Calcutta High Court (Appellete Side)
N. Mamatha Nagesh vs State Of West Bengal And Anr on 8 May, 2026
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
PRESENT:
THE HON'BLE JUSTICE UDAY KUMAR
CRR 2270 OF 2025
N. MAMATHA NAGESH
-VS-
STATE OF WEST BENGAL AND ANR.
For the Petitioner : Mr. Dipta Dipak Banerjee
Hearing concluded on : 21.04.2026
Judgment on : 08.05.2026
UDAY KUMAR, J.: -
I. INTRODUCTION
1.
The Petitioner, N. Mamatha Nagesh, has moved this Court under
Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023
(corresponding to Section 482 of the Code of Criminal Procedure,
1973), seeking the quashing of proceedings in Case No.
CS/35126/2022 currently pending before the Learned 7th
Judicial Magistrate at Calcutta. The Petitioner challenges the
issuance of process and the continuation of a prosecution
initiated by Opposite Party No. 2 (Inditrade Fincorp Limited) for
an alleged offence under Section 138 of the Negotiable
Instruments Act, 1881.
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2. The central grievance of the Petitioner is that she has been
impleaded in a commercial dispute despite being a legal stranger
to the instrument and the bank account in question. She asserts
that the prosecution is not a bona fide pursuit of justice but a
strategic attempt to exert psychological pressure on her husband,
the primary accused, by dragging a non-signatory spouse into a
criminal trial.
3. It is imperative to record the procedural history regarding the
representation of the Opposite parties. Despite exhaustive efforts
to ensure the presence of the Opposite Party No. 2 (the
Complainant), the said party has remained unrepresented. The
Opposite Party No. 1 (State), being a formal party, also did not
enter an appearance. Consequently, in light of the order of this
Court dated February 23, 2026, and the Complainant’s persistent
default, this Court has proceeded to decide the matter on its
merits, predicated strictly on the “sterling quality” materials
available on record and the submissions made by the Petitioner.
II. FACTUAL MATRIX
4. The genesis of the dispute lies in a commercial loan facility
extended by the Complainant, a Non-Banking Financial Company
(NBFC), to a business concern styled as “Dhathri Fuels.” The
transaction was a standard business arrangement intended for
operational requirements, governed by a credit agreement
executed between the lender and the business concern.
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CRR 2270 OF 2025
5. In purported discharge of the liability arising therefrom, a cheque
bearing No. 000448, dated January 18, 2022, was issued in
favour of the Complainant. Upon presentation, the instrument
was returned unpaid with the remark “insufficient funds.” Up to
this point, the transaction followed a standard commercial
trajectory leading to a default.
6. A crucial link in the factual chain emerges from the legal
constitution of “Dhathri Fuels.” As per the GST Registration
Certificate and bank mandates (Annexure P-3), the entity is a sole
proprietorship owned exclusively by Mr. G.V. Nagesh (Accused
No. 2). The Petitioner (Accused No. 3) is the wife of the proprietor.
Critically, she is neither a partner in the firm, nor an authorized
signatory to the bank account, nor is her signature present on
the instrument.
7. Following the dishonour, a statutory demand notice was issued,
as required under Proviso (b) to Section 138. However, a glaring
factual fracture occurred, the notice and the subsequent
complaint demanded a sum of ₹7,607/-, whereas the actual
cheque pertains to a staggering sum of ₹36,07,687/-. Despite this
massive discrepancy, the Complainant filed the complaint,
employing a strategic ambiguity by describing the concern as a
“proprietorship/partnership” to rope in the Petitioner.
8. Notwithstanding that the Petitioner is a permanent resident of
Karnataka (outside the territorial jurisdiction of the Trial Court)
and a non-signatory, the Learned Magistrate took cognizance and
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issued process. The Petitioner’s application challenging the
maintainability was rejected on March 21, 2025, on the ground
that her involvement was a “matter of trial.” This prompted the
present revision, asserting that the continuation of such
proceedings constitutes a manifest abuse of the process of law.
