Kallar Harikumar and Lalitha Harikumaar v. Amritha Enterprises Pvt. Ltd. and State of Kerala

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A. Badharudeen
Judgment Date: 2022-10-19
Court Decision / Holding: The revision petition stands allowed and conviction and sentence impugned stand set aside.
Final Disposition: Conviction and sentence set aside; petition allowed.

Parties to the Case

Appellants / Petitioners

KALLAR HARIKUMAR
LALITHA HARIKUMAR

Respondents

AMRITHA ENTERPRISES PVT.LTD
STATE OF KERALA

Legal Representation & Advocates

Counsels for Petitioners

• Noble Mathew

Counsels for Respondents

• K MANOJ CHANDRAN
• P.R. AJITH KUMAR
• AMMU CHARLES
• S.A. MANSOOR (PATTANAM)
• RENJIT GEORGE

Case Synopsis & Summary

This is a criminal revision petition under Sections 397 and 401 Cr.P.C. filed by KALLAR HARIKUMAR and LALITHA HARIKUMAR, who are described as directors of Teltron Kuri Company Pvt. Ltd., challenging the judgments in CC 41/2013 of the Judicial First Class Magistrate Court-V and the subsequent confirmation in Crl.Appeal No. 53 of 2016 by the Additional Sessions Judge-V, Thiruvananthapuram. The complainant Amritha Enterprises Pvt. Ltd. along with the State of Kerala alleged a cheque for Rs. 5,26,500 issued by the company in discharge of a liability, resulting in a conviction under Section 138 NI Act. The core legal issue is whether a prosecution under Section 142 NI Act can proceed against directors when the company is not arraigned as an accused. The petition relies on the Supreme Court's decision in Himanshu v. B. Shivamurthy (2019) 3 SCC 797, which held that in the absence of the company being arraigned, a complaint against a director is not maintainable, since company liability is a prerequisite for vicarious liability. In this case, the cheque was issued for and on behalf of the company, and the company was not arraigned, rendering the entire prosecution vitiated. The court thus allows the revision petition and sets aside the conviction and sentence. It also directs that any money deposited be released to the complainant and adjusted as per decree terms. The consequence is that the impugned judgments are quashed.

Provisions of Law Cited

Section 397 of Cr.P.C.Section 401 of Cr.P.C.Section 138 of the Negotiable Instruments ActSection 142 of the Negotiable Instruments Act

Legal Doctrines & Maxims

Vicarious liability of directors
Company must be arraigned as accused; absence vitiates NI Act proceedings

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicants contend that in prosecutions under Section 138 NI Act, the company must be arraigned as an accused; without arraignment, the complaint against directors is not maintainable; vicarious liability to be attracted only if the company is indicted. They rely on the Supreme Court decision in Himanshu v. B. Shivamurthy (2019) 3 SCC 797; the absence of the company as accused renders the proceedings void and the conviction should be set aside, with any deposit handled per the decree.

Contentions of Respondents

The respondents contend that the constitutional and statutory framework allows the directors to be charged, and that the court should consider the civil decree and any deposits; they rely on the Himanshu decision to clarify procedural steps, arguing for the proper disposition of deposited amounts and maintaining the validity of proceedings to the extent of co-accused liability.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Himanshu v. B. Shivamurthy	(2019) 3 SCC 797	Positive	The Apex Court held that, where the cheque is issued by a company, the company must be arraigned as an accused; without arraignment, a complaint against directors is not maintainable, and vicarious liability attaches only if the company is held liable.

Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR. JUSTICE A. BADHARUDEEN** **WEDNESDAY, THE 19[TH] DAY OF OCTOBER 2022 / 27TH ASWINA,** **1944** **CRL.REV.PET NO. 622 OF 2022** **AGAINST THE JUDGMENT IN CC 41/2013 OF JUDICIAL MAGISTRATE OF FIRST CLASS -V,(SPECIAL COURT-MARKLIST** **CASES), THIRUVANANTHAPURAM** **CRL.APPEAL NO.53/2016 OF ADDITIONAL SESSIONS COURT - V,** ## **THIRUVANANTHAPURAM** ## **REVISION PETITIONERS/APPELLANTS/ACCUSED :** **1 KALLAR HARIKUMAR, MANAGING DIRECTOR, TELTRON KURI COMPANY PRIVATE LIMITED, THANIMA DINAPATHRAM BUILDING, THIRUVANANTHAPURAM-14** **2 LALITHA HARIKUMAR, CHAIRPERSON, TELTRON KURI COMPANY PRIVATE LIMITED, THANIMA DINAPATHRAM BUILDING, THIRUVANANTHAPURAM-14.** ## **BY ADV NOBLE MATHEW** ## **RESPONDENTS/RESPONDENTS/COMPLAINANT & STATE :** **1 AMRITHA ENTERPRISES PVT.LTD, GANDHI NAGAR, VAZHUTHACADU, THIRUVANANTHAPURAM, REP.BY ITS FINANCIAL ADVISOR, P.G.M.CHETTIAR, PIN - 695014** **CRL.R.P. NO.622 OF 2022** -:2:- **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM – 682031** **BY ADVS. K MANOJ CHANDRAN PUBLIC PROSECUTOR P.R.AJITH KUMAR(K/000708/1998) AMMU CHARLES(K/000664/2013) S.A.MANSOOR (PATTANAM)(K/217/1994) BY SRI.RENJIT GEORGE, SR.PUBLIC PROSECUTOR** **THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 19.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **CRL.R.P. NO.622 OF 2022** -:3:- **“C.R.”** **Crl.R.P.No.622 of 2022 --------------------------------------------** ## **O R D E R** Accused Nos.1 and 2 in C.C.No.41 of 2013 on the file of the Judicial First Class Magistrate Court-V, Thiruvananthapuram are the revision petitioners in this revision petition filed under Sections 397 and 401 of Code of Criminal Procedure (hereinafter will be referred as Cr.P.C. for convenience). The respondents herein are the original complainant as well as the State of Kerala. 2. Heard the learned counsel for the revision petitioners as well as the learned counsel appearing for the first respondent and the learned Public Prosecutor for **CRL.R.P. NO.622 OF 2022** -:4:- the second respondent/State of Kerala. 3. I shall refer the parties in this Revision Petition as 'revision petitioners' and ‘complainant’ hereinafter for convenience. 4. The revision petitioners assail judgment dated 30.11.2015 in CC 41/2013 of the learned Magistrate and confirmed in appeal by the Additional Sessions Judge-V, Thiruvananthapuram as per judgment dated 11.10.2018 in Crl.Appeal No.53 of 2016. 5. The learned counsel for the revision petitioners, while assailing the concurrent verdicts of the trial court raised an important legal question, and the same will go to the root of the matter, if found, in favour of the revision petitioners. In this matter, the complainant launched presecution alleging commission of offence punishable Under Section 138 of Negotiable Instruments Act (hereinafter will be referred as 'N.I Act' for **CRL.R.P. NO.622 OF 2022** -:5:- convenience) _,_ on dishonour of a cheque for Rs.5,26,500/-, alleged to be issued with signatures of the revision petitioners, as directors, for and on behalf of the Teltron Kuri Company Pvt.Ltd. 6. The courts below concurrently found commission of offence punishable under Section 138 of the Negotiable Instruments Act by the revision petitioners. 7. The legal question that has been pressed into before this Court is, whether a prosecution launched under Section 142 of the NI Act would lie against the Director/Directors of a company without arraying the company as an accused? 8. In this connection, the learned counsel for the revision petitioner placed a decision of the Apex Court reported in [(2019) 3 SCC 797], **Himanshu v. B.Shivamurthy and another** , where the Apex Court **CRL.R.P. NO.622 OF 2022** -:6:- considered exactly similar question in paragraph Nos.11, 12, 13 and 14 of the judgment and held that in the absence of company being arraigned as an accused, a complaint against the director is not maintainable, merely for the reason that the Director of the Company had signed the cheque for and on behalf of the company. It was held further that the commission of the offence by the company is an express condition precedent to attract vicarious liability of Director. Therefore, the ratio of the decision, indubitably, is that, in a prosecution alleging commission of the offence punishable Under Section 138 of N.I Act, when cheque being issued by a company, a prosecution shall not sustain without arraying the company as an accused. No doubt, then its director/directors can be arrayed as co-accused, being signatory/signatories of the cheque. 9. In this case, admittedly, the cheque was **CRL.R.P. NO.622 OF 2022** -:7:- issued for and on behalf of a company and the company is not arraigned as an accused. Therefore, in view of the above legal position, the entire prosecution is vitiated and accordingly, the concurrent finding of conviction and sentence are liable to be set aside. 10. Accordingly, the revision petition stands allowed and conviction and sentence impugned stand set aside. 11. At this juncture, it is argued by the learned counsel for the first respondent that in **Himanshu'** s case (supra), the Apex Court, while recording acquittal, directed the Registry to issue communication to the respondent/complainant in the said case to give the amount of money deposited before the court, as directed. Therefore, the amount, if any, deposited in this case, may be directed to be given to the complainant. 12. In response to this submission, the **CRL.R.P. NO.622 OF 2022** -:8:- learned counsel for the revision petitioners would submit that there is a civil suit and decree has been passed therein. Therefore, it is ordered that the amount, if any, deposited in this case before the court below shall be released to the first respondent and the amount shall be adjusted towards the decree debt and the first respondent is entitled to realise the remaining amount alone by executing the decree or otherwise, subject to the terms of the decree. Sd/- **A. BADHARUDEEN JUDGE** rkj