Shri Dattatraya Narayan Ghandge vs Vinir Engineering Private Limited - Quashing Proceedings

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Shri Dattatraya Narayan Ghandge vs Vinir Engineering Private Limited on 5 March, 2026

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NC: 2026:KHC:13543
CRL.P No. 883 of 2018

        HC-KAR

             IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                 DATED THIS THE 5TH DAY OF MARCH, 2026

                                   BEFORE
                   THE HON'BLE MR. JUSTICE R. NATARAJ
                   CRIMINAL PETITION NO. 883 OF 2018

        BETWEEN:

        1.    SHRI DATTATRAYA NARAYAN
              GHANDGE, AGE - 65 YEARS,
              OCCUPATION-SERVICE,
              DIRECTOR ANAND TEKNOW AIDS
              ENGINEERING LIMITED,
              R/A. FLAT NO.5-B, UJWAL APARTMENT,
              HINGANE (KHURD), VITTHALWADI,
              PUNE - 411 030.

        2.    MRS. RAGINI RAKESH RANJAN
              AGE - 45 YEARS,
              OCCUPATION - SERVICE
              DIRECTOR
              ANAND TEKNOW AIDS ENGINEERING

Digitally LIMITED,
signed by R/A KUNAL ICON,
SUMA
Location:
ROW HOUSE 21, PIMPLE SAUDAGAR,
HIGH PUNE - 411027.
COURT OF
KARNATAKA
3. SHRI. ANIRUDDHA JOSHI,
AGE - 52 YEARS,
OCCUPATION-SERVICE,
SENIOR VICE PRESIDENT
- PROJECTS,
ANAND TEKNOW AIDS
ENGINEERING LIMITED,
R/A. C/O L T PATIL, 519,
DATTAWADI, NEAR
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NC: 2026:KHC:13543
CRL.P No. 883 of 2018

HC-KAR

 CORPORATION SCHOOL,
 PUNE - 411030.

1. SHRI. SHAILESH KISHOR TIWARY, AGE - 39 YEARS, OCCUPATION - SERVICE, GENERAL MANAGER-FINANCE, HAVING OFFICE AT KUNAL PURAM, G BUILDING, 2ND FLOOR, OPPOSITE ATLAS COPCO(I) LIMITED, MUMBAI-PUNE ROAD, DAPODI, PUNE - 411 012. ...PETITIONERS (BY SRI. SUSHIL NIMBKAR, ADVOCATE)

AND:

VINIR ENGINEERING PRIVATE LIMITED,
A COMPANY REGISTERED UNDER THE PROVISIONS
OF THE COMPANIES ACT, 1956,
HAVING ITS OFFICE
AT 102-104, BOMMASANDRA INDUSTRIAL AREA,
HOSUR ROAD,
BANGALORE - 560099.
...RESPONDENT

(BY SRI. MAHESH ARKALGUD SRIKANTH, ADVOCATE)

 THIS CRL.P FILED UNDER SECTION 482 CR.P.C PRAYING

TO QUASH THE COMPLAINT IN C.C.NO.2027/2017 PREFERRED
BY THE RESPONDENT AGAINST THE PETITIONERS AND QUASH
THE ORDER DATED 24.04.2017 ISSUING NBW AGAINST THE
PETITIONERS IN THE PROCEEDINGS IN C.C.NO.2027/2017
FILED IN THE COURT OF THE CHIEF JUDICIAL MAGISTRATE
RURAL COURT, BENGALURU, BENGALURU RURAL.

 THIS PETITION, COMING ON FOR DICTATING ORDERS,

THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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NC: 2026:KHC:13543
CRL.P No. 883 of 2018

HC-KAR

CORAM: HON'BLE MR. JUSTICE R. NATARAJ

                     ORAL ORDER The accused Nos.4, 5, 6 and 7 in C.C No.2027/2017 on

the file of the Chief Judicial Magistrate Rural Court, Bengluru,

Bengaluru Rural, are before this Court seeking to quash the

proceedings initiated by the respondent against them under Section 138 of the Negotiable Instruments Act, 1881. They

have prayed to quash the order dated 24.04.2017 passed by

the Trial Court in so far as it relates to ordering issuance of

non-bailable warrant against petitioner Nos.2 to 4 herein.