III. POINTS FOR DETERMINATION
9. To resolve this revision, this Court frames the following
interconnected points for determination:
i. Whether the Complainant’s persistent default in
representation, coupled with the postal endorsement
“Addressee Left,” warrants the conclusion that the
prosecution is vexatious and justifies an ex-parte
adjudication on merits?
ii. Whether a prosecution under Section 138 of the N.I. Act
can be legally sustained against the Petitioner, who is
admittedly neither the drawer of the cheque, nor the
signatory, nor the maintainer of the bank account?
iii. Whether the principle of vicarious liability under Section
141 of the N.I. Act can be extended to a sole
proprietorship concern to implead a spouse in the
absence of a corporate or partnership structure?
iv. Whether a statutory demand notice containing a gross
discrepancy (demanding ₹7,607/- for a ₹36 Lakh cheque)
satisfies the mandatory requirement of Proviso (b) to
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Section 138, or whether it renders the notice non-est in
the eyes of law?
v. Whether the Learned Magistrate failed to exercise the
mandatory “gatekeeping” duty under Section 202 of the
Cr.P.C. (Section 225 B.N.S.S.) by issuing process against
a resident of Karnataka without conducting the requisite
inquiry?
vi. Whether the use of the ambiguous description
“proprietorship/partnership” constitutes a suppression of
material facts, rendering the prosecution an abuse of the
process of law?
IV. SUBMISSIONS ON BEHALF OF THE PETITIONER
10. Mr. Dipta Dipak Banerjee, Learned Counsel appearing for the
Petitioner has forcefully contended that the initiation of criminal
proceedings against the Petitioner was not only a misadventure in
law but a blatant abuse of the process of the Court. The primary
thrust of the submissions was that the Petitioner, being the wife
of the proprietor, had been conveniently impleaded as a “person
in charge” to exert extra-legal pressure for the recovery of a
commercial debt, for which she held no personal or vicarious
liability.
11. Mr. Banerjee drew the attention of this Court to the persistent
non-appearance of the Complainant/Opposite Party No. 2. He
submitted that despite exhausting all efforts to ensure service,
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CRR 2270 OF 2025
and notwithstanding the final opportunity granted by this Court’s
order dated February 23, 2026, the Complainant has stayed away
from these proceedings. This conduct, it is argued, reflects a lack
of bona fide intent and an inability to defend the glaring legal
infirmities inherent in the prosecution. Consequently, he prayed
that the matter be decided on its merits.
12. On the merit, it was submitted by Mr. Banerjee that the statutory
mandate of Section 138 of the Negotiable Instruments Act is
strictly restricted to the “drawer” of the cheque. Relying on the
ratio in Jugesh Sehgal v. Shamsher Singh Gogi [(2009) 14 SCC
683], Mr. Banerjee emphasized that since the account was
maintained by a third party (the sole proprietorship of the
husband), the foundational ingredient of the offence is missing.
13. Addressing vicarious liability, Learned Counsel argued that
Section 141 of the NI Act is inapplicable as “Dhathri Fuels” is a
sole proprietorship, which lacks a separate legal identity. Citing
Bijoy Kumar Moni v. Paresh Manna & Anr. [2024 SCC OnLine SC
3833], he submitted that criminal liability cannot be foisted upon
a spouse merely on “bald averments” of dominion or control.
14. Further, Mr. Banerjee highlighted a gross jurisdictional and
procedural error. It was submitted that the Petitioner was a
permanent resident of Karnataka, residing well beyond the
territorial limits of the Learned Trial Court. In such
circumstances, the mandate of Section 202 of the Cr.P.C. (now
Section 225 of the B.N.S.S.) required a mandatory inquiry or
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CRR 2270 OF 2025
investigation before the issuance of process. He argued that the
Learned Magistrate had issued summons in a mechanical
manner, failing to observe the “gatekeeping” duty established in
Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari
Patsansta Ltd. [2025 SCC Online SC 641].
