Bombay High Court
CLC INDUSTRIES LIMITED (SPENTEX INDUSTRIES LTD.) , NEW DELHI AND OTHERSversusPRAKASH COTTON, AURANGABAD
- Disposal
- DISMISSED
- Bench
- Y G KHOBRAGADE
Holding
A petition under Section 482 CrPC challenging the issuance of process under Section 138 NI Act is not maintainable by directors or other accused through a power of attorney and cannot be filed in the absence of the primary corporate offender.
Summary
CLC Industries Ltd. and its directors were charged under Section 138 of the Negotiable Instruments Act for the dishonour of three cheques. The accused filed three separate applications under Section 482 of the Criminal Procedure Code seeking quashment of the issuance of process and dismissal of the complaints. The Court examined whether such applications could be filed through a power of attorney and whether directors could challenge the proceedings without the company, the primary offender, being impleaded. Relying on precedent that only the accused person or a duly authorized next friend may file a petition, and on provisions of the Companies Act and the Power of Attorney Act, the Court held that the applications were not maintainable via a power of attorney and that directors could not alone challenge the process. Consequently, the applications were dismissed against the company and the directors, and the proceedings were ordered to continue.
Issues considered
- Whether an application under Section 482 CrPC challenging the issuance of process for an offence under Section 138 NI Act is maintainable through a power of attorney.
- Whether directors or other officers of a company can file such applications in the absence of the company, the primary offender.
Legislation cited
- Code of Criminal Procedure, 1973 — s. 205, 273, 482
- Companies Act, 1956 — s. 34
- Negotiable Instruments Act — s. 138, 141
- Power of Attorney Act — s. 2
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act — s. 13(4)
Subjects
- Section 138 NI Act
- Section 482 CrPC
- Power of Attorney
- Director liability
- Corporate offence
- Quashment of criminal proceedings
- Vicarious liability
- Companies Act
Judgment
2026:BHC-AUG:6615
930**-Cri-Apln-344-2020++.odt
IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
930 CRIMINAL APPLICATION NO. 344 OF 2020
CLC INDUSTRIES LIMITED (SPENTEX INDUSTRIES LTD.) , NEW
DELHI AND OTHERS
VERSUS
PRAKASH COTTON, AURANGABAD
WITH
CRIMINAL APPLICATION NO. 345 OF 2020
CLC INDUSTRIES LIMITED (SPENTEX INDUSTRIES LTD.) , NEW
DELHI AND OTHERS
VERSUS
PRAKASH COTTON, AURANGABAD
WITH
CRIMINAL APPLICATION NO. 346 OF 2020
CLC INDUSTRIES LIMITED (SPENTEX INDUSTRIES LTD.) , NEW
DELHI AND OTHERS
VERSUS
PRAKASH COTTON, AURANGABAD
.…
Mr. Ashwin Sakolkar, Advocate for Applicant Nos. 2 to 4 and 9
Mr. Sanket Kulkarni, Advocate for Applicant No.7
Mr. Abhay Dilip Ostwal, Advocate for the Respondent
.…
CORAM : Y. G. KHOBRAGADE, J.
DATE : February 12, 2026
PER COURT :-
1. Needless to say that, on 22.01.2026, this Court passed the
following order:-
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“1. Advocate Mr. Ashwin Sakolkar appears through video
conferencing and submits that today itself he has received
instructions on behalf of applicant nos.2 to 4 to appear in the
present application and seeks one week time to file
Vakalatnama. Mrs. Rashmi Kulkarni made a statement that she
has instruction to appear for applicant no.7 only and she
prayed for time to file appropriate application seeking
permission to file an independent application by deleting the
name of the applicant no.7 from this application.
2. Mr. Ostwal the learned counsel appearing for the non-
applicant strongly objected for adjournment. Needless to say
that on 12.02.2020, this Court passed an order and issued
notice to the non-applicant and granted stay to the proceeding
SCC No.10855/2018. The said complaint pertains to offence
punishable under Section 138 of the N.I. Act for dishonour of
three different cheques amounting to Rupees One Crore and
Fifty Lakhs as described in para 9 of the complaint.
