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2025 DIGILAW 350 (AP)

Nammi Appalaraju v. State of AP

2025-02-24

V.SUJATHA

body2025
ORDER : V.SUJATHA, J. This petition, under Section 482 of Cr.P.C ., is filed by the petitioners/accused in C.C.No.81 of 2018 on the file of the learned Judicial First Class Magistrate, Kotturu, Srikakulam District, seeking to quash the proceedings against them in the said case. 2. The aforesaid C.C. has been registered against the petitioners/accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the N.I. Act'), on the basis of a private complaint filed by respondent No.2 herein under Section 200 Cr.P.C read with Section 142 of the N.I. Act. 3. The allegations in the complaint filed by respondent No.2/complainant, in brief, are as under: (i) Accused Nos.1 and 2, who are husband and wife, are known to the complainant as Managing Partner and Partner of Sri N.A.R. Constructions, Visakhapatnam, respectively. On their request, the complainant has lent an amount of Rs.6,00,000/- (Rupees Six Lakhs only) to the accused for business purposes on 20.01.2016 and that the accused have agreed to repay the said amount with interest at the rate of 24% per annum and also executed a promissory note. (ii) It was further alleged that subsequently, when the complainant was in need of money, he requested the accused to repay the amount lent by him. After repeated demands, the accused, representing Sri N.A.R. Constructions as Managing Partner and Partner respectively, have jointly issued a cheque bearing No.275153 dated 11.09.2017 drawn on Oriental Bank of Commerce, Gajuwaka, Visakhapatnam, for an amount of Rs.5.00 lakhs towards part payment of the debt. However, when the complainant presented the said cheque for collection through his banker, the same was dishonoured and returned with an endorsement „funds insufficient?, vide cheque return memo dated 20.11.2017. (iii) It was further alleged that the complainant got issued a legal notice to the accused on 13.12.2017, informing them about dishonor of the cheque and calling upon them to pay the cheque amount within fifteen days from the date of receipt of the notice. However, the said legal notice was returned unserved, as the accused refused to receive the same, and even thereafter, the accused did not pay the cheque amount. Hence, the complainant filed the private complaint against the accused for the offence punishable under Section 138 of N.I. Act, which came to be registered as C.C.No.81 of 2018 by the trial Court. 4. Hence, the complainant filed the private complaint against the accused for the offence punishable under Section 138 of N.I. Act, which came to be registered as C.C.No.81 of 2018 by the trial Court. 4. Learned counsel for the petitioners contends that the petitioners, being signatories of the cheque in question, are being prosecuted, while the firm - Sri N.A.R. Constructions, which is the drawer of the cheque and from whose account the cheque was issued, has not been arraigned as an accused. Learned counsel contends that without arraigning the firm as an accused, the question of fastening vicarious liability on the petitioners does not arise and thus, the proceedings against the petitioners are liable to be quashed on this sole ground. In support of his contentions, learned counsel placed reliance on the judgments of the Hon'ble Apex Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., [ (2012) 5 SCC 661 ] and Himanshu v. B. Shivamurthy , [ (2019) 3 SCC 797 ] 5. On the other hand, learned counsel for respondent No.2/ complainant, reiterating the substance of the written arguments filed by him, contends that though the petitioners have obtained the debt in their individual capacity but not in the official capacity as Managing Partner and Partner of the firm, they have tactfully issued the cheque from the account of the firm only with a view to avoid prosecution. He further contends that the promissory note was executed by petitioner No.1 and the same would show that the debt was obtained in his individual capacity. Learned counsel further contends that these are all questions of fact, which should be decided only after a full-fledged trial and, therefore, the present petition may be dismissed, allowing the trial to proceed. He further contends that the promissory note was executed by petitioner No.1 and the same would show that the debt was obtained in his individual capacity. Learned counsel further contends that these are all questions of fact, which should be decided only after a full-fledged trial and, therefore, the present petition may be dismissed, allowing the trial to proceed. Learned counsel for the 2 nd respondent has relied upon the decisions of the Hon?ble Apex Court in 1) Bir Singh v. Mukesh Kumar , [ (2019) 4 SCC 197 ] , to contend that the onus to rebut the presumption under Section 139 of N.I. Act that the cheque was issued in discharge of a debt or liability, lies on the accused, 2) Rajeshbai Muljibhai Patel and others v. State of Gujarat , [ (2020) 3 SCC 794 ] , to contend that a complaint under Section 138 of N.I. Act cannot be quashed when disputed question of fact are involved, 3) S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan , [ (2023) 10 SCC 685 ] to contend that a Director of a company must furnish incontrovertible material to substantiate that he is not concerned with the issuance of cheque, 4) Rathish Babu Unnikrishnan v. The State (Govt. of NCT of Delhi), [2022 LiveLaw (SC) 413], to contend that a complaint cannot be quashed when factual controversy is yet to be canvassed, and 5) Standard Chartered Bank v. State of Maharashtra , [ (2016) 6 SCC 62 ] , to contend that complaint against officials of a company cannot be quashed merely on the ground of non-furnishing of particulars in the complaint. 6. Having heard the submissions made by the learned counsel on both sides and on perusal of the material available on record, the point that arises for consideration is as follows: “Whether the proceedings ag ainst the petitioners in C.C.No.81 of 2018 on the file of learned Judicial First Class Magistrate, Kotturu, are liable to be quashed by exercising jurisdiction under Section 482 of Cr.P.C .?” 7. The present petition has been filed under Section 482 of Cr.P.C . Section 482 of Cr.P.C . The present petition has been filed under Section 482 of Cr.P.C . Section 482 of Cr.P.C . saves the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. It is an obvious proposition that when a Court has authority to make an order, it must have also power to carry that order into effect. If an order can lawfully be made, it must be carried out; otherwise it would be useless to make it. The authority of the Court exists for the advancement of justice, and if any attempt is made to abuse that authority so as to produce injustice, the Court must have power to prevent that abuse. In the absence of such power the administration of law would fail to serve the purpose for which alone the Court exists, namely to promote justice and to prevent injustice. Section 482 of Cr.P.C confers no new powers but merely safeguards existing powers possessed by the High Court. Such power has to be exercised sparingly in exceptional cases and this power is external in nature to meet the ends of justice. 