Title: Rajiv & Others And State Bank of India C.C.No.3095 of 2021
Date of Decision: October 6, 2023
CORAM: The Hon’ble Mr. Justice M. Nagaprasanna
Introduction
This judgment review pertains to a case where two criminal petitions were filed under Section 482 of the Criminal Procedure Code (Cr.P.C.) to quash the proceedings initiated against the petitioners for offenses punishable under Section 138 of the Negotiable Instruments Act, 1881. The case revolves around the issuance of a cheque as security for a credit facility, which became the subject of dispute after the death of the individual who had signed the cheque.
Facts of the Case
The case involves two separate criminal petitions filed by the accused parties. In the first criminal petition (No.6481 of 2022), accused numbers 3, 4, and 6 filed the petition, while in the second criminal petition (No.7203 of 2022), accused numbers 1, 2, and 5 were the petitioners. The accused parties in both petitions challenged the proceedings initiated against them in Criminal Case No.3095 of 2021.
The dispute centers around M/s. Jamkhandi Sugars Limited, which had sought credit facility from the State Bank of India (the Bank) for its operations related to harvesting and transportation of sugarcane. The credit facility was granted, and a cheque was issued by the Chairman of the company as security for the facility. However, the Chairman passed away, and subsequently, the accused parties took over as office bearers of the company.
The Bank declared the credit facility as a non-performing asset, and when the cheque was presented for realization, it was dishonored due to insufficient funds. A legal notice was sent by the Bank to the accused parties, which led to the filing of a private complaint and the issuance of summons.
Court’s Analysis and Decision
The crux of the case revolved around whether the issuance of the cheque as security, following the death of the Chairman who signed it, was legally valid. The petitioners argued that the presentation of the cheque after the Chairman’s death rendered it invalid, and therefore, the proceedings against them were null and void.
On the other hand, the Bank contended that the accused parties, who were office bearers of the company, were not absolved from liability as they had played a role in the renewal of loan documents, were aware of the cheque issued by the former Chairman, and the company was still in existence.
After considering the arguments from both sides, the Court had to decide whether the proceedings should be quashed. The Court held that the mere death of the Chairman of the company did not automatically absolve the other office bearers from liability. They were responsible for the company’s debts and had actively participated in the transactions.
The Court rejected the petitioners’ arguments and ruled in favor of the Bank, stating that the proceedings would not be quashed. The Court found that the petitioners had a role in the affairs of the company and could not evade liability under Section 138 of the Negotiable Instruments Act.
In conclusion, the Court’s decision upheld the continuation of proceedings against the accused parties, emphasizing that they had a significant role to play in the company’s financial transactions, despite the death of the Chairman.
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Written by- Tarishi Verma