3. By the present application under Section 482 of the
Cr.PC. The applicants who are original accused nos.1 to 9 have
challenged the order dated 31.01.2019, whereby the learned
trial Court issued process as against the present applicants for
the offence punishable under Section 138 read with Section
141 of the N.I. Act. Though, advocate Mr. Sakolkar made a
statement that he has instructions to appear on behalf of the
applicant nos.2 to 4 and advocate Mrs. Rashmi Kulkarni made a
statement that she has instructions to appear on behalf of
applicant no.7. However, nothing has been justified when
present application was filed by all the accused persons as to
how at this stage different applicants can engage different
advocates and whether such practice is permissible under the
Advocates Act and Rules as well as under the High Court
Appellate Side Rules. Since the present application pertains to
offence punishable under Section 138 of the N.I. Act and it is
ideally pending since 2020 and even after lapse of 5 – 6 years,
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the applicants are playing tricks and trying to delay the
proceeding. One more adjournment is granted subject to
payment of cost of Rs.10,000/- each which will be payable by
the applicants nos.2, 3, 4 and 7 each to the non-applicant.
4. Stand over to 09.02.2026. The earlier interim order, if
any, to continue till then.”
2. On 09.02.2026, this Court has passed the following
order:-
“1. Heard the learned counsel Mr. Kulkarni, appearing for
applicant No. 7 and Mr. Ostwal, learned counsel appearing for
the sole respondent, at length.
2. None appeared for the respondent Nos. 2 to 4.
3. The learned counsel appearing for the applicant No. 7 made
a statement about depositing of costs under order dated
22.01.2026. The learned Counsel appearing for the sole
respondent affirmed for the receipt of the costs.
4. When all these three matters i.e. Criminal Application Nos.
344 of 2020, 345 of 2020 and 346 of 2020 are called out, the
learned counsel Mr. Kulkarni has made a statement that, he has
only instructions to appear on behalf of applicant No. 7, i.e. Mr.
Rajinder Kumar Jain, however, he has no instructions to appear
on behalf of other applicants.
5. The present applicants are the original accused in SCC
No.10855 of 2018, SCC No. 9286 of 2018 and SCC No. 10854
of 2018. All these complaints are filed under Section 138 of the
Negotiable Instruments Act, for the dishonour of cheques,
which are the subject matter of the respective complaints.
6. After verification of the complaints, the learned Judicial
Magistrate First Class, Aurangabad passed separate orders of
issuance of process in all these three complaints, which are as
under:-
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Sr.No. Number of case Date.
1) SCC No. 9286 of 2018 12.02.2019
2) SCC 10855 of 2018 31.01.2019
3) SCC 10854 OF 2018 08.03.2019
7. Being aggrieved by above all these three different orders,
the accused/applicants have filed these three applications
bearing No. 346 of 2020, 345 of 2020 and 344 of 2020,
challenging the order of issuance of process. The applicants/
accused further pray for quashment of complaints bearing Nos.
SCC 9286 of 2018, SCC 10855 of 2018 and SCC 10854 of
2018.
8. On 12.02.2020, this Court passed order and issued notice
to the respondents/complainant and further proceedings
bearing SCC 9286 of 2018, SCC 10855 of 2018 and SCC 10854
of 2018 are stayed. Thereafter, on 12.11.2025, none appeared
on behalf of the applicants, therefore, the matter was kept for
passing of the order of dismissal on 19.11.2025.
On 19.11.2025, this Court passed following order :
“1. Learned advocate Shri Deshmukh appearing for the
applicants states that since the main arguing counsel Shri
Arun Agrawal has passed away, he is required to take
instructions from the applicant.
2. Since the arguing counsel has expired, it would be
appropriate to issue notice to the applicants returnable on
17.12.2025.
3. Interim relief granted vide order dated 12.02.2020 to
continue till then”.
9. As per the service report, the applicant Nos. 1) CLC
Industries Limited, 5) Mr. Deepak Diwan, 6) Mr. Kapoor Chand
Garg and 8) Ms.Shivani Gupta, refused to accept the notices,
therefore, there is presumption that the applicant Nos. 1, 5, 6 &
8 are duly served but they remain absent. The notice of
applicant No. 9 still await.
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10. Though the learned counsel Mr. Ashwin Sakolkar,
appeared on behalf of respondent Nos. 2 to 4 before this Court,
on 22.01.2026, through vidco conferencing, but he failed to file
the Vakalatnama till date. Therefore, the present applications
are liable to be dismissed as against the applicant Nos. 1, 2 to
4, 5, 6 and 8, accordingly they are dismissed.
11. At this stage, Mr. Kulkarni, learned counsel appearing for
applicant No. 7 and the learned counsel Mr. Ostwal, appearing
for non applicant/respondent have jointly made a request for
taking instructions, to see as to whether the applications shall
be continued or not as against the present applicant No. 7, on
the ground that the present applicant No. 7 is nominated as
Director of Axis Trustee Bank, appointed by the SEBI as
Nominee Director.
