- 1 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF JULY, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR CRIMINAL PETITION NO. 3387 OF 2025 (482(Cr.PC) / 528(BNSS) C/W CRIMINAL PETITION NO. 3359 OF 2025 (482(Cr.PC) / 528(BNSS) IN CRL.P No. 3387/2025 BETWEEN: MR PESI SAVAK PATEL S/O SAVAK PESTONJI PATEL, AGED ABOUT 72 YEARS, R/A LYNDEWODE HOUSE, BOMANJI PETIT ROAD, CUMBALA HILL, MUMBAI, MAHARASHTRA – 400 026 …PETITIONER (BY SRI. MAHESH Y. L., ADVOCATE) AND: M/S KURLON ENTERPRISES LTD., HAVING ITS REGISTERED OFFICE AT NO. 1002/1006, THE AVENUE, 10TH FLOOR, INTERNATIONAL AIRPORT ROAD, OPP. TO THE LEELA, ANDHERI (EAST), MUMBAI – 400 059. …RESPONDENT (BY SRI. SUDHAKARA M. R., ADVOCATE) THIS CRIMINAL PETITION IS FILED U/S 482 CR.PC (FILED U/S 528 BNSS) PRAYING TO QUASH THE PRIVATE COMPLAINT DATED 27.11.2019 FILED BY THE RESPONDENT, AGAINST THE PETITIONER / ACCUSED NO.5 IN PCR NO.56545/2019 BEFORE THE HON’BLE COURT OF XXXIVADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BENGALURU FOR THE OFFENCE PUNISHABLE Digitally signed by CHANDANA B M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT VIDE ANNEXURE-A ANE ETC. IN CRL.P NO. 3359/2025 BETWEEN: MR. PESI SAVAK PATEL, S/O SAVAK PESTONJI PATEL, AGED ABOUT 72 YEARS, R/A LYNDEWODE HOUSE, BOMANJI PETIT ROAD, CUMBALA HILL, MUMBAI, MAHARASHTRA – 400 026 ...PETITIONER (BY SRI. MAHESH Y. L., ADVOCATE) AND: M/S KURLON ENTERPRISES LTD., HAVING ITS REGISTERED OFFICE AT NO. 1002/1006, THE AVENUE, 10TH FLOOR, INTERNATIONAL AIRPORT ROAD, OPP. TO THE LEELA, ANDHERI (EAST), MUMBAI – 400 059. ...RESPONDENT (BY SRI. SUDHAKARA M. R., ADVOCATE) THIS CRIMINAL PETITION IS FILED U/S 482 CR.PC (FILED U/S 528 BNSS) PRAYING TO QUASH THE PRIVATE COMPLAINT DATED 28.11.2019 FILED BY THE RESPONDENT, AGAINST THE PETITIONER / ACCUSED NO.5 IN PCR NO.56597/2019 BEFORE THE HON’BLE COURT OF XXXIV ADDITIONAL CHIEF JUDICIAL MAGISTRATE BENGALURU FOR THE OFFENCE P/U/S 138 OF NEGOTIABLE INSTRUMENTS ACT 1881 VIDE ANNEXURE-A ANE ETC. - 3 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In Crl.P.No.3387/2025, petitioner seeks for the following relief: “ (i) Quash the Private Complaint dated: 27.11.2019 filed by the Respondent , against the Petitioner/Accused No.5 in PCR No.56545/2019 before the Hon’ble Court of XXXIV Addl. Chief Metropolitan Magistrate, Bengaluru for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 vide Annexure-A; (ii) Quash the Order for cognizance and issuance of summons, dated: 19/06/2020 taken against the Petitioner/Accused No.5 by the Hon’ble Court of XXXIV Addl. Chief Metropolitan Magistrate, Bengaluru in PCR No.56545/2019, for the offences punishable under Section 138 of the Negotiable Instruments Act, 1881 vide Annexure- c; (iii) Quash the entire proceedings in C.C.No.52796/2020 pending before the Hon’ble V Addl .Judge Court of Small Causes, Mayohall Unit, Bengaluru (SCCH-20) (arising out of PCR No.56545/2019) for the offences punishable under Section 138 of the Negotiable Instruments Act, 1881. - 4 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 (iv) Pass any other Orders as this Hon’ble court may deem fit in the interest of justice and equity.” In Crl.P.No.3359/2025, petitioner seeks for the following relief: “ (i) Quash the Private Complaint dated: 28.11.2019 filed by the Respondent , against the Petitioner/Accused No.5 in PCR No.56597/2019 before the Hon’ble Court of XXXIV Addl. Chief Judicial Magistrate, Bengaluru for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 vide Annexure-A; (ii) Quash the Order for cognizance and issuance of summons, dated: 21/11/2019 taken against the Petitioner/Accused No.5 by the Hon’ble Court of XXXIV Addl. Chief Judicial Magistrate, Bengaluru in PCR No.56597/2019, for the offences punishable under Section 138 of the Negotiable Instruments Act, 1881 vide Annexure-c; (iii) Quash the entire proceedings in C.C.No.58508/2019 pending before the Hon’ble XV ASCJ & XXIII ACJM, Mayohall Unit, Bengaluru (SCCH-19) (arising out of PCR No.56597/2019) for the offences punishable under Section 138 of the Negotiable Instruments Act, 1881. (iv) Pass any other Orders as this Hon’ble court may deem fit in the interest of justice and equity.” 