1. The respondent claimed that the accused Nos.2 to 6

had approached it for manufacture and supply of forgings and

placed several purchase orders. The complainant had

manufactured the same and supplied it to the accused. The

respondent claimed that towards discharge of the liability, the

accused issued five cheques for a sum of Rs.1,13,10,309/- and

assured that they would arrange for the funds in their account

so that the cheques would be encashed on presentation. The

respondent claimed that the said cheques were dishonored due

to insufficient funds in the account, following which, the -4- NC: 2026:KHC:13543 CRL.P No. 883 of 2018 HC-KAR

respondent caused a notice of demand to the accused.

However, all the accused failed to pay the amount, which

forced the respondent to initiate proceedings for prosecution of

the accused for an offence punishable under Section 138 of the

Negotiable Instruments Act, 1881 (for short, 'the N.I. Act '). In

the private complaint filed by the respondent, the accused No.2

was shown as the Managing Director of the accused No. 1,

while the accused Nos.3, 4 and 5 were shown as the Directors

of the accused No.1 and accused Nos.6 and 7 were shown as

the Senior Vice President - Projects and General Manager -

Finance respectively. In the complaint, it was stated as follows:

"...the 3rd accused Mr. D. N. Ghandge,
Director along with other Accused approached
the complainant representing that all accused
are the directors of 1st Accused Anand Teknow
Aids Engineering India Ltd. Pune, handling its
day to day affairs and also represented that
accused No 2 to 7 are responsible for its
management and also its day to day affairs. All
accused also represented that they are into the
business of high performance valves & systems
and that they require forgings which should be
manufactured by the complainant. ..."
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Further, it was stated that, "...all the accused 2 to 7

represented that they are actively involved in handling the day

to day affairs of the 1st accused company and are carrying on

its business collectively. Accused No. 2 to 7 also represented

that they are carrying on the business of the company in

various capacities collectively. The 2nd accused is the Managing

Director of the 1st Accused Company while Accused No.3, 4 and

5 are its directors. The 6th accused is the person who is directly

connected with the affairs of the 1st accused company as the

Sr. Vice President - Projects while 7th accused is the General

Manager - Finance who is also directly connected with the

affairs of the 1st accused company. Hence as all the accused

herein are responsible for the day to day affairs of the 1st

accused company and are carrying on its business activities

actively and thus they are liable to be prosecuted in the above

case".

1. It appears from the cheques, that they were all

drawn by the Managing Director of the accused No.1. The Trial

Court took cognizance of an offence under Section 138 of the

N.I. Act and ordered issuance of hand summons to the

accused. Being aggrieved by the same, the petitioners, who -6- NC: 2026:KHC:13543 CRL.P No. 883 of 2018 HC-KAR

were arraigned as accused Nos.4, 5, 6 and 7 in C.C.

No.2027/2017 are before this Court.

1. The learned counsel for the petitioners/accused

Nos.4, 5, 6 and 7 submits that the respondent had made an

omnibus statement that all the Directors and the employees of

the accused No.1 were responsible for the day-to-day affairs of

the Company without clearly disclosing the role and

responsibility of each of them in managing the affairs of the

accused No.1 - Company. He, therefore, submits that unless

there was specific averment as to how the accused Nos.2 to 7

are responsible, the Trial Court committed an error in taking

cognizance against the said accused. He also submits that the

Trial Court failed to exercise jurisdiction under Section 202 of

the Criminal Procedure Code (for short, 'the Cr.P.C ') as the

accused Nos.4, 5, 6 and 7 were residing outside the jurisdiction

of the Court. In support of his contention, he relied upon the

judgment of the Hon'ble Apex Court in [K.K. Ahuja v. V.K.

