Shobha N. Shetty vs Saraswathi and Others

A.N. Venugopal Gowda, J.—Respondent No. 1 is the complainant and the petitioner is accused No. 2, in C.C. No. 18918/2014, pending on the file of the XIII Additional Chief Metropolitan Magistrate, Bengaluru City. Petitioner and her husband are being prosecuted for an offence under Section 138 of Negotiable Instruments Act. The petitioner being not the drawer of the cheque in question, filed this petition for quashing of the proceedings of the said case i.e., insofar as she is concerned.

Learned advocate for the petitioner by placing reliance on the decision in Mrs. Aparna A. Shah Vs. Sheth Developers Pvt. Ltd. and Another, (2013) 5 ABR 119 : (2013) 10 AD 505 : AIR 2013 SC 3210 : (2013) 3 BC 491 : (2014) 118 CLA 366 : (2013) 3 CompLJ 449 : (2013) CriLJ 3743 : (2013) 3 JCC 169 : (2013) 9 JT 258 : (2013) 3 RCR(Civil) 680 : (2013) 3 RCR(Criminal) 686 : (2013) 8 SCALE 140 : (2013) 8 SCC 71 , contended that the launching of prosecution against the petitioner and she being made to face the trial being abuse of process of law, this petition is liable to be allowed and the pending proceedings, insofar as the petitioner is concerned, is liable to be quashed.

Learned advocate for respondent No. 1/complainant, on the other hand, contended that in view of the Explanation to Clause (a) of sub-Section (2) of Section 141 of the Act, the petitioner falls within the meaning of ''other association of individuals'' and as such was prosecuted. He submitted that the case against the petitioner has been pleaded in para ''3'' of the complaint filed before the learned Magistrate. He submitted that in the said factual scenario, the petitioner should face the trial.

In the case on hand, the learned Magistrate is only concerned with the criminal liability on account of dishonour of a cheque. In Mrs. Aparna A. Shah (supra), the Court was dealing with an identical situation. Therein, having considered the provisions under Sections 138 and 141 of the Act, as well as the ingredients necessary to constitute an offence under Section 138 of the Act, as has been pointed out in the case of Jugesh Sehgal Vs. Shamsher Singh Gogi, (2009) CLT 1451 : (2009) 9 JT 292 : (2009) 9 SCALE 455 : (2009) 14 SCC 683 : (2009) 10 SCR 857 and also the decision in S.K. Alagh Vs. State of U.P. and Others, AIR 2008 SC 1731 : (2008) 4 BC 622 : (2008) 142 CompCas 228 : (2008) CriLJ 2256 : (2008) 2 JT 540 : (2008) 2 SCALE 523 : (2008) 5 SCC 662 : (2008) AIRSCW 2389 : (2008) 2 Supreme 152 , it has been held as follows:

"13. In the case on hand, we are concerned with criminal liability on account of dishonour of a cheque. It primarily falls on the drawer, if it is a Company, then Drawer Company and is extended to the officers of the company. The normal rule in the cases involving criminal liability is against vicarious liability. To put it clear, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. For example, Section 141 of the N.I. Act is an instance of specific provision that in case an offence under Section 138 is committed by a company, the criminal liability for dishonour of a cheque will extend to the officers of the company. As a matter of fact, Section 141 contains conditions which have to be satisfied before the liability can be extended. Inasmuch as the provision creates a criminal liability, the conditions have to be strictly complied with. In other words, the persons who had nothing to do with the matter, need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, the officers of the company, who are responsible for the acts done in the name of the company, are sought to be made personally liable for the acts which result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub-section enables certain persons to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. The liability under Section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability."

In para 9 of the complaint, pending before the learned Magistrate with regard to the cause of action for the complainant to prosecute the case, it has been stated as under:

"9. The cause of action for this Complaint arose when the Accused No. 1 received a sum of Rs. 20,00,000/- (Rupees Twenty Lakhs Only) on 15.04.2013; in the second week of November, 2013, when the Accused No. 1 issued a Cheque in favor of the Complainant; on 12.12.2013 when the said Cheque was dishonored with the endorsement "funds insufficient"; on 25.12.2013 when the Complainant got issued Legal Notice calling upon the Accused No. 1 and 2 to pay the amount due and payable and subsequently when the amount became payable but not paid, thereby committed offences complained of, at Bangalore City, within the jurisdiction of this Hon''ble Court. The Complaint is in time."

The decision, noticed supra, squarely applies.

There being no dispute that the petitioner is not the drawer of the cheque and that the cheque in question has been issued by accused No. 1 i.e., Mr. Naveen Chandra Shetty, the inclusion of the petitioner as an accused in the case being contrary to the ratio of law in the decision noticed supra, amounts to abuse of process of Court and hence, interference is called for.

In the result, petition is allowed and the case in C.C. No. 18918/2014, pending on the file of the XIII Additional Chief Metropolitan Magistrate, Bengaluru City i.e., insofar as the petitioner is concerned is quashed. However, this order would not stand in the way of the learned Magistrate proceeding against accused No. 1 - Naveen Chandra Shetty i.e., husband of the petitioner. It is open to the complainant to examine the petitioner, by taking steps, if found necessary.