The Karnataka High Court addressed petitions filed by an accused, Shaik Nowhera, challenging multiple private complaints (seventeen in number) under Section 138 of the Negotiable Instruments Act for cheque dishonour, seeking quashing of the proceedings on grounds of technical irregularity in how the accused company was described in the complaint / cause title. The total amount in dispute across the cheques was roughly ₹9,84,24,292. The accused argued that the company was not properly named, that the description was inverted (the director/officer named before the company rather than “Company represented by its CEO and MD”), and that such defects were incurable and fatal to the prosecution.
Justice Sachin Shankar Magadum, however, rejected these arguments, holding that once a Magistrate takes cognizance under the NI Act, the proceedings cannot be quashed merely because the company has not been perfectly described in the cause title—unless it is shown that no notice under Section 138(b) of the NI Act was served on the company. In this case, the notice requirement was satisfied: notice had been duly issued and served on the company through its CEO and MD in their official capacity. The court held that service on these officers in their corporate capacity constitutes valid notice to the company itself. Furthermore, under Section 141 of the NI Act, notice to the company by service on officers or directors responsible for its conduct is deemed notice to the company, in relation to those offences.
The bench noted that defects in description—the inversion of ordering of names or failing to first state the company's name and then its representative—are irregularities but they do not impact the substance of the complaint when the intention and identity of accused are clear. Such technical irregularities are not, the court held, sufficient to terminate the prosecution. The court observed that to quash proceedings on such hyper-technical grounds, despite all substantive ingredients of Section 138 being present, would prejudice the complainant unfairly and undermine the objectives of the NI Act, which include safeguarding commercial transactions and ensuring deprived creditors have recourse.
Additionally, the court found that failure to separately array the Director as accused (though service on the company was already effected) is a defect that is curable. It can be remedied under relevant procedural provisions: either under Section 223 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), or under Section 319 of the Criminal Procedure Code, depending on the stage of proceedings.
Accordingly, the court dismissed the petitions seeking quashing. The proceedings under Section 138 NI Act in respect of the seventeen cases were ordered to continue.
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