15. A significant factual anomaly was further brought to the attention
of this Court regarding the irreconcilable discrepancy between the
statutory demand notice and the cheque. It was submitted by Mr.
Banerjee that a demand notice claiming ₹7,607/- in relation to a
cheque of over ₹36 lakhs (₹36,07,687/-) was a non-est notice in
the eyes of law, as it failed to meet the mandatory requirement of
Proviso (b) to Section 138, which necessitates a demand for “the
said amount of money.”
16. Finally, citing the principle of “Clean Hands,” it was argued by
Mr. Banerjee that the Complainant had deliberately suppressed
the true nature of the business entity and used vague
descriptions like “proprietorship/partnership” to mislead the
Court. In light of the Complainant’s refusal to appear and the
manifest legal defects in the case, the Petitioner prayed for the
exercise of this Court’s inherent power to quash the impugned
proceedings in Case No. CS/35126/2022, as the continuation of
the trial against her would be an exercise in futility and an
instrument of harassment.
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CRR 2270 OF 2025
V. DISCUSSION, ANALYSIS AND FINDINGS ON POINTS FOR
DETERMINATION
(i) DISCUSSION AND FINDINGS ON POINT NO. I: Procedural
Propriety and Deemed Service
17. The first point for determination addresses the procedural
authority of this Court to adjudicate this revisional application on
its merits despite the absence of the Complainant (Opposite Party
No. 2). This Court must ensure that the judicial process is not
paralyzed by the tactical or negligent absence of a party who has
set the criminal law in motion. Adjudicating this point requires a
delicate balancing of the principles of natural justice against the
mandate to prevent the abuse of the process of law.
18. The factual progression regarding service is of significant note
and must be recorded with precision. The records indicate that
the Petitioner has exhausted all reasonable modes of service of
notice along with the copy of revisional application upon the
Complainant. The Postal Consignment Tracking Report confirms
that notice was dispatched to the Complainant’s registered
address, but was returned with the official endorsement
“Addressee Left.”
19. Under the established legal framework, this endorsement
constitutes valid and sufficient service. Pursuant to Section 27 of
the General Clauses Act, 1897, and Section 114 of the Indian
Evidence Act, 1872, there is a strong presumption of service
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CRR 2270 OF 2025
when a document is properly addressed and dispatched by
registered post.
20. The judicial consensus, as articulated in Madan & Co. v. Wazir
Jaivir Chand (1989) 1 SCC 264 and the 3-Judge Bench decision
in C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555, is
that if an addressee vacates the premises without providing a
forwarding address, they cannot frustrate legal proceedings by
their own omission. Endorsements such as “unclaimed” or “left”
are held to be deemed service.
21. Regarding the adjudication of the matter on merit in the absence
of the Complainant, the Hon’ble Supreme Court in K.S.
Panduranga v. State of Karnataka [(2013) 3 SCC 721] has laid
down the following principle:
“The Court can decide an appeal or revision on merits even
if the counsel for the accused or the complainant is absent,
provided the Court applies its mind to the facts and the
law. A criminal matter should not be dismissed merely for
default of the parties; it must be decided on the strength of
the legal merits appearing on the face of the record.”
22. When a Complainant initiates a criminal process but refuses to
defend its legality before the High Court, it reinforces the
Petitioner’s contention that the prosecution was initiated for
extra-legal purposes rather than a genuine pursuit of justice. As
observed in Associated Cement Co. Ltd. v. Keshvanand [(1998) 1
SCC 687], if the complainant remains absent, the court should
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CRR 2270 OF 2025
not hesitate to pass orders in favour of the accused if the
situation so demands.
23. In the present case, the “sterling quality” documents including
the GST Certificate and the physical cheque, allow this Court to
determine the sustainability of the prosecution without the
Complainant’s oral defence. The Complainant’s persistent failure
to appear, despite deemed service, strengthens the inference that
the prosecution was initiated for purposes other than a genuine
pursuit of justice.
