/s. Shriram City Union Fiance Ltd.

S.Venkata Ramana, Vs The State of a.P.,rep.by its Public Prosecutor

G.Lingam Vs Uppala Srinivas

Madireddi Lakshmi Narayana , Chinna Vs The State of Ap., through Ps. III Town L Ando

Dr. Shankhabrata Bagchi, Vs The State of Andhra Pradesh

Palla Ramachandra Rao Vs The State of Ap.,through Kanigiri Ps.,Kanigiri