Mobile Distributor Can Add Trader Named On ₹3 Lakh Bounced Cheques As Accused, Karnataka HC Says

Ajit, a distributor of LYF mobile phones, filed two complaints under Section 138 of the Negotiable Instruments Act, 1881, alleging that Mohammadrafiq had issued two cheques for ₹1,50,000 each towards mobile phones supplied to him.

The cheques were dishonoured for insufficient funds, and Mohammadrafiq did not pay after receiving notice.

During trial, the complainant asserted that the cheques stood in the name of Jilani Bahadoorahammad Shaik, who had business dealings with both parties, and applied under Section 319 Cr.P.C. to add him as an accused.

The Trial Court rejected the application, and the Sessions Court dismissed the complainant’s revisions.

Mohammadrafiq separately sought to quash the proceedings, contending that he was neither the cheque signatory nor the account holder.

Section 319 Cr.P.C. empowers a court to proceed against a person not already an accused where evidence before it indicates that the person has committed an offence triable with the existing accused.

Under Hardeep Singh v. State of Punjab, (2014) 3 SCC 92, this is an extraordinary and discretionary power, to be exercised sparingly on strong and cogent evidence—more than a prima facie case at the charge-framing stage, though short of satisfaction that the evidence would necessarily lead to conviction; in a complaint case, the power may be invoked on evidence recorded during trial.

The Court also considered Sarabjit Singh v. State of NCT of Delhi and the Supreme Court’s dismissal of the challenge in M Tech Developers Pvt. Ltd. v. State of NCT of Delhi.

Section 138 of the NI Act was the underlying offence provision.

The accused relied on Alka Khandu Avhad v. Amar Syamprasad Mishra, but the judgment does not set out a separate application of that authority to the facts.

The Court noted that the cheque-related transaction and the parties’ business relationship were not disputed, and that the reply notice contained an admission by Mohammadrafiq concerning issuance of the cheques and a separate transaction involving the proposed accused.

The record also indicated that the cheques stood in the proposed accused’s name, a fact the complainant said was not known when the complaints were filed.

Given that evidence and the need to determine the relevant facts at trial, the Court held that the application to add the proposed accused should be allowed.

It also rejected Mohammadrafiq’s quashing request, finding no merit in it in light of his admission concerning the transaction.

It set aside the Trial Court and revisional orders, allowed the applications under Section 319 Cr.P.C., and permitted the complainant to implead the proposed accused as accused No. 2.

The Trial Court was directed to decide the complaints in accordance with law, with the merits left open.