24. I, therefore, find that this Court is legally justified in deciding this
application on its merits. The service is held to be valid, and the
Complainant’s absence is viewed as a waiver of their right to be
heard.
(ii) DISCUSSION AND FINDINGS ON POINT NO. II: The “Drawer”
Mandate and the Jurisdictional Bar
25. Having established that this Court is duty-bound to adjudicate
this matter despite the Complainant’s absence, I now turn to the
foundational substantive challenge of whether a prosecution
under Section 138 of the N.I. Act can be sustained against a
person who is admittedly neither the drawer nor the signatory of
the instrument nor the maintainer of the bank account.
26. The resolution of this point requires a synthesis of the “sterling
quality” evidence on record with the rigid statutory architecture of
the Act. The factual progression reveals a stark disconnect
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CRR 2270 OF 2025
between the Petitioner and the dishonoured instrument. The GST
Registration Certificate and Bank Account Mandates (Annexure
P-3) conclusively identify the business concern, “Dhathri Fuels,”
as a sole proprietorship belonging exclusively to Accused No. 2.
The bank account from which Cheque No. 000448 was issued is
maintained solely in the name of the proprietorship, and the
physical signature appearing on the instrument is that of the
proprietor, not the Petitioner. It conclusively proves that the
Petitioner is a total stranger to the account.
27. This factual reality must be tested against the rigours of Section
138, which is a technical penal provision. Its opening words
establish a mandatory restrictive boundary:
“Where any cheque drawn by a person on an account
maintained by him with a banker…”
The legislative choice of the words “by a person” and
“maintained by him” establishes an unbreakable identity-link
between the account holder, the drawer, and the signatory. In
the absence of this trinity of attributes, the foundational
jurisdiction to prosecute an individual under this section simply
does not exist.
28. I am guided by the celebrated ratio in Jugesh Sehgal v. Shamsher
Singh Gogi [(2009) 14 SCC 683], where the Apex Court held that:
“One of the essential ingredients of Section 138 is that the
cheque should have been issued from the account
maintained by the accused. If the cheque is drawn on an
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CRR 2270 OF 2025account which is not maintained by the accused, the
fundamental ingredient of the Section is missing.”
29. Applying this ratio to the present matrix, it is evident that the
Petitioner is a total stranger to the bank account. While the
Complainant alleged “dominion and control,” the law does not
recognize such nebulous concepts as a substitute for a signature
under Section 138. In a special statute where liability is strictly in
personam, criminal provisions cannot be stretched to foist liability
on a non-signatory. As clarified in P.J. Agro Tech Ltd. & Ors. v.
Water Base Ltd. [(2010) 12 SCC 146], criminal provisions must be
strictly construed; they cannot be used to foist liability on a party
who falls outside the statutory definition of an offender.
30. To relegate a non-signatory wife, residing in a different state, to
the rigours of a criminal trial to prove she did not sign a cheque,
when the instrument itself bears a different signature and
belongs to a different account holder, is a manifest failure of
justice. This is not a “matter of trial” but a matter of law.
31. I, therefore, find that the Petitioner cannot be prosecuted as a
“Drawer” under Section 138. To compel a non-signatory to
undergo the rigours of a trial to prove a negative is a manifest
failure of justice.
(iii) DISCUSSION AND FINDINGS ON POINT NO. III – The
Inapplicability of Vicarious Liability to Sole Proprietorships
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CRR 2270 OF 2025
32. Closely linked to the findings in Point II is the question of whether
the Petitioner can be held “vicariously” liable.The Complainant’s
strategy rests on the assumption that as the wife of the
proprietor, the Petitioner is a “person in charge” under Section
141 of the N.I. Act. This assumption is a legal fallacy. Having
concluded that the Petitioner is not a “drawer” within the
meaning of Section 138, I now address the Complainant’s attempt
to bridge this legal gap by invoking the doctrine of vicarious
liability. The Complainant’s case rests on the assertion that as
the wife of the proprietor, the Petitioner is a “person in charge”
and thus liable under Section 141 of the N.I. Act. This argument
is founded upon a fundamental legal fallacy.