2. The petitioner in both the petitions is arraigned as accused No.5 in the impugned proceedings initiated by the same - 5 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 respondent – complainant against the company – M/s.Cox and Kings Ltd., and accused Nos. 2 to 4 and 6 to 9 for an offence punishable under Section 138 of the N.I.Act. 3. Since common questions of law and fact arise for consideration in both the petitions, they are taken up together for consideration and disposed of by this common order. 4. A perusal of the material on record will indicate that the respondent – complainant initiated the aforesaid proceedings against accused No.1 – company, its Directors accused Nos. 2 to 6 and its employees who are arraigned as accused Nos. 7 to 9 for an offence punishable under Section 138 of N.I.Act in relation to cheques said to have been signed by accused No.9 and issued on behalf of the company by all the accused persons including petitioner, who is arraigned as accused No.5 in the impugned proceedings and who is before this Court by way of the present petition seeking quashing of the impugned proceedings. 5. Heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record. - 6 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 6. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that the petitioner was neither in-charge or managing the affairs of the accused No.1- company nor was he responsible to the company for conduct of the business of the company. It was submitted that the petitioner was also not a signatory to the subject cheque involved in the impugned proceedings and that the same deserve to be quashed. In support of his submissions, he has produced documents viz., Form DIR-12 issued by the RoC, annual report, statutory report and minutes of meeting pertaining to the company in order to contend that the petitioner was an independent Director and could not have been arraigned as an accused person in the impugned proceedings which deserve to be quashed qua the petitioner. 7. Per contra, learned counsel for the respondent invited my attention to the impugned complaints, in particular paragraphs-4 and 17 in order to contend that in view of the specific and categorical allegations made against the petitioner as well as other accused persons and in the light of the provisions contained in Section 141(1) and (2) of the N.I.Act, the question of quashing the - 7 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 impugned proceedings qua the petitioner would not arise in the facts and circumstances of the instant case. He would submit that various documents produced by the petitioner in the present petition are seriously disputed and denied by the respondent and the genuineness, veracity and validity of the same would necessarily have to be decided by the trial court after providing an opportunity to the respondent in this regard and as such, there is no merit in the petition and that the same is liable to be dismissed. In support of his submissions, learned counsel places reliance upon the judgment of the Apex Court in the case of S.V.Muzumdar and others vs. Gujarat State Fertilizer Co., Ltd., - (2005) 4 SCC 173. 8. I have given my anxious consideration to the rival submissions and perused the material on record. 9. Before adverting to the rival contentions, it would be apposite to refer to the impugned complaint, which reads as under:- “MEMORANDUM OF PRIVATE COMPLAINT UNDER SECTION 200 OF THE CRIMINAL PROCEDURE CODE - 8 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 READ WITH SECTION 138 AND 141 OF THE NEGOTIABLE INSTRUMENTS ACT, 1981 The Complainant respectfully submits as follows: 1. The address of the Complainant for the purpose of Court notice and process is as shown in the cause title and also that of its counsel M/s. GKM Associates, No. 205, II Floor, Ahuja Chambers, No.1, Kumara Krupa Road, Bangalore-560001. 2. The address of the Accused for the similar purpose is as shown in the cause title. 