Vora](https://indiankanoon.org/doc/1957018/) [2009 LawSuit(SC) 1232] and contended that if the

Managing Director of a Company is arraigned as an accused,

that would be sufficient. He also contended that for the

Directors of a Company to be arraigned as accused, there -7- NC: 2026:KHC:13543 CRL.P No. 883 of 2018 HC-KAR

should be a specific averment as to how such Director is

responsible to the Company for the conduct of its business and

also whether such Director is in-charge of the business of the

Company. He contends that a reading of the entire complaint

would show that an omnibus statement is made that the

accused Nos.2 to 7 are responsible for the day-to-day affairs

and the business of the Company. Thus, he contends that the

cognizance of an offence under Section 138 of the N.I. Act

taken by the Trial Court in so far as accused Nos.4, 5, 6 and 7

are concerned is liable to be quashed.

1. Per contra, the learned counsel for the respondent

submitted that the respondent has specifically averred in the

complaint that the accused Nos.2 to 7 were responsible for the

affairs of the accused No.1 - Company and all of them were

involved in the business of the Company. He, therefore,

contends that for the purpose of Section 141 of the N.I. Act,

this would be sufficient. He also contends that it is for the

respondent to establish at the trial as to how the accused

Nos.4, 5, 6 and 7 are responsible for the affairs of the

Company. He, thus, contends that the order passed by the

Trial Court taking cognizance of the offence punishable under -8- NC: 2026:KHC:13543 CRL.P No. 883 of 2018 HC-KAR Section 138 of the N.I. Act against the accused Nos.4, 5, 6 and

7 is just and proper.

1. I have considered the submissions of the learned

counsel for the petitioners as well as the learned counsel for

the respondent.

7(i). An offence under Section 138 of the N.I. Act is said

to be committed when a cheque drawn by a person on his or its

account towards payment or towards discharge of a loan or

liability is returned unpaid by the Bank due to insufficient funds

in the account and also when such person fails to pay the

amount covered under the cheque soon after a notice of

demand is received by the drawee of the cheque. When such

person 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. Therefore, it was incumbent upon the

respondent to not only plead the particulars of the person who

was in-charge of and was responsible to the accused No.1 - -9-

NC: 2026:KHC:13543 CRL.P No. 883 of 2018 HC-KAR

Company for the conduct of the business of the Company, but

also specifically point out as to how each one of them was

responsible to the accused No.1 - Company for the conduct of

the business of the Company. The accused No.2 is the

Managing Director of the accused No.1-Company who had

passed on the cheques to the respondent under his signature.

The Hon'ble Apex Court in K.K. Ahuja 's case while considering

the question as to who can be arraigned as an accused when

the drawer of the cheque is a Company, held as follows:

"14. The words "every person who, at the time of the
offence was committed, was in charge of, and was
responsible for the conduct of the business of the
company" occurs not only in section 141(1) of the Act but
in several enactments dealing with offences by
companies, to mention a few - Section 278 B of the
Income Tax Act, 1961, Section 22C of Minimum Wages
Act, 1948, Section 86A of the Employees State Insurance
Act, 1948, Section 14A of Employees Provident Fund and
Miscellaneous Provisions Act, 1952, Section 29 of
Payment of Bonus Act, 1965, Section 40 of The Air
(Prevention and Control of Pollution) Act, 1981 and section 47 of Water (Prevention and Control of Pollution)
Act, 1974. But neither section 141(1) of the Act, nor the
pari materia provisions in other enactments give any
indication as to who are the persons responsible to the