12. Stand over to 12.02.2026.
13. The earlier interim relief granted is hereby stand vacated
as against these applicants, except the applicant No. 7, Mr.
Rajinder Kumar Jain and applicant No. 9, Ms. Charul Jain.
LATER ON :-
1. At about 5.00 p.m., the learned counsel Mr. Sakolkar,
appeared for applicant Nos. 2 to 4 and orally requested for
recalling of the order of dismissal in respect of applicant Nos. 2
to 4, on ground that when the matter was called out he was
busy before another Court.
2. Since the learned counsel Mr. Sakolkar, has made a
request
today itself, therefore, the said order of dismissal against
applicant Nos. 2 to 4 is hereby re-called.
3. Stand over to 12.02.2026.”
3. In view of above order, the present applications are
dismissed as against applicant Nos. 1, 5, 6 and 8.
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4. I have heard Mr. Sakolkar, the learned counsel appearing
for applicant Nos. 2 to 4 and 9 for sufficient time. Today, Mr.
Sakolkar, made a statement that on 10.02.2026, he has filed
Vakalatnama on behalf of respondent No.9. Mr. Kulkarni, the learned
counsel for applicant No.7 and Mr. Ostwal, the learned counsel for the
Non-applicant / original Complainant.
5. By the present applications, the applicants who are the
accused in Summary Criminal Case Nos. 10855 of 2018, 9286 of
2018 and 10854 of 2018, respectively, have filed the present
applications, challenging orders dated 31.01.2019, 12.02.2019 and
08.03.2019, respectively therein, whereby, the learned Judicial
Magistrate, Aurangabad issued process u/s 138 of Negotiable
Instruments Act.
6. After hearing the learned Counsels appearing for the
respective parties, in these 3 separate applications following legal
questions are arises for my consideration as under:
i. Whether the applications u/s 482 of Cri. P. C.,
challenging the order of issuance of process as well as
seeking quashment of the criminal proceeding are
maintainable through the power of attorney?
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ii. Whether these proceedings are maintainable at the behest
of the applicants /original accused, the Directors and
Non-Executive Directors of the main accused No.
1/Company when the applications u/s 482 of Cri.P C.,
are dismissed against the accused No.1?
7. The learned counsel appearing for the respective
applicants canvassed that, the applicant No. 1 / original accused no. 1
is a Company incorporated under the provisions Companies Act, 1956
and engaged in the business of manufacturing and export of “Cotton
Yarn/Synthetic Blended Yarns”. The Applicants 2 to 4 are the
Directors of the Applicant no. 1 Company, whereas the applicant Nos.
5 to 9 are Nominee/Independent Non-Executive Directors of the
Applicant No. 1 Company. All the Applicants 2 to 9 are residing at
New Delhi and Kanpur (UP). Therefore, to prosecute these
applications, the applicants have executed Power of Attorney in
favour of Shri Rajkumar Mukundwar. since the proceedings for the
offence punishable u/s 138 of Negotiable Instruments Act, are in
quasi civil nature, therefore, the applications u/s 482 of Cri. P. C.
challenging the order of issuance of process and quashment of
proceedings u/s 138 of Negotiable Instruments Act, is maintainable.
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8. Per contra Mr. Ostwal, the learned counsel appearing for
the Non-applicant / original complainant canvassed that, the
procedure contemplated under the Code of Criminal Procedure
required to be followed while conducting the complaints u/s 138 of
the Negotiable Instruments Act. So also, Sec. 138 of the Negotiable
Instruments Act is in the nature of punitive and in personam.
Therefore, unless such party is a minor, an insane person or is
suffering from any other disability, which in law, is recognised as
sufficient to permit any other person i.e. next friend, to move the
Court on his behalf as a guardian or a next friend, initiation of
proceedings, so as to challenge the legality and validity of the orders,
passed against him, to seek redressal of the grievance except through
the next friend or guardian is maintainable. However, the applicants
have not come with specific plea under what special circumstances
present applicants have empowered their power of Attorney Holder to
file these applications. It is further canvassed that, the applicants have
not produced copy of Power of Attorney on record to show that, Mr.
Rajkumar Mukundwar is authorised to file these applications, hence,
prayed for dismissal of these applications.
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9. Needless to say that, the proceeding under Section 138 of
the Negotiable Instruments Act, is quasi civil nature but it is in
punitive nature for the said offence. The offence under the Indian
Penal Code or any other Special Law always in the personam and it
can not be inheritable or act of crime and punishment not
transferable to any other person. So also, the Offender/Accused is to
suffer sentence, in case awarded by the Court of Law after conclusion
of the trial.