3. The Complainant is the Company registered under the provisions of Companies Act 1956 and is engaged in the business of manufacturing of rubberized coir, latex, foam and polyurethane foam, spring mattress along with home comfort solutions like pillows, cushions, bed linens as well as ergonomically designed furniture, Furnishings, etc., and is the India's largest selling mattress brand. Copy of the Certificate of Incorporation of the Complainant Company is Produced herewith. The Complainant is represented by its authorized signatory Shri. Varun Ramanathan, Assistant Manager, Kurlon Enterprise Limited. The board of complainant company, by its Board Resolution dated 1 October 2019 has authorized Shri Varun Ramanathan to represent the complainant company. Certified Copy of the Board Resolution dated 1st October 2019 is Produced herewith. - 9 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 4. The Accused No.1 is the company registered under the provision Companies Act 1956 and is a company specializing in premium travel related services like holidays, ticketing etc. The Accused No. 2 to 6 are the Directors of the Company, Accused No. 7 is the Chief Financial Officer of the Accused No.1 Company, the Accused No.8 is the General Manager, Finance, of the Accused No.1 and also one of the authorized signatory of the Cheque Accused No. 9 is the employee of the Accused No.1 Company and also one of the authorized signatories of the Cheque. The Accused No.2 to 9 are actively involved in the management as well as day to day affairs of the company. 5. The Complainant submits that the 1st Accused had approached the Complainant during the month of March 2019 and had requested that it is in requirement of financial assistance. Accordingly the Complainant had lent a sum of Rs.24,73,61,000/- (Rupees Twenty Four Crores Seventy Three Lakhs Sixty One Thousand Only) on 20.03.2019 and the 1st Accused had agreed to repay a sum of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only) which is inclusive of interest, to the Complainant on 03.05.2019. Copy of the Bank Statement of the complainant company for the period 19.03.2019 to 21.03.2019 is Produced herewith. The 15 Accused has issued commercial papers for a sum of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only) with maturity date of 03.05.2019. The Complainant submits that the said sum of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only) - 10 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 was paid by the Accused on 03.05.2019 received by it on maturity date. Copy of the Bank Statement of the complainant company for the period 03.05.2019 to 06.05.2019 is Produced herewith. 6. The Directors of the 1st Accused Company, once again requested for financial assistance and the Complainant totally paid a sum of Rs.24,77,29,750/- (Rupees Twenty Four Crores Seventy Seven Lakhs Twenty Nine Thousand and Seven Hundred Fifty Only) to the Accused from 07.05.2019 to 13.05.2019. The amount was lent for a period of 45 days. Copy of the Bank Statement for the period 03.05.2019 to 13.05.2019 for having paid the said sum is Produced herewith. The accused has paid a sum of Rs.25,00,00,000/- including interest to the complainant on due date. Copy of the Bank statement for the period 01.06.2019 to 30.06.2019 for having received the aforesaid amount by the Complainant is Produced herewith. 7. The Accused has once again requested for a short term loan of Rs.20,00,00,000/- (Rupees Twenty Crores Only). Copy of the request letter dated 12.06.2019 issued by the 1st Accused Company is Produced herewith. The Complainant paid a sum of Rs.9,89,20,700/- (Rupees Nine Crores Eighty Nine Lakhs Twenty Thousand and Seven Hundred Only) to the 1st Accused on 14.06.2019 in the following manner: Date of Due date for Amount Lent (Rs.) Amount receivable - 11 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Lending Repayment (Rs.) 14.06.2019 29.07.2019 4,94,60,350 5,00,00,000 14.06.2019 29.07.2019 4,94,60,350 5,00,00,000 Total 9,89,20,700 10,00,00,000 For the said sum, the Accused had issued commercial papers and agreed to repay the amount on 29.07.2019. 