8. Time and again, the scope of powers of this Court under Section 482 of Cr.P.C . was highlighted by the Hon?ble Apex Court in long line of perspective pronouncements, which are as follows: In “R.P. Kapur v. State of Punjab, [ AIR 1960 SC 866 ] ”, the Hon?ble Apex Court laid down the following principles: (i) Where institution/continuance of criminal proceedings against an accused may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice; (ii) where it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding, e.g. want of sanction; (iii) where the allegations in the First Information Report or the complaint taken at their face value and accepted in their entirety, do not constitute the offence alleged; and (iv) where the allegations constitute an offence alleged but there is either no legal evidence adduced or evidence adduced clearly or manifestly fails to prove the charge. 9. Section 482 of Cr.P.C . 9. Section 482 of Cr.P.C . empowers the High Court to exercise its inherent power to prevent abuse of the process of Court. In proceedings instituted on complaint exercise of the inherent power to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482 of Cr.P.C . It is not, however, necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. If it appears on a consideration of the allegations, in the light of the statement on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexatious. In that event there would be no justification for interference by the High Court as held by the Hon?ble Apex Court in Mrs. Dhanalakshmi v. R.Prasanna Kumar, [ AIR 1990 SC 494 ] 10. In State of Haryana v. Bhajan Lal, [1992 Supp (1) SCC 335], the Hon?ble Apex Court considered in detail the powers of High Court under Section 482 and the power of the High Court to quash criminal proceedings or FIR. The Apex Court summarized the legal position by laying down the following guidelines to be followed by High Courts in exercise of their inherent powers to quash a criminal complaint: (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. Keeping in view the above principles, this Court would like to examine the case on hand. 11. From a perusal of the copy of the cheque in question filed along with the material papers, it is evident that the said cheque was issued from the account of Sri N.A.R. Constructions and the petitioners/ accused signed the cheque as Managing Partner and Partner of the said firm. However, admittedly, the said firm is not arraigned as an accused in the complaint. However, admittedly, the said firm is not arraigned as an accused in the complaint. Though the learned counsel for the complainant contended that the debt was incurred by the petitioners in their individual capacity, the fact remains that the drawer of the cheque is Sri N.A.R. Constructions and the petitioners are signatories of the cheque in the capacity of Managing Partner and Partner of the said firm. 12. In this backdrop, the only issue that needs to be decided in the present case is whether the complaint filed against the petitioners in the absence of arraigning the firm, which is the drawer of the cheque, as an accused, is maintainable or not. 13. It is pertinent to note that in Aneeta Hada v. Godfather Travels & Tours (P) Ltd (1 supra), the Hon?ble Apex Court has dealt with the issue as to whether an authorized signatory of a company would be liable for prosecution under Section 138 of N.I. Act, without the company being arraigned as an accused, and it was held thus: “58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 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 drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself.” 14. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself.” 14. Further, in Himanshu v. B. Shivamurthy (2 supra), reiterating the principles laid down in Aneeta Hada , the Hon?ble Apex Court held that in the absence of the company being arraigned as an accused, prosecution of Director of the company for the offence under Section 138 of N.I. Act was not maintainable. The relevant portions of the said judgment are usefully extracted hereunder: “11. In the present case, the record before the Court indicates that the cheque was drawn by the appellant for Lakshmi Cement and Ceramics Industries Ltd., as its Director. A notice of demand was served only on the appellant. The complaint was lodged only against the appellant without arraigning the company as an accused. 13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. …” 15. Thus, it is the settled position of law that in case of a cheque issued on behalf of a company/firm by its authorized signatory, prosecution cannot proceed against such authorized signatory, unless the company/firm who is the drawer of the cheque is arraigned as an accused in the complaint. 16 . In the case on hand, as already noted above, the drawer of the cheque was the firm, but it is not arraigned as an accused in the complaint filed before the trial Court and only the petitioners, who are signatories of the cheque as Managing Partner and Partner of the firm, have been arrayed as accused. Hence, in the light of the settled position of law, it can be held that the complaint filed against the petitioners herein is not maintainable, since the firm, which is the drawer of the cheque and on whose behalf the petitioners have signed the cheque, is not arraigned as an accused. As such, continuing the proceedings against the petitioners in the absence of the company being arraigned as an accused, would amount to abuse of process of law and, thus, the proceedings against the petitioners are liable to be quashed. As such, continuing the proceedings against the petitioners in the absence of the company being arraigned as an accused, would amount to abuse of process of law and, thus, the proceedings against the petitioners are liable to be quashed. Since the case is decided solely on the aforementioned issue, the judgments relied upon by the learned counsel for respondent No.2/complainant are of no relevance to the present case. 17. Accordingly, this criminal petition is allowed and the proceedings against the petitioners/accused in C.C.No.81 of 2018 on the file of the learned Judicial First Class Magistrate, Kotturu, Srikakulam District, are hereby quashed. As a sequel, interlocutory applications, if any, pending in this petition shall stand closed.