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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1465 OF 2009

HIMANSHU Appellant(s)

VERSUS

B. SHIVAMURTHY & ANR. Respondent(s)

JUDGMENT

Dr. Dhananjaya Y. Chandrachud, J.

A complaint under Section 138 of the Negotiable

Instruments Act, 1881 was instituted by the respondent against

the appellant. According to the complainant, the appellant had

borrowed a sum of Rs. 4,15,000/- “for his business development”

and on the same day, the appellant issued a cheque drawn on

Karnataka Bank, Hosadurga for an equivalent amount. When the

cheque was presented on 26 December 2003 for encashment to the

State Bank of Mysore, Beligere Branch, the bank returned the

cheque with an endorsement on 29 December 2003 stating that

funds were insufficient. The complainant issued a notice to the

appellant on 19 January 2004 which was served on 28 January

2004.

Upon the failure of the appellant to pay the amount due

under the cheque, a complaint was instituted.

The Civil Judge, Junior Division, Tiptur took cognizance

Digitally signed by

MANISH SETHI

Date: 2019.01.24

16:19:04 IST

Reason:

Signature Not Verified

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on 6 July 2004 and issued summons to the appellant.

The appellant instituted a petition under Section 482 of

the Code of Criminal Procedure, 1973 (“CrPC”) before the High

Court of Karnataka. Paragraph 6 of the petition states the

ground on which the jurisdiction of the High Court was invoked.

“6. The cheque was issued by one of the

directors of M/s Lakshmi Cement and

Industries Ltd., i.e., on behalf of said company.

The said company was public limited company and in

order to demonstrate the said fact, the accused

herewith produces copies of the memorandum and

articles of association of the company alongwith

the certification of incorporation of the company

and which are marked as ANNEXURE C1, C2 AND C3

respectively.”

In paragraph 7, the appellant averred thus:-

“7. …

The complainant approached the learned Magistrate

with a request to take cognizance against the

accused stating that the accused on 23.12.2003 had

issued a cheque in his favour and the said cheque

was bounced on 26.12.2003 on meticulously going

through the cheque dated 23.12.2005 it discloses

that the cheque was issued by one of the directors

of the company and that was not a cheque issued by

any person in his individual capacity. If that is

accepted the complaint should have been against the

company and its Directors and not against the

Accused.”

The appellant submitted that the cheque was issued by a

Director of Lakshmi Cement and Ceramics Industries Ltd., a

public limited company. In other words, the cheque was not

issued by the signatory in his personal capacity. Hence, it

was urged that the complaint ought to have been instituted

against the company and its Directors and not against the

appellant.

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The High Court by its order dated 24 January 2006

dismissed the petition. The High Court rejected the submissions

urged on behalf of the appellant on the ground that the

complainant had pleaded ignorance about the existence of the

company. Moreover, in the view of the High Court, it would not

be difficult for the complainant to take steps to proceed

against the company as well as against other persons who are

responsible for the affairs of the company.

The judgment of the High Court has been questioned on two

grounds. Learned counsel appearing on behalf of the appellant

submits that firstly, the appellant could not be prosecuted

without the company being named as an accused. The cheque was

issued by the company and was signed by the appellant as its

Director. Secondly, it was urged that the observation of the

High Court that the company can now be proceeded against in the

complai