8. The Complainant submits that on request of the 1st Accused the Complainant lent another sum of Rs.9,90,27,600/- (Rupees. Nine Crores Ninety Lakhs Twenty Seven Thousand and Six Hundred Only) on 26.06.2019 for a period of 45 days. Details of the same is provided herein below: Date of Lending Due date for Repayment Amount Lent (Rs.) Amount receivable (Rs.) 26.06.2019 05.08.2019 4,95,19,750 5,00,00,000 26.06.2019 06.08.2019 4,95,07,850 5,00,00,000 Total 9,90,27,600 10,00,00,000 Hence the Accused were liable to pay the sum of Rs.10,00,00,000/- (Rupees Ten Crores Only) on or before 06.08.2019. Copy of the Bank Statement for the period 14.06.2019 to 26.06.2019 is produced herewith. - 12 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 9. The Complainant submits that, Complainant had in all paid a sum of Rupees.19,79,48,300/- (Rupees. Nineteen Crores Seventy Nine Lakhs Forty Eight Thousand and Three Hundred Only) to the Accused and the Accused has agreed to repay a sum of Rs.20,00,00,000/- (Rupees Twenty Crores Only) along with further interest at 24% p.a. In furtherance of the same the Accused has executed a loan agreement dated 14.06.2019 wherein the 1st accused has admitted that a sum of Rs.20,00,00,000/- (Rupees Twenty Crores Only) is due to be paid to the Complainant and an interest is liable to be paid at 24% p.a. Towards repayment of the an amount Rs.20,00,00,000/- as well as the interest, the 1st Accused issued cheques in favour of the Complainant. Copy of the Loan Agreement dated 14.06.2019 is Produced herewith. Along with Loan Agreement the 1st Accused also submitted a certified copy of the Board Resolution passed by the Board of Directors of the 1st Accused company on 14.06.2019. Copy of the Board Resolution of the 1st Accused company dated 14.06.2019 is Produced herewith. On the same day the 1st Accused company issued a letter acknowledging that it has issued postdated cheques towards discharge of loan amount and interest payable by the accused company. Copy of the letter dated 14.06.2019 issued by the 1st Accused is Produced herewith. The 2nd Accused also executed the deed of guarantee dated 14.06.2019 in favour of the Complainant guaranteeing the repayment of the loan amount by the 1st - 13 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Accused company. Copy of the deed of guarantee dated 14.06.2019 is Produced herewith. 10. The Complainant submits that the 1st Accused has issued 8 cheques in favour of the complainant towards discharge of loan amount. The details of cheques issued by the 1st Accused is hereunder. 11. The Complainant submits that on 29.07.2019, the 8th Accused wrote an email to the complainant stating that they are not able to make payment with respect to the cheques issued by them and requested not to deposit the aforesaid cheques. Copy of the email dated 29.07.2019 is produced herewith. Sl.No. Cheque No. Bank Date Amount 1 001130 State Bank of India 29.07.2019 5,00,00,000/- 2 001131 State Bank of India 29.07.2019 14,79,452/- 3 001132 State Bank of India 29.07.2019 14,79,452/- 4 001133 State Bank of India 29.07.2019 5,00,00,000/- 5 001134 State Bank of India 05.08.2019 5,00,00,000/- 6 001135 State Bank of India 05.08.2019 13,15,068/- - 14 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 7 001136 State Bank of India 06.08.2019 5,00,00,000/- 8 001137 State Bank of India 06.08.2019 13,47,945/- 12. The Complainant submits that subsequently the accused have informed the complainant to present the cheques. Accordingly the complainant presented 4 Cheques detailed in the below mentioned paragraphs, with their Banker M/s. HDFC Bank Ltd., M.G.Road Branch Bangalore, which are the subject matter of this case. Separate case has been filed in respect of remaining four cheques. 13. The Complainant submits that the Cheque issued by the 1st Accused bearing No.001130 drawn on State Bank of India Commercial Branch Mumbai dated 29.07.2019 for sum of Rs.5,00,00,000/- (Rupees Five Crores only) was presented with Complainant's banker HDFC Bank Ltd, MG Road branch, Bangalore for encashment on 18.09.2019. On presentation of the above cheque the banker of the Accused returned the aforesaid cheque unpaid with an Endorsement "refer to drawer" to Complainant's Banker and the same was communicated to Complainant by Complainant's Banker vide its Cheque Return Memo dated 20.09.2019. Copy of the Cheque bearing No. 001130 dated 29.07.2019; presentation slip and Bank Memo dated 20.09.2019 are Produced herewith. - 15 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 14. The Complainant submits that Cheque issued by accused bearing No.001133 drawn on State Bank of India- Commercial Branch Mumbai dated 29.07.2019 for sum of Rs.5,00,00,000/- (Rupees Five Crores only) was presented with Complainant's banker HDFC Bank Ltd, MG Road branch, Bangalore for encashment on 18.09.2019. On presentation of the above cheque, the banker of the accused returned the aforesaid cheque unpaid with an Endorsement "refer to drawer" to Complainant's Banker and the same was communicated to Complainant by its Banker vide Cheque Return Memo dated 20.09.2019. Copy of the cheque bearing No. 001133 dated 29.07.2019; presentation slip and Bank Memo 20.09.2019 are Produced herewith. 