33. Under established jurisprudence, a sole proprietorship is not a
separate legal entity; it is merely a trade name under which an
individual carries out business. In the eyes of the law, the
proprietor and the proprietorship are one and the same. This
distinction is pivotal because Section 141, which creates a legal
fiction of vicarious liability for “Companies,” is a penal provision
that must be strictly construed and cannot be extended by
implication.
Section 141 states:
“If the person committing an offence under section 138 is a
company, every person who… was in charge of, and was
responsible to the company for the conduct of the
business… shall be deemed to be guilty…”
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CRR 2270 OF 2025
The explanation to the section defines “Company” as anybody
corporate and includes a firm or other association of individuals.
34. The Hon’ble Supreme Court has recently reinforced this principle
in Bijoy Kumar Moni (supra) holding that “A sole proprietorship
concern is not a ‘Company’ within the meaning of Section 141 of
the NI Act. The proprietor and the proprietorship are one and the
same legal entity. Consequently, Section 141… cannot be invoked
to rope in any person other than the proprietor himself.”Since the
entity lacks a corporate or partnership persona, the concept of
roping in “vicarious” parties is legally impermissible. Criminal
liability in a proprietorship begins and ends with the proprietor
alone.
35. Furthermore, the Complainant has failed to establish any specific
legal nexus beyond the marital relationship. A spouse cannot be
arraigned as a co-accused simply by virtue of marriage or through
“bald averments” of being a joint beneficiary of a loan. As
observed in M.M. Lal v. State of NCT of Delhi & Anr. 2012 SCC
OnLine Del 4851, the absence of a formal partnership deed or a
corporate structure renders the invocation of Section 141 a
nullity in law.
36. In the present matrix, describing the entity as a
“proprietorship/partnership” appears to be a strategic attempt to
circumvent these restrictive boundaries. However, the “sterling
quality” documents on record, specifically the GST Certificate,
confirm the entity’s status as a sole proprietorship. Consequently,
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CRR 2270 OF 2025
the Petitioner, being neither the proprietor nor the signatory,
cannot be held liable for the dishonour of a cheque issued by a
different legal person.
37. I, therefore, find that the principle of vicarious liability is entirely
foreign to the facts of this case. The continuation of proceedings
against the Petitioner on the strength of a non-existent
partnership is a manifest abuse of the process of law.
(iv) DISCUSSION AND FINDINGS ON THE POINT NO. IV: The
Fundamental Invalidity of the Defective Demand Notice
38. Building upon the conclusion that the Petitioner is a legal
stranger to the instrument and the entity, I now turn to a
jurisdictional defect that strikes at the very root of the
prosecution, the validity of the statutory demand notice under
Proviso (b) to Section 138.
39. The factual record reveals an irreconcilable contradiction. While
the dishonoured cheque (No. 000448) represents a sum of
₹36,07,687/-, the statutory demand notice and the subsequent
Petition of Complaint demanded a mere ₹7,607/-. This is not a
marginal rounding error or a minor clerical slip; it is a staggering
discrepancy where the demand represents less than 1% of the
instrument’s value.
40. The mandate of Proviso (b) to Section 138 requires a demand for
payment of the “said amount of money.” This has been judicially
interpreted to mean the exact amount covered by the cheque. The
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purpose of the notice is to provide the drawer a “last clear
chance” to rectify the default and avoid criminal prosecution.
41. A notice that claims a fraction of the debt effectively misleads the
drawer. If the drawer pays the demanded ₹7,607/-, they have
technically complied with the notice, yet the underlying liability
remains unaddressed. On this point the Hon’ble Supreme Court
remove the doubts by holding such notice defective which refer
demand of a claim less than the cheque amount, in Suman Sethi
v. Ajay K. Churiwal & Anr. [(2000) 2 SCC 380].
