- 1 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF JULY, 2025 BEFORE THE HON'BLE MS. JUSTICE J.M.KHAZI CRIMINAL PETITION NO. 13943 OF 2023 (482(Cr.PC) / 528(BNSS)) BETWEEN: 1. MR. RAGHAV HEGDE S/O MR NARASIMHA HEGDE MAJOR AGED 51 YEARS FORMER AUTHORIZED SIGNATORY OF SIVAN AND COMPANY 23/2, COFFEE DAY SQUARE VITTAL MALLYA ROAD BANGALORE-560001, KARNATAKA, INDIA 2. MR DEEKSHITH MALLE GOWDA KODUVALLI S/O LATE MALLE GOWDA K S AGED 53 YEARS FORMER AUTHROIZED SIGNATORY OF SIVAN AND COMPANY 23/2, COFFEE DAY SQUARE VITTAL MALLYA ROAD, BANGALORE-560001 KARNATAKA, INDIA …PETITIONERS (BY SRI. N K DILIP, ADVOCATE) AND: 1. SAW SHOBHADEVI SURESHLAL MAJOR, AGED 68 YEARS WIFE OF MR SURESHLAL HIRALAL Digitally signed by REKHA R Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 NO 17, SUBRAMANYA SWAMY TEMPLE STREET V V PURAM, BANGALORE-560004 REP BY SPA HOLDER MR KISHORE SURESHLAL SON OF MR SURESHLAL HIRALAL AGED ABOUT 46 YEARS 2. SIVAN AND COMPANY A SOLE PROPRIETORSHIP FORMED AND OWNED BY LATE V G SIDDHARTHA PRESENTLY NOT IN EXISTENCE PREVIOUSLY HAVING ITS OFFICE AT AUTHORISED SIGNATORY OF SIVAN AND COMPANY 23/2, COFFEE DAY SQUARE VITTAL MALLYA ROAD, BANGALOER-560001 KARNATAKA, INDIA …RESPONDENTS (BY SMT. LAKSHMI MENON, ADVOCATE FOR R1) THIS CRL.P IS FILED U/S.482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO A. QUASH AND SET ASIDE THE COMPLIANT BEARING PCR NO. 651/2020 IN C.C.NO.2714/2022 UNDER SECTION 200 OF THE CR.PC READ WITH SECTION 138, 141, 142 & 143 OF THE NI ACT 1881 AND AS PER ANNEXURE-A FILED BEFORE THE LEARNED XX ACMM COURT AT BENGALURU AND SET ASIDE THE ORDER DATED 07.02.2020 PER ANNEXURE-B BY THE LEARNED XX ACMM COURT AT BENGALURU IN CC NO.2714/2020 AND CONSEQUENTIALLY ALLOW THE CRIMINAL PETITION AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MS. JUSTICE J.M.KHAZI - 3 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 ORAL ORDER Petitioners who are arraigned as accused Nos.2 and 3 have filed this petition under Section 482 Cr.P.C to quash the criminal proceedings initiated against them in C.C.No.2714/2022 on the file of XX ACMM, Bengaluru for the offences punishable under Sections 138, 141, 142 and 143 of the Negotiable Instruments Act, 1881 ('N.I Act' for short'). 2. While petitioners are arraigned as accused Nos.2 and 3, respondent No.2 is arraigned as accused No.1 and respondent No.1 is the complainant. 3. For the sake of convenience the parties are referred to by their rank before the trial Court. 4. Complainant filed a complaint under Section 200 Cr.P.C against accused Nos.1 to 3 alleging offences punishable under Sections 138, 141, 142 and 143 of N.I Act, contending that accused Nos.2 and 3 are the - 4 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 authorised signatories of accused No.1 and actively engaged in conducting its business. They are in charge and responsible for day-to-day affairs of accused No.1. 5. Accused Nos.2 and 3 being well known to the complainant since three years approached for a hand loan of ₹1 Crore. They agreed to pay interest in the sum of ₹9,50,000/-. Accordingly, complainant paid ₹90,50,000 through cheque No.000046 dated 19.06.2019 and the amount was transferred to the account of accused through RTGS. Accused Nos.2 and 3 representing accused No.1 agreed to repay the entire loan of ₹1 Crores in five instalments of ₹20 lakhs each and issued the following five cheques, with an assurance that they would be realised on presentation. (i) Cheque No.871514 dated 20.08.20219 for Rs.20,00,000/-. (ii) Cheque No.871515 dated 20.09.20219 for Rs.20,00,000/-. (iii) Cheque No.871516 dated 20.10.20219 for Rs.20,00,000/-. - 5 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 (i) Cheque No.871517 dated 20.11.20219 for Rs.20,00,000/-. 6. Accused have paid the amount due under the first cheque. However, cheque at Sl.No.2 to 4 were presented, they were dishonoured on the ground that account is blocked. Complainant got issued legal notice dated 02.12.2019. It is duly served on them. Accused Nos.2 and 3 as an afterthought have sent an evasive reply, in order to deceive the complainant. 7. After recording the sworn statement of the complainant, trial Court has taken cognizance and issued summons. 8. Accused Nos.2 and 3 have challenged the said order contending that accused No.1 is a sole Proprietorship concern. Sri V.G.Siddharth, its Proprietor died on 31.07.2019. His income tax returns and other records evidence this fact. Accused No.1 was not coming under the definition of company or Partnership or Association of - 6 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 persons. Accused Nos.2 and 3 were only authorised signatories, but they were not in the knowledge of transaction between complainant and accused No.1. They were not in-charge of nor involved in looking after the functioning of accused No.1 establishment. 