15. The Complainant submits that Cheque issued by accused bearing No.001134 drawn on State Bank of India- Commercial Branch Mumbai dated 05.08.2019 for sum of Rs.5,00,00,000/- (Rupees Five Crores only) was presented with Complainant's banker HDFC Bank Ltd, MG Road branch, Bangalore for encashment on 18.09.2019. On presentation of the above cheque, the banker of the accused returned the aforesaid cheque unpaid with an Endorsement "refer to drawer" to Complainant's Banker and the same was communicated to Complainant by its Banker vide Cheque Return Memo dated 20/09/2019. Copy of the cheque bearing No. 001134 dated 05.08.2019; presentation slip and Bank Memo 20.09.2019 are Produced herewith. - 16 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 16. The Complainant submits that Cheque issued by accused bearing No.001136 drawn on State Bank of India- Commercial Branch Mumbai dated 06.08.2019 for sum of Rs.5,00,00,000/- (Rupees Five Crores only) was presented with Complainant's banker HDFC Bank Ltd, MG Road branch, Bangalore for encashment on 18.09.2019. On presentation of the above cheque, the banker of the accused returned the aforesaid cheque unpaid with an Endorsement "refer to drawer" to Complainant's Banker and the same was communicated to Complainant by its Banker vide Cheque Return Memo dated 20.09.2019. Copy of the cheque bearing No. 001136 dated 06.08.2019; presentation slip and Bank Memo 20.09.2019 are Produced herewith. 17. The Complainant submits all the cheques issued by the Accused were dishonoured. Copy of the statement of accounts issued by the Complainant's bank is Produced herewith. The Accused have issued the aforesaid Cheques towards discharge of legally recoverable debt. Accused No. 2 to 9 are incharge and responsible for conduct of the business of the 1st Accused company and have actively participated in the day to day affairs of the Company and have collectively taken the decision to issue the Cheques in favour of the complainant. The Accused have issued aforesaid Cheques in favour of the Complainant with an intention to make unlawful gain to themselves and to cause unlawful loss to the complainant and thereby they have committed an offence punishable under Section 138 and 141 of the Negotiable Instruments - 17 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Act apart from the offence punishable under Indian Penal Code. 18. The Complainant got issued legal notice dated 15.10.2019 through RLAD, calling upon the Accused No. 1 to 8 to repay the amount covered under the aforesaid Cheques, within 15 (fifteen) days from the date of the receipt of the Notice. Thereafter the complainant came to know that the Accused no. 9 who is the employee of the 1st Accused Company is also one of the signatory to the Cheques. Hence the Complainant got issued legal notice dated 18/10/2019 through RLAD, calling upon the Accused No. 9 to repay the amount covered under the aforesaid Cheques, within 15 (fifteen) days from the date of the receipt of the Notice. The notice was served on the 1st accused on 19.10.2019. Notices issued to accused No.2 to 9 were also served on them. Copies of the Legal Notice dated 15.10.2019 and 18.10.2019 and postal receipts and the postal acknowledgments are Produced herewith. 19. The Complainant submits that the Accused issued the aforesaid cheques on 29.07.2019, 05.08.2019 and 06.08.2019 respectively. The said Cheques were presented for encashment on 18.09.2019, which came to be dishonoured. The intimation of dishonour of cheques were received by the Complainant on 20.09.2019. The Complainant got issued legal notice on 15.10.2019 to Accused No. 1 to 8 and on 18.10.2019 to Accused No.9. The legal notice sent through RLAD was served to the - 18 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Accused No. 1 on 19.10.2019 and also served on other accused. The statutory period of 15 days expired on 03/11/2019. The accused have not made any payment either during the statutory