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company, for the conduct of the business of the company.
Therefore, we will have to fall back upon the provisions of Companies Act, 1956 which is the law relating to and
regulating companies. Section 291 of the said Act
provides that subject to the provisions of that Act, the
Board of Directors of a company shall be entitled to
exercise all such powers, and to do all such acts and
things, as the company is authorised to exercise and do.
A company though a legal entity can act only through its
Board of Directors. The settled position is that a Managing
Director is prima facie in charge of and responsible for the
company's business and affairs and can be prosecuted for
offences by the company. But insofar as other directors
are concerned, they can be prosecuted only if they were
in charge of and responsible for the conduct of the
company's business. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in
clauses (24), (26), (30), (31), (45) of section 2 of that
Act would show that the following persons are considered
to be the persons who are responsible to the company for
the conduct of the business of the company : -

(a) the managing director/s;

(b) the whole-time director/s;

(c) the manager;

(d) the secretary;

(e) any person in accordance with whose directions or
instructions the Board of directors of the company is
accustomed to act;
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(f) any person charged by the Board with the
responsibility of complying with that provision (and who
has given his consent in that behalf to the Board); and

(g) where any company does not have any of the officers
specified in clauses (a) to (c), any director or directors
who may be specified by the Board in this behalf or where
no director is so specified, all the directors.

  It follows that other employees of the company, cannot
  be said to be persons who are responsible to the
  company,     for   the    conduct      of   the     business   of   the
  company."

7(ii). It was further held, "It is evident that a person who

can be made vicariously liable under sub-section (1) of [Section

141](https://indiankanoon.org/doc/686130/) is a person who is responsible to the company for the

conduct of the business of the company and in addition is also

in charge of the business of the company. There may be many

directors and secretaries who are not in charge of the business

of the company at all". The Hon'ble Apex Court referred to its

earlier judgment in [Katta Sujatha v. Fertiliser and

Chemicals Travancore Ltd.](https://indiankanoon.org/doc/1951626/) [2002 7 SCC 655], where it

was held that the words "person in charge of the business of

the company" refer to "a person who is in overall control of the

day to day business of the company." It is also pointed out

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"that a person may be a director and thus belongs to the group

of persons making the policy followed by the company, but yet

may not be in charge of the business of the company; that a

person may be a Manager who is in charge of the business but

may not be in overall charge of the business; and that a person

may be an officer who may be in charge of only some part of

the business." It was further held "Therefore, if a person does

not meet the first requirement, that is, being a person who is

responsible to the company for the conduct of the business of

the company, neither the question of his meeting the second

requirement (being a person in charge of the business of the

company), nor the question of such person being liable under

sub-section (1) of section 141 does not arise". It was further

held "To put it differently, to be vicariously liable under

subsection (1) of Section 141, a person should fulfill the 'legal

requirement' of being a person in law (under the statute

governing companies) responsible to the company for the

conduct of the business of the company and also fulfill the

'factual requirement' of being a person in charge of the

business of the company."

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 7(iii).    While considering the position of a Managing

Director or a Joint Managing Director of a company, it was held

by the Hon'ble Apex Court in K.K. Ahuja 's case (supra), "...

(i) If the accused is the Managing Director or a Joint Managing

Director, it is not necessary to make an averment in the

complaint that he is in charge of, and is responsible to the

company, for the conduct of the business of the company. It is

sufficient if an averment is made that the accused was the

Managing Director or Joint Managing Director at the relevant

time. This is because the prefix 'Managing' to the word

'Director' makes it clear that they were in charge of and are

responsible to the company, for the conduct of the business of

the company".

7(iv). In so far as a director is concerned, it was held

"(ii) In the case of a director or an officer of the company who

signed the cheque on behalf of the company, there is no need

to make a specific averment that he was in charge of and was

responsible to the company, for the conduct of the business of

the company or make any specific allegation about consent,

connivance or negligence. The very fact that the dishonoured

cheque was signed by him on behalf of the company, would

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give rise to responsibility under sub-section (2) of Section 141.

It was further held "(iii). In the case of a Director, Secretary or

Manager (as defined in Sec. 2(24) of the Companies Act) or a

person referred to in clauses (e) and (f) of section 5 of

Companies Act, an averment in the complaint that he was in

charge of, and was responsible to the company, for the conduct

of the business of the company is necessary to bring the case

under Section 141(1). No further averment would be necessary

in the complaint, though some particulars will be desirable.