9. Unfortunately, Sri.V.G Siddharth died on 31.07.2019. With his death, accused No.1 cease to exist and all its bank accounts are frozen by the bank as per the letter dated 10.09.2019. Accused Nos.2 and 3 are not the beneficiaries of any of the business of late V.G Siddharth. In fact accused Nos.2 and 3 vide notice dated 11.12.2019, requested complainant not to present the post dated cheques at Sl.Nos.2 to 5. Owing to the death of Sri.V.G.Siddharth, the account was blocked by the bank and offence punishable under Section 138 of N.I Act is not attracted. In the light of these facts and circumstances, the continuation of the criminal proceedings would amount to abuse of the process of the Court and hence the petition. - 7 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 10. Learned counsel representing accused No.1 fairly conceded that since accused No.1 is a Proprietorship concern, with the death of its Proprietor, it ceased to exist and accused Nos.2 and 3 who are only authorised signatories and mandate holders of the Proprietor cannot be proceeded against and petition may be allowed quashing the entire proceedings. However, liberty may be reserved to the complainant to initiate necessary proceedings for recovery of the amount due. 11. Heard the arguments and perused the record. 12. As contended by accused Nos.2 and 3 and as conceded by learned counsel for complainant, accused No.1 was a Proprietorship concern represented by late V.G.Siddharth. Unfortunately, he died on 31.07.2019. With his death, accused No.1 ceased to exist. Section 141 of the N.I Act deals with offences by the companies. Explanation appended to Section 141(2) of the N.I Act explain that company means any body Corporator and - 8 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. Thus, only a juridical person, viz, a company, or a firm an association of persons comes under the purview of Section 141 and when offence under Section 138 is committed by such company or firm or an association of persons, then every person who at the time the offence was committed was in charge of and was responsible to the company as well as the company are liable. The person who is in- charge of and responsible for the conduct of business of the company or firm or association of person is made vicariously liable. When accused No.1 is not covered by the provisions of Section 141 of the N.A Act, accused Nos.2 and 3 cannot be made liable. With the death of V.G.Siddharth, accuse No.1 also ceased to exist and as such proceedings cannot be continued as against accused Nos.2 and 3 also. - 9 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 13. In a similar case, in Raghu Laxmi Narayanan Vs. Fine Tubes (Raghu Laxmi Narayanan)1, the Hon'ble Supreme Court held that a Proprietary concern could not answer the description of either a company incorporated under the Companies Act or a firm within the meaning of the provisions of Section 4 of Partnership Act. It is only the business name in which the Proprietor of the business carries on the business. Therefore, except the Proprietor of the Proprietorship concern, no other person can be held liable. With the death of Sri. V.G.Siddharth, the Proprietorship concern has come to an end. Therefore, neither the accused persons nor any of the legal heirs of the Proprietor can be proceeded against. 14. In fact, in Crl.P.No.7399/2020, which was arising out of C.C.No.2715/2020 with regard to dishonour of cheque, the present petitioners who were sought to be prosecuted for dishonour of cheque drawn on the account of the accused No.1 Proprietorship concern also came to be 1 (2007) 5 SCC 103 - 10 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 allowed and the proceedings were quashed. However, liberty was reserved to the complainant to proceed in accordance with law for recovering the amount due under the cheques in question. Similarly, the present petition deserves to be allowed and accordingly, the following: ORDER (i) Petition filed by the petitioners/accused Nos.2 and 3 under Section 482 Cr.P.C is hereby allowed. (ii) The criminal proceedings in C.C.No.2714/2022 on the file of XX ACMM, Bengaluru, for the offences punishable under Sections 138, 141, 142 and 143 of the N.I Act is hereby quashed. (iii) However, the complainant is liberty to proceed in accordance with law for recovering the amount due under the cheques in question. - 11 - HC-KAR NC: 2025:KHC:29628 CRL.P No. 13943 of 2023 (iv) The Registry is directed to send a copy of this order to the trial Court through email. Sd/- (J.M.KHAZI) JUDGE RR List No.: 1 Sl No.: 28