period or thereafter. The offence committed is within the jurisdiction of this Hon'ble Court and as such the Hon'ble Court has got jurisdiction to try this Complaint. The Complaint filed today is within time. 20. The Complainant submits that the accused have failed to make arrangement for encashment of the aforesaid dishonoured cheques with malafide intention to make unlawful gain for themselves and to cause un-lawful loss to the complainant. At the time of issuing the afore said cheques the Accused were fully aware that the said cheques will not be honored on presentation. Therefore, the accused has dishonestly induced the complainant to advance the amount knowing fully well that it cannot repay the said amount to the complainant. That the accused is guilty of offence under Section 138 and 141 of Negotiable Instruments Act. 21. The Complainant submits that towards discharge of legally recover-able debt, Accused have issued the aforesaid cheques towards repayment of legally recoverable debt, knowing fully well that they have not made sufficient arrangement in its account to honour cheques issued by it and also with an intention to make unlawful gain for them-selves and to cause unlawful loss to the complainant, thereby the accused have committed - 19 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 an offence punishable under Section 138 and 141 of the Negotiable Instruments Act. PRAYER WHEREFORE, the Complainant prays that this Hon'ble Court may be pleased to take cognizance of the offence committed by the accused and punish the accused in accordance with law and pass such other appropriate orders, in the interest of justice.” 10. Section 141 of the N.I.Act, reads as under:- “141. Offences by companies.—(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central - 20 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section,— (a) ‘company’ means any body corporate and includes a firm or other association of individuals; and (b) ‘director’, in relation to a firm, means a partner in the firm.” 11. In S.V.Muzumdar’s case supra, the Apex Court held as under:- “DR ARIJIT PASAYAT, J.— Leave granted. 2. In all these appeals the appellants have questioned correctness of the judgment rendered by a Single Judge of the Gujarat High Court refusing to accept the prayer by the appellants to quash the proceedings initiated on the basis of a complaint filed by the respondents alleging commission of offence in terms of Section 138 of the Negotiable - 21 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Instruments Act, 1881 (in short “the Act”) and other connected offences. 3. The facts as projected by the respondents in the complaint were to the effect that Respondent 1 (hereinafter referred to as “the complainant”) supplied goods on credit to M/s Garware Nylons Ltd. (hereinafter referred to as “the Company”) (Accused 14). Cheques issued by the Company were not honoured by the drawee bank on the ground of insufficient funds. Payments were not made even after legal notices. There were 14 accused persons including the Company named in the complaint. Some of the accused persons were Directors and while others were employees. Learned Chief Judicial Magistrate, Vadodara after recording statement of the Marketing Manager who had filed the complaint for himself and on behalf of the complainant company, issued summons to all the accused persons for facing trial for the alleged commission of offences punishable under Section 138 of the Act read with Sections 420 and 114 of the Penal Code, 1860 (in short “IPC”). The order issuing summons was challenged by filing criminal revision applications which were dismissed by order dated 21-3- 1996. The said common judgment and order was challenged before the High Court by filing special criminal applications and these applications were permitted to be withdrawn to enable the appellants to move applications before the learned Chief Judicial Magistrate as stated by the petitioners. Application was filed with prayer to drop proceedings. That application was rejected by order dated 21-8-1997. Same was questioned before the High Court. The challenge before - 22 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 the High Court was primarily on the ground that there was no material to show that the accused persons at the time of offence as allegedly committed were in charge and/or responsible to the Company for the conduct of the business as required under Section 141(1) of the Act. It was also submitted that the deeming provision under sub-section (2) of Section 141 which covers persons with whose consent or connivance or any attributable negligence for commission of the offence by the company was also not applicable. The High Court did not accept the pleas and held that the controversy was to be adjudicated at the trial. It considered the petition to be unacceptable attempt to stall the criminal proceedings at the threshold. 