Pawan Garg vs. State Of U.P. And Another

Held

The Court allowed the application and quashed the impugned summoning order dated 12.08.2021, insofar as it related to the applicant, Pawan Garg. The Court found that the materials on record established that Smt. Kajal Garg was the sole proprietor of M/s Aircon Gallery and that the applicant, Pawan Garg, was neither the proprietor, co-proprietor, authorized officer, signatory, owner, nor principal officer of the firm. The impugned cheque was issued by Smt. Kajal Garg in her capacity as the sole proprietor. The Court noted that there was no evidence to establish that the applicant was an authorized signatory, agent, or co-proprietor of the firm. It reiterated the legal principle that a wife and husband have separate legal entities. The Court relied on various High Court judgments, including M. Seethalakshmi v. Suresh Bafna, S.B. Shankar v. Amman Steel Corpn., P. Dhamodharan v. Palani Andavar Mills Ltd., and Gangadhar v. Shrenikmal, which held that individuals not involved in the issuance of cheques or the management of firms cannot be held liable under Section 138 of the NI Act. The Court also referred to the guidelines laid down by the Apex Court in State of Haryana v. Ch. Bhajan Lal for exercising inherent powers under Section 482 Cr.P.C. to prevent abuse of process of law, finding that the allegations against the applicant did not prima facie constitute an offence.

Facts

The applicant, Pawan Garg, sought to quash criminal proceedings initiated against him under Section 138 of the Negotiable Instruments Act (NI Act) and Section 420 of the Indian Penal Code. The complaint was filed by R & S Air Conditioning against Pawan Garg, his wife Smt. Kajal Garg, and M/s Aircon Gallery, through its proprietor Smt. Kajal Garg. The complainant alleged that a cheque for Rs. 3,00,000/- issued by M/s Aircon Gallery, signed by Smt. Kajal Garg, was dishonoured due to "exceed arrangement." The applicant contended that M/s Aircon Gallery is a proprietorship firm run solely by his wife, Smt. Kajal Garg, and he has no connection with the firm as a proprietor, director, or authorized signatory. He argued that he was impleaded solely due to his marital relationship with the proprietor to exert pressure for recovery. The applicant highlighted that GST documents and e-way bills produced by the complainant did not mention his name in any capacity related to the firm.

Key Issues

1. Whether the applicant, Pawan Garg, can be held liable under Section 138 of the Negotiable Instruments Act, 1881, for a cheque issued by a proprietorship firm where his wife, Smt. Kajal Garg, is the sole proprietor, and he is neither a signatory nor involved in the firm's day-to-day affairs? The applicant argued that as M/s Aircon Gallery is a proprietorship firm run by his wife, Smt. Kajal Garg, and he has no legal or practical connection with it, he cannot be prosecuted under Section 138 of the NI Act. He relied on the fact that GST and e-way bills do not name him and that his wife is the sole proprietor, evidenced by a government registration certificate. He cited M. Seethalakshmi v. Suresh Bafna, S.B. Shankar v. Amman Steel Corpn., P. Dhamodharan v. Palani Andavar Mills Ltd., and Gangadhar v. Shrenikmal to support the principle that individuals not involved in the issuance of a cheque or the management of a firm cannot be held liable. The State (opposite party) did not file any counter-affidavit and remained unrepresented, thus presenting no arguments.