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2015 DIGILAW 1095 (KAR)

Srinath v. D. K. Venkatanareshbabu

2015-09-14

RATHNAKALA

body2015
ORDER : Rathnakala, J. 1. The petitioner is the accused, who is alleged to have committed the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as the Act'). The fact is: "On a private complaint of the respondent herein, alleging that the accused in respect of the loan transaction of Rs. 5,00,000/- issued a cheque and the said cheque when presented to the Bank, bounced with the shara 'Insufficient Funds', and even after service of notice on him, he did not pay the loan amount, the jurisdictional Magistrate took cognizance of the matter and procured the accused. He pleaded not guilty to the accusation and the stage of the case is for cross-examination of P.W. 1." 2. Sri Sachidananda K., learned Counsel for the petitioner submits that the cheque in dispute is signed by C. Srinath as the Director of M/s. Maruthi Bake Equipments Private Limited. But the demand notice was issued to C. Srinath-the petitioner herein and the private complaint is also filed against C. Srinath only. In that view of the matter, Section 141 of the Act comes into play. The proceedings cannot be sustained without arraigning the company as the accused. 3. Sri H. Aravind Reddy, learned Counsel for the respondent submits that the accused has not disputed the signature on the cheque in question. He was served with the demand notice in the address of his company. Even in the complaint, the address of the company is mentioned. The matter is set down for cross-examination of P.W. 1 and at this length of time, quashing of the proceedings is not warranted. 4. As reflected in the cheque in question, it is issued by the accused-petitioner in the capacity of the Director of the Company. The complaint allegation is to the effect that the accused availed loan for the purpose of his factory business. In such condition, initial presumption under Section 118(g) of the Act i.e., the holder of a negotiable Instrument is a holder in due course cannot be automatically invoked. Having received the cheque from the Director of the company and not arraigning the company as one of the accused is a serious lapse that vitiates the entire proceedings. In such condition, initial presumption under Section 118(g) of the Act i.e., the holder of a negotiable Instrument is a holder in due course cannot be automatically invoked. Having received the cheque from the Director of the company and not arraigning the company as one of the accused is a serious lapse that vitiates the entire proceedings. The Apex Court in the matter of Aneeta Hada v Godfather Travels and Tours Private Limited with Anil Hada v Godfather Travels and Tours Private Limited with Avnish Bajaj v State and Ebay India Private Limited v State and Another 2012(4) Kar. L.J. 296 (SC): AIR 2012 SC 2795 : (2012)3 SCC (Cri.) 241 : 2012 Cri. L.J. 2525 (SC): (2012)5 SCC 661 and connected cases, has held at para 59, which reads thus: "59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in State of Madras v C.V. Parekh and Another, AIR 1971 SC 447 , which is a three Judges Bench decision. Thus, the view expressed in Sheoratan Agarwal and Another v State of Madhya Pradesh, AIR 1984 SC 1824 does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada v Indian Acrylic Limited, AIR 2000 SC 145 is overruled with the qualifier as stated in para 37. The decision in Uttar Pradesh Pollution Control Board v M/s. Modi Distillery and Others, AIR 1988 SC 1128 has to be treated to be restricted to its own facts as has been explained by us hereinabove." 5. In the light of the above said reasons, the complainant cannot maintain the prosecution against the accused. The learned Magistrate while taking cognizance has not adverted to this legal proposition and the taking cognizance is vitiated. Accordingly, the petition is allowed. The proceedings in C.C. No. 31838 of 2014 in PCR No. 23 of 2012, pending on the file of the XXII Additional Chief Metropolitan Magistrate, Bengaluru is quashed. The learned Magistrate while taking cognizance has not adverted to this legal proposition and the taking cognizance is vitiated. Accordingly, the petition is allowed. The proceedings in C.C. No. 31838 of 2014 in PCR No. 23 of 2012, pending on the file of the XXII Additional Chief Metropolitan Magistrate, Bengaluru is quashed. However, liberty is reserved to the complainant for redressal of his grievance under civil forum, if so advised or need arises. In view of the disposal of the main petition, I.A. No. 2 of 2015 is disposed of as it does not survive for consideration. Disposed off