10. In Amit Ahuja Vs. Gian Prakash Bhambri,
MANU/PHYSICAL HEARING/1159/2010 : 2010 (3) R.C.R.
(Criminal) 586 = 2010 Supreme (P&H) 1597, it is held that, it is only
the accused person against whom a criminal case has been registered
or a criminal complaint has been filed, who can file a petition under
Section 482 of Cri. P. C. in the High Court for quashing the complaint,
the summoning order, and the subsequent proceedings, no third
person can fight a proxy war on his behalf under the garb of public
interest litigant. The aggrieved party, which is affected by an order is
required to seek redress of its grievance by questioning the legal
validity or correctness of the same except if the aggrieved party is
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suffering from some disability i.e. unless such party is a minor, an
insane person, or is suffering from any other disability, which in law,
is recognized as sufficient to permit any other person i.e. next friend
to move the Court on his behalf. On behalf of minor, or insane person,
a guardian or a next friend initiates proceedings so as to challenge the
legality and validity of the order passed against him to seek redressal
of the grievance as under the law. Such a person having disability,
cannot be said as competent to file a petition except through next
friend or guardian. If, in criminal cases, until and unless, a person
aggrieved, suffers from some disability, recognized by law, a stranger
or some other person, is allowed to fight the proxy war, then the
every purpose of criminal justice system shall be defeated.
11. It is further held that, Section 2 of the Power of Attorney
Act cannot override the specific provision of a statute which requires
that a particular Act should be done by a party-in-person. When the
Code of Criminal Procedure requires the appearances of an accused in
a Court, it makes no compliance if a power of attorney holder appears
for him. It is different thing that a party can be permitted to appear
through Counsel. Chapter XVI of the Code empowers the Magistrate
to issue summons or warrant for the appearance of the accused.
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Section 205 of the Code of Criminal Procedure empowers the
Magistrate to dispense with “the personal attendance of the accused
and permit him to appear by his pleader”, if he sees reasons to do so.
Section 273 of the Code speaks the powers of the Court to record
evidence in the presence of the pleader of the accused, in cases when
personal attendance of the accused is dispensed with. But in no case
the appearance of the accused be made through a power of attorney
holder.
12. However, in case in hand, the applicants / original
accused have instituted the present applications u/s 482 of Cri.P.C.
questioning legality and validity of Orders dated 31.01.2019,
12.02.2019 and 08.03.2019 passed by the learned Judicial
Magistrate, Aurangabad, in Summary Criminal Case Nos. 10855 of
2018, 9286 of 2018 and 10854 of 2018, respectively and prayed for
quashment of the said complaints u/s 138 of the Negotiable
Instruments Act, without specifying about their disability through the
Power of Attorney. Therefore, taking into consideration the law laid
down in Amit Ahuja, cited supra as well as Sec. 205, 273 and 235 of
Criminal Procedure Code and Sec. 2 of the Power of Attorney Act, I
am on view that, the application for quashment of the complaint and
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challenging the order of issuance of process is not maintainable
through the power of attorney holder. Accordingly, I answered the
question no. (i) in negative.
13. In respect of question no. (ii), Mr. Sakolkar, the learned
counsel appearing for applicant Nos. 2 to 4 and 9 canvassed that, the
applicants 2 to 4 & 9 are the Directors of the Applicant no. 1/ original
accused no. 1 CLC Industries Limited. These applicants/accused are
not having control and responsible for day to day affairs of the
Applicant No. 1 Company. So also, the applicants received notice
dated 16.04.2018 from the State Bank of India u/s 13(4) of
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act read with Rule 4 (v) of the Rules
and as per said notice. The SBI have attached movable and
immovable properties of Bhadresh Trading Corporation Limited with
which the Memorandum of Understanding dated 20.12.2017 was
executed. Therefore, it was legal compulsion that the applicant no. 1
Company issued a cheque No. 001300 dated 31.05.2018 in sum of
Rs. 25 lakhs drawn of R.B.I. Hauzkhas Branch, New Delhi in favour of
it’s Banker, which resulted issuance of directions to stop payment
against the cheque issued in favour of the
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Non-applicant/Complainant. So also, after service of mandatory
notice, the applicants issued reply dated 17.10.2018 and brought to
the notice of Non-applicant/original Complainant about legal
impediment. Therefore, though the application u/s 482 of Cri.P.C.
dismissed as against the applicant no. 1/Company is maintainable in
respect of other applicants/Directors.