4. In support of the appeals, learned counsel for the various appellants submitted that identical issues have been referred for consideration by larger Bench and, therefore, these matters should also be tagged down with those cases. Reference has been made to various orders in this connection. 5. It was on merits pointed out that even the complaint read as a whole does not disclose commission of any offence, more particularly, so far as the appellants are concerned. It was pointed out that some of the appellants are lawyers and/or other professionals who had no scope for direct participation in the conduct of business and are not involved in the conduct of business and, therefore, no offence can be attributed to them in terms of Section 141 of the Act. - 23 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 6. In response, learned counsel for the respondents submitted that there is no challenge to the constitutional validity of the provisions and that can never be the subject- matter of challenge in the proceedings under the Code of Criminal Procedure, 1973 (in short “the Code”). The allegations against the accused persons were covered by Section 141 of the Act. There were specific allegations against the appellants and, therefore, the courts below were justified in refusing to accept the prayer made by the appellants to drop the proceedings. 7. Section 141 of the Act reads as follows: “141. Offences by companies.—(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central - 24 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section,— (a) ‘company’ means any body corporate and includes a firm or other association of individuals; and (b) ‘director’, in relation to a firm, means a partner in the firm.” 8. We find that the prayers before the courts below essentially were to drop the proceedings on the ground that the allegations would not constitute a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub-section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations - 25 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 contained are sufficient to attract culpability is a matter for adjudication at the trial. 9. Under the scheme of the Act, if the person committing an offence under Section 138 of the Act is a company; by application of Section 141 it is deemed that every person who is in charge of and responsible to the company for conduct of the business of the company as well as the company are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of the proviso to sub-section (1). The burden in this regard has to be discharged by the accused. 10. The three categories of persons covered by Section 141 are as follows: (1) The company who committed the offence. (2) Everyone who was in charge of and was responsible for the business of the company. (3) Any other person who is a Director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence. 11. Whether or not the evidence to be led would establish the accusations is a matter for trial. It needs no reiteration that proviso to sub-section (1) of Section 141 enables the accused to prove his innocence by discharging the burden which lies on him. 12. Therefore, the High Court was justified in rejecting the petition filed by the appellants. The larger Bench is considering issues referred to. The decision to be rendered - 26 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 by the larger Bench obviously would govern the trial. As rightly submitted by the respondents in these appeals, there is no challenge to the validity of any provision and grievance essentially related to the prayer for dropping the proceedings. Therefore, we find no substance in the plea for tagging these matters with those pending before the larger Bench. 