42. In the present matrix, the notice fails the “clarity test.” A drawer
who receives a notice for 7,607/- for a liability exceeding 3.6
million is effectively misled. If the drawer pays the demanded
7,607/-, they have technically complied with the notice, yet the
underlying debt remains largely unpaid. Conversely, if they do
not pay, they face a criminal prosecution for a default of over 3.6
million that was never properly “demanded” in writing as required
by the statute.
43. Relying on the ratio in K.R. Indira v. Dr. G. Adinarayana [(2003) 8
SCC 300], “a notice which does not make a demand for the
amount covered by the cheque is not a notice in the eye of law
and cannot be the basis for a complaint under Section 138.”
Without a valid notice, the “cause of action” never matures, and
the Learned Magistrate lacks the foundational jurisdiction to take
cognizance.
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44. I, therefore, hold that the statutory notice in this case is void ab
initio. This gross discrepancy vitiates the entire prosecution,
rendering it legally unsustainable from its very inception.
(v) DISCUSSION AND FINDINGS ON POINT NO. V: The Failure of
Judicial Gatekeeping and the Mandatory Inquiry
45. The fifth point for determination addresses a significant
procedural lapse that strikes at the jurisdictional validity of the
summoning order. This Court must determine whether the
Learned Magistrate failed to exercise the mandatory “gatekeeping”
duty required when an accused resides outside the Court’s
territorial jurisdiction, a safeguard specifically designed to
prevent the criminal machinery from being weaponized as a tool
of harassment against distant residents.
46. The factual progression of this case highlights a significant
geographical and procedural chasm. The Petitioner is a
permanent resident of Karnataka, whereas the process was
issued by a Court in Kolkata, West Bengal. Under such
circumstances, the Magistrate was not merely exercising a
discretion but was bound by the mandatory command of Section
202 of the Cr.P.C. (now Section 225 of the B.N.S.S.).
47. This mandate, as amended in 2006, makes it obligatory for a
Magistrate to either inquire into the case personally or direct an
investigation where the accused resides beyond the area of his
jurisdiction. The statute explicitly commands:
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“…in a case where the accused is residing at a place
beyond the area in which he exercises his jurisdiction, [the
Magistrate] shall postpone the issue of process against the
accused, and either inquire into the case himself or direct
an investigation…”
48. The use of the word “shall” signify a mandatory procedural
safeguard. As reaffirmed in Rekha Sharad Ushir (supra) and the
landmark decision in Vijay Dhanuka & Ors. v. Najima Mamtaj &
Ors. [(2014) 14 SCC 638], the purpose of this inquiry is to protect
innocent persons from being vexed by unscrupulous
complainants through the “ordeal of trial.”
49. In the matrix of the present case, the Learned Magistrate issued
the summons in a mechanical manner. Had the mandatory
inquiry been conducted, the Court would have immediately
discovered the fatal infirmities discussed in the preceding points:
i. The Petitioner was a non-signatory to the instrument;
ii. The accused entity was a sole proprietorship, precluding
vicarious liability;
iii. The demand notice was mathematically and legally
fractured.
50. The inquiry under Section 202 is intended to act as a judicial
“sieve” that filters out legally untenable allegations. In cases
involving distant residents, a Magistrate cannot simply rely on
“bald averments” of a party being a “person in charge.” There
must be a specific legal nexus. Here, the Petitioner’s status as a
spouse residing in Karnataka, coupled with the total absence of
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her signature on the cheque, should have triggered heightened
judicial scrutiny rather than routine issuance of process.
51. By bypassing this inquiry, the Learned Trial Court effectively
allowed the Complainant to use the distance and the rigours of
travel as a weapon of coercion. Forcing a resident of Karnataka to
appear in a Kolkata court to answer a charge that has no “legal
legs” constitutes a grave miscarriage of justice. This failure is not
a mere “curable irregularity” but a jurisdictional error that
vitiates the summoning order itself.