14. Mr. Sanket Kulkarni, the learned Counsel appearing for
the applicant No. 7 canvassed that, the Applicant No. 7 Shri Rajinder
Jain is an independent non executive director of the Applicant No. 1
Company and he does not have control over the day to day affairs of
it. Therefore, the complaints u/s 138 of the N.I. Act as well as
issuance of process as against the applicant no. 7 is not maintainable.
15. Per contra, Mr. Ostwal, the learned counsel
appearing for the Non-applicant/original complainant canvassed that,
the Non-applicant has specifically made averment in complaint Nos.
10855 of 2018, 9286 of 2018 and 10854 of 2018 that, the
Applicants/Accused Nos. 2 to 9 are the Directors of the
Applicant/Accused no. 1/Company and they are indulged in handling
and managing the day to day affairs and business of the applicant no.
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1. So also, Accused Nos. 2 to 9 are actively involved in the day to day
functioning and activities of the Accused no. 1/Company in its regular
course of business, hence, they are liable for the decisions taken on
behalf of the accused no. 1/Company. Therefore, considering the facts
and circumstances of these complaints, the learned Judicial
Magistrate, Aurangabad passed the Orders dated 31.01.2019,
12.02.2019 and 08.03.2019 in Summary Criminal Case Nos. 10855,
9286, and 10854 of 2018 and issued process against the
applicants/accused, which is justifiable. So also, all these
complainants for the offence punishable u/s 138 of N.I. Act are not
the abuse process of law, hence, prayed for dismissal of the
applications.
16. Needless to say that, initially, all these applications u/s
482 of Cri. P. C., are instituted by the accused No. 1 / Company
registered under the Companies Act and accused Nos. 2 to 9, who are
Directors of the accused No. 1/Company. The applicants/Accused
Nos. 2 to 4 and 9 have not denied that they are not Directors of the
accused No. 1/Company and not managing regular course of business
and they are not liable for the decisions taken on behalf of the
accused No. 1/Company. Though the applicant No. 7 claimed that, he
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is an independent non executive director of the Applicant No. 1 /
Company and he does not have control over the day to day affairs of
it, the applicants have not produced on record the copy of reply
issued to the statutory notice stating the said defense.
17. Section 34 of the Companies Act, provides that, where an
offence under this act has been committed by a company, every
person who at the time of offence was committed, was in charge of,
and was responsible to the company for the conduct of the business of
the company, as well as the company shall be deemed to be guilty of
the offence and shall be liable to be proceeded against and punished
accordingly.
Provided that, nothing contained in this sub-section shall
render any such person liable to any punishment provided in this Act,
if he proves that the offence was committed without his knowledge or
that he exercised all due diligence to prevent the commission of such
offence.
18. It is thus seen that, the vicarious liability of a person for
being prosecuted for an offence committed under the Act by a
Company arises, if at the material time he was in charge and was also
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responsible to the company for the conduct of its business. Therefore,
the company i.e. applicant no. 1 CLC Industry Ltd., is considered the
primary offender for the offence punishable u/s 138 of N.I. Act and as
such the present application u/s 482 of Cri.P.C. is dismissed as against
the Company, therefore, in my considered view the application for
quashment of the complaints for the offence u/s 138 of NI Act as well
as challenge to the orders of issuance of process, is not maintainable
at the behest of Directors only.
19. In Nilesh Agrawal V. Income Tax Office, the Delhi High
Court held that, the Directors generally cannot challenge an order of
issuance of summons in a Criminal complaint without impleading the
company, as the company is considered the primary offender in
corporate crimes and that prosecuting directors without the company
is an abuse process of law.
20. It is matter of record that, as per the order dated
09.02.2026, these applications are dismissed as against applicant
Nos.1, 5, 6 and 8. Since the applicants are questioned legality and
validity of orders of issuance of process dated 31.01.2019,
12.02.2019 and 08.03.2019 passed in Summary Criminal Case Nos.
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10855 of 2018, 9286 of 2018 and 10854 of 2018 and prayed for
quashment of proceedings, but the applications u/s 482 of Cri. P. C.
are dismissed in respect of the main applicant/Accused No.1
Company who issued the cheques in question for discharging legal
liabilities. The applicants are being Directors of the applicant/Accused
No. 1 Company, therefore, the applicants Director of the said
Company cannot alone challenge order of issuance of process and
seeks quashment of proceeding in absence of the applicant No.1.
Therefore, I am on view that, the present applications are not tenable
in eyes of law at the behest of these applicants/accused. Accordingly,
all these Criminal Applications are dismissed.
21. The trial of the complaint be expedited.
[ Y. G. KHOBRAGADE, J. ]
SMS
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