13. Taking into account the fact that the cases have been pending for nearly a decade, we direct that the matter be taken up on 8-8-2005 by the trial court. If the appellants file applications in terms of Section 205 of the Code for dispensing with their personal attendance, the trial court will do to take note of the same and dispense with the personal attendance by stipulating conditions in terms of Section 205(2) of the Code. It has to be borne in mind that while dealing with an application in terms of Section 205 of the Code, the court has to consider whether any useful purpose would be served by requiring the personal attendance of the accused or whether progress of the trial is likely to be hampered on account of his absence. We make it clear that if at any stage the trial court comes to the conclusion that the accused persons are trying to delay the completion of trial, it shall be free to refuse the prayer for dispensing with personal attendance. The trial court would do well to complete the trial by the end of November 2005. The parties shall cooperate in that regard. We make it clear that we have not expressed any opinion on the merits of the case. 14. The appeals are accordingly dismissed.” - 27 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 12. If the impugned complaint, in particular, paragraphs 4 and 17 are examined, bearing in mind Section 141(2) of N.I.Act and the judgment of the Apex court referred to supra, it is clear that necessary ingredients constituting the alleged offence have been made out by the respondent – complainant who has made specific allegations in this regard. It is needless to state that the veracity and validity of the said allegations would necessarily required to be adjudicated during trial and the petitioner – accused No.5 would be entitled to put forth his defence and contest the proceedings in accordance with law. Under these circumstances, without entering into a full fledged trial and in the light of the aforesaid allegations made in the impugned complaint, it would be impermissible in law to quash the impugned proceedings at the instance of the petitioner – accused No.5 whose contentions and defences as well as the rival contentions of the respondent – complainant would necessarily be dealt with and adjudicated upon by the trial court during trial and consequently, this is not a fit case to invoke the jurisdiction of this Court under Section 482 Cr.P.C. to quash the impugned proceedings. - 28 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 13. Insofar as the contention of the petitioner – accused No.5 that he was an independent Director and could not be incriminated for the alleged offence by accused No.1 – company is concerned, the documents produced by the petitioner before this Court are seriously disputed and denied by the respondent and as such, the legality, authenticity, validity, veracity, probative value etc., would necessarily have to be tested and adjudicated upon during trial after giving sufficient opportunity in this regard to both parties. It follows therefrom that the said disputed documents cannot be relied upon by the petitioner in support of his contentions and consequently, this contention urged on behalf of the petitioner cannot be accepted. 14. As stated supra, the various contentions urged by the petitioner in the present petitions not only give rise to disputed questions of fact but the same also involve mixed questions of law and fact warranting examination and adjudication only after a full fledged trial. Under these circumstances, though several contentions have been urged by both sides in support of their respective claims, without expressing any opinion on the merits / demerits of the rival contentions, I deem it just and appropriate to - 29 - HC-KAR NC: 2025:KHC:24572 CRL.P No. 3387 of 2025 C/W CRL.P No. 3359 of 2025 dismiss both the petitions without interfering with the impugned proceedings and leaving / keeping open all contentions to be decided by the trial court in accordance with law after providing sufficient and reasonable opportunity to both parties. 15. Subject to the aforesaid observations, petitions stand dismissed. Sd/- (S.R.KRISHNA KUMAR) JUDGE SRL List No.: 1 Sl No.: 42