52. I find that the Learned Magistrate failed to exercise the
“gatekeeping” duty established by law. The mechanical issuance
of process against a distant resident, especially where the
statutory foundation is so visibly fractured, necessitates the
quashing of the proceedings against the Petitioner
(vi) DISCUSSIONS AND FINDINGS ON POINT NO. VI: Suppression
of Material Facts and the Abuse of Process
53. The final point for determination addresses the conduct of the
Complainant and whether the cumulative effect of the
misrepresentation, specifically regarding the entity’s legal status
and the presentation of a mismatched financial claim, constitutes
a manifest abuse of the process of law and the suppression of
material facts. This Court must determine if the judicial
machinery has been utilized as a tool for extra-legal coercion
rather than a bona fide pursuit of justice.
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54. A review of the record reveals a persistent pattern of “calculated
ambiguity” on the part of the Complainant. In the Petition of
Complaint, the accused entity was described through the dual
lens of a “proprietorship/partnership,” and the Petitioner was
consequently roped in as a “person in charge.” However, the GST
Registration Certificate and the loan agreements, documents
produced by the Complainant itself categorically identify the
entity as a sole proprietorship.
55. By using a slash to bridge two distinct and mutually exclusive
legal concepts, the Complainant effectively misled the Learned
Trial Court into applying the principles of vicarious liability under
Section 141 of the NI Act. As established in Point No. III, this
section has no application to a sole proprietorship. This was not a
mere clerical oversight; it was a strategic misdescription intended
to circumvent the restrictive boundaries of the NI Act and drag
the Petitioner into a criminal dock where no liability existed.
56. This ambiguity is further exacerbated by the “mismatched claim”
discussed in Point No. IV. The presentation of a statutory demand
for ₹7,607/- against a cheque of ₹36,07,687/- is a failure to
disclose the true nature of the default to the Court at the time of
taking cognizance. When a Complainant initiates criminal law,
they owe a duty of absolute candour. The suppression of the
entity’s true legal status, coupled with a mathematically fractured
demand notice, strikes at the very heart of the prosecution’s
integrity.
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57. Learned Counsel for the Petitioner has rightly relied upon the
principle that “he who seeks equity must come with clean hands.”
In the context of criminal law, the Hon’ble Supreme Court in
State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335] held that
the High Court may exercise its inherent powers to quash
proceedings:
“…where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the accused and with a view to spite him due to private
and personal grudge.”
58. In the present matrix, the Complainant’s conduct points to a
strategy of institutionalized harassment. By impleading the wife
of the proprietor, a resident of a distant State, through a distorted
legal lens, the Complainant has attempted to use the criminal
process to recover a commercial debt from a party who bears no
statutory or personal liability.
59. As held in Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate &
Ors. [(1998) 5 SCC 749], summoning an accused in a criminal
case is a serious matter. A Complainant cannot be permitted to
maintain a prosecution by suppressing the true legal status of the
parties. To allow this trial to continue against the Petitioner
would be to sanction a manifest injustice and allow the “ordeal of
trial” to serve as the punishment itself.
60. I find that the Complainant’s reliance on ambiguous descriptions
and a defective claim constitutes a suppression of material facts.
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Such conduct vitiates the foundational integrity of the complaint.
Consequently, the initiation and continuation of the proceedings
against the Petitioner in Case No. CS/35126/2022 constitute a
blatant abuse of the process of law. The judicial machinery
cannot be allowed to be used as a pawn for strategic litigation.
Therefore, in the interest of justice and to prevent the further
harassment of the Petitioner, the proceedings as against her must
be quashed.