They can also be made liable under section 141(2) by making

necessary averments relating to consent and connivance or

negligence, in the complaint, to bring the matter under that

sub-section."

1. The Hon'ble Apex Court in the case of [National

Small Industries Corp. Ltd. v. Harmeet Singh Paintal and

Another](https://indiankanoon.org/doc/832836/) [2010 Supp AIR (SC) 569], while referring to its

judgment in K.K. Ahuja 's case referred supra, held as follows:

"(i) The primary responsibility is on the
complainant to make specific averments as are
required under the law in the complaint so as to
make the accused vicariously liable. For fastening

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 the criminal liability, there is no presumption that
 every Director knows about the transaction.

(ii) Section 141 does not make all
Directors liable for the offence. The criminal liability
can be fastened only on those who, at the time of
the commission of the offence, were in charge of
and were responsible for the conduct of the
business of the company.

(iii) Vicarious liability can be inferred
against a company registered or incorporated under
the Companies Act, 1956 only if the requisite
statements, which are required to be averred in the
complaint/petition, are made so as to make
accused therein vicariously liable for offence
committed by company along with averments in the
petition containing that accused were in-charge of
and responsible for the business of the company
and by virtue of their position they are liable to be
proceeded with.

(iv) Vicarious liability on the part of a
person must be pleaded and proved and not
interfered.

(v) If accused is Managing Director or
Joint Managing Director then it is not necessary to
make specific averment in the complaint and by
virtue of their position they are liable to be
proceeded with.

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(vi) If accused is a Director or an Officer of
a company who signed the cheques on behalf of the
company then also it is not necessary to make
specific averment in complaint.

(vii) The person sought to be made liable
should be in-charge of and responsible for the
conduct of the business of the company at the
relevant time. This has to be averred as a fact as
there is no deemed liability of a Director in such
cases."

1. When this Court called upon the learned counsel for

the petitioners to disclose as to who is responsible for the

affairs of the accused No.1 - Company and who conducts the

businesses of the Company, the learned counsel submitted that

it is the accused No.2, who conducts the business of the

accused No.1 - Company and is overall in charge of the affairs

of the Company.

1. In the background of the above exposition of law, if

the private complaint is perused, the accused Nos.4 and 5 are

arraigned as accused on the ground that they are Directors of

the accused No.1 while accused Nos. 6 and 7 are arraigned as

accused in view of their position in the Company, namely,

Senior Vice President - Projects and General Manager - Finance.

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There is no averment as to how the accused Nos.4, 5, 6 and 7

are responsible for the business of the accused No.1 - Company

and there is no mention as to how they are vicariously liable for

the acts of the accused No.1. The accused No.2 is the Managing

Director of the accused No.1, who has drawn the cheques in

favour of the respondent and therefore, it was the accused

No.2 alone who was to be prosecuted for an offence punishable

under Section 138 of the N.I. Act. It is however made clear that

if whatever reason the accused No.2 cannot be prosecuted,

then the person in-charge and responsible for the affairs of the

Company at that point of time may be arraigned as an accused.

1. In that view of the matter, this petition is allowed.

The order dated 08.03.2017 passed by the Chief Judicial

Magistrate Rural Court, Bengaluru, Bengaluru Rural, in so far as

it relates to taking cognizance for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, against

the petitioners / accused Nos.4, 5, 6 and 7 in C.C.

No.2027/2017, is quashed. The order dated 24.04.2017

passed by the Trial Court in so far as it relates to issuance of

non-bailable warrant against petitioner Nos.2 to 4 / accused

Nos.5 to 7 in C.C. No.2027/2017, is quashed.

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1. The Trial Court shall proceed with the case - C.C.

No.2027/2017 and decide the dispute as early as possible at

any rate within a period of six months from the date of receipt

of a certified copy of this order.

Sd/-

(R. NATARAJ)
JUDGE

SMA/List No.: 1 Sl No.: 38