VI. SUMMARY OF LEGAL FINDINGS
61. Upon an exhaustive discussion and meticulous analysis of the
legal and factual matrix, this Court arrives at the following
significant legal findings:
i. Liability under Section 138 of the Negotiable Instruments
Act is strictly in personam. The statute creates a
mandatory identity-link between the drawer, the
signatory, and the account holder. Criminal liability
cannot be foisted upon a person who is neither the
signatory of the instrument nor the maintainer of the
bank account.
ii. A sole proprietorship has no legal identity or “soul”
separate from its proprietor. Unlike companies or
partnership firms, it is not a “body corporate” or an
“association of individuals.” Therefore, the proprietor and
23
CRR 2270 OF 2025the proprietorship are, in the eyes of the law, one and the
same entity.
iii. The principle of vicarious liability under Section 141 of the
Act is an exception to general criminal law and must be
strictly construed. Since a sole proprietorship is not a
“Company” within the meaning of Section 141, the
concept of roping in “persons in charge” cannot be
extended to such a concern.
iv. A marital relationship is not a legal substitute for a
partnership deed or a corporate structure. In the absence
of a registered partnership or company, a spouse cannot
be made an accused based on “bald averments” of
dominion or control over a business belonging to the
other spouse.
v. A statutory demand notice is a mandatory condition
precedent for a cause of action. The phrase “said amount
of money” in Proviso (b) to Section 138 refers to the exact
cheque amount. A notice claiming a gross and staggering
discrepancy (₹7,607/- vs. ₹36,07,687/-) is a non-est
notice that fails to provide the drawer a valid opportunity
to rectify the default.
vi. The “gatekeeping” duty of a Magistrate under Section 202
of the Cr.P.C. (now Section 225 B.N.S.S.) is mandatory
where the accused resides outside the Court’s
jurisdiction. The failure to conduct this inquiry to verify
24
CRR 2270 OF 2025the legal nexus of an out-of-station resident constitutes a
jurisdictional error that vitiates the summoning order.
VII. CONCLUSION AND CONSEQUENTIAL DIRECTIONS
62. In view of the categorical legal findings arrived at hereinabove,
this Court concludes that the continuation of the criminal
prosecution against the Petitioner is legally unsustainable. The
undisputed facts demonstrate that the Petitioner is neither the
account holder nor the signatory of the dishonoured cheque.
Furthermore, the legal status of the accused entity as a sole
proprietorship precludes the application of vicarious liability.
63. Consequently, this Court is of the firm opinion that the
continuation of the impugned proceedings against the Petitioner
(Accused No. 3) would be an exercise in futility and an affront to
justice.
64. Accordingly, the Criminal Revisional Application being C.R.R. No.
2270 of 2025 stands Allowed.
65. The proceedings in Case No. CS/35126/2022 pending before the
Learned 7th Judicial Magistrate at Calcutta, are hereby quashed
and set aside insofar as they relate to the present Petitioner, N.
Mamatha Nagesh (Accused No. 3).
66. The Petitioner is hereby discharged from the said case. All bail
bonds, surety bonds, or undertakings executed by the Petitioner
shall stand cancelled, and the sureties are released. All warrants,
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CRR 2270 OF 2025
summons, or look-out circulars issued against the Petitioner in
this specific case stand cancelled.
67. The Learned Trial Court shall proceed with the trial against the
remaining accused persons (Accused No. 1 and Accused No. 2)
with utmost expedition, without being influenced by any
observations made in this judgment, which are limited to the
liability of the Petitioner herein.
68. The Learned Trial Court is directed to return any personal
documents belonging to the Petitioner upon proper identification.
69. Let a copy of this judgment be sent to the Learned Trial Court
immediately for compliance.
70. All connected applications stand disposed of.
71. Interim orders stand vacated.
72. There shall be no order as to costs.
73. The Trial Court Record (TCR), if any, shall be sent down to the
Trial Court, at once.
74. Case diary, if any, be returned forthwith.
75. Urgent photostat certified copy of this judgment, if applied for, be
supplied to the parties upon compliance with all requisite
formalities.
(Uday Kumar, J.)
