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2011 Supreme(AP) 295
In the High Court of Judicature, A.P. at Hyd.
N. Ravi Shankar, J.
Amit Kwnar Agarwal
v.
Reynolds Packagings Pvt. Ltd., Patancheru, Medak District and others
Crl. P No.4682 of 2008
Decided on : March 30, 2011
Sharad Sanghi, Counsel for the Petitioner;
S. Srinivas Reddy, Counsel for the Respondent No.1; Public Prosecutor, Counsel for the Respondent No.4.
Headnote:
Criminal Procedure – First respondent herein is a private limited company is the complainant in and it filed same alleging an offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act 1881 against the petitioner and respondents allegations made in the complaint are that the petitioner and the third respondent herein are partners of the second respondent partnership firm and that in connection with a subsisting liability the third respondent Umakanth Agarwal issued six cheques for various amounts aggregating to Rs.18 lakhs on behalf of the said firm in favour of the complainant drawn on Agroha Co-operative Urban Bank Limited, Ricob Gunj, Hyderabad and that the said cheques when presented for encashment were dishonoured with the endorsement "payment stopped by drawer". The learned Magistrate after examining the complaint took cognizance of it as on his file for the above offences and issued process to the petitioner, his partnership firm and the other partner i.e. Umakanth Agarwal who is the third respondent herein. It is then stated in the complaint that the petitioner and the third respondent are active partners of their partnership firm Paro Food Products which is the first accused in the case and therefore all the three of them are liable for the offence punishable under Section 138 read with Section 142 of the Act – In High Court of Judicature – Held, learned Counsel for the first respondent based on the law relating to partnership firms, it is true that under the Partnership Act every partner is an agent of the firm but here is a case where a partner who has not issued the cheques is sought to be prosecuted for the offence under Section 141 of the Act. In other words, he is sought to be made vicariously liable for a criminal offence under Section 141 of the Act. It may be true that he may be liable in a civil action for recovery of the amount covered by the cheques but so far as criminal offence is concerned even a partner who has not issued the cheques can be made vicariously liable only if it is pleaded and proved that he was also responsible for the business of the firm in which case alone he can be attributed with the knowledge that the cheques issued may be dishonoured. In fact in S.M.S. Pharmaceuticals Ltds case it has been laid down that in order to make a director who has not issued the cheque liable it should be specifically pleaded about the requirements of Section 141 of the Act in order to make him know what the case is against him so as to meet it and defend himself same principle equally applies to a partner who has not issued the cheque contention of the first respondents Counsel that a partner being an agent of the firm can be directly made liable for the offence under Section 138 of the Act without making the specific averments against him which are required to be made by Section 141 of the Act cannot be accepted – criminal petition is accordingly allowed.
The petitioner herein is the third accused (A3) in a criminal case i.e. CC No.I72 of 2003 on the file of the Court of the II Metropolitan Magistrate, Hyderabad. He filed this petition under Section 482 of the Code of Criminal Procedure (for short 'Cr.PC') to quash the proceedings against him in the said criminal case.
2. The first respondent herein which is a private limited company is the complainant in the aforesaid CC No. In of 2003 and it filed the same alleging an offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act 1881 (for short 'Act') against the petitioner and respondents 2 and 3 herein. The allegations made in the complaint are that the petitioner and the third respondent herein are partners of the second respondent partnership firm and that in connection with a subsisting liability the third respondent Umakanth Agarwal issued six cheques for various amounts aggregating to Rs.18 lakhs on behalf of the said firm in favour of the complainant drawn on Agroha Co-operative Urban Bank Limited, Ricob Gunj, Hyderabad and that the said cheques when presented for encashment were dishonoured with the endorsement "payment stopped by drawer". The learned Magistrate after examining the complaint took cognizance of it as CC No. In of 2003 on his file for the above offences and issued process to the petitioner, his partnership firm and the other partner i.e. Umakanth Agarwal who is the third respondent herein. It is then stated in the complaint that the petitioner and the third respondent are active partners of their partnership firm M/s. Paro Food Products which is the first accused in the case and therefore all the three of them are liable for the offence punishable under Section 138 read with Section 142 of the Act.
3. The contention of the petitioner herein is that in the whole complaint nothing is averred or stated against him in so many words as required by Section 141 of the Act that at the time when the cheques in question were issued he was also in charge of and was responsible for the conduct of business of the partnership firm and also to the said partnership firm and therefore the complaint or the criminal case against him is defective inasmuch as it does not disclose his role in the business of the partnership firm and consequently the proceedings in the said criminal case against him are bad and should be quashed. This is the only contention or ground upon which this criminal petition is filed. Sri Sharad Sanghi, the learned Counsel for the petitioner in support of this contention relied upon two decisions of the Apex Court given in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, 2005 (2) ALD (Crl.) 595 (SC) = AIR 2005 SC 3512 and another given in Saroj Kumar Poddar v. State (NCT of Delhi), AIR 2007 SCW 656 and this latter decision was given following the earlier decision in S.M.S. Pharmaceuticals Ltd's case (supra). Both these decisions relate to prosecution of companies and its directors as contemplated under Section 141 of the Act.
4. Elaborating on the above contention Sri Sanghi pointed out that Section 141 of the Act which deals with prosecution of companies for the offence under Section 138 of the Act covers a partnership firm and its partners also and since the petitioner did not admittedly issue the cheques in question, he would not be personally liable for the alleged offence but he may be held vicariously liable as a partner only if it is pleaded in the complaint that he was in charge of the conduct of the business of the partnership firm in question as contemplated under Section 141 of the Act and since it is not pleaded so in the complaint as required by Section 141 of the Act the proceedings against him should be quashed. His plea is that this is the principle laid down in the aforesaid two decisions relied upon by him.
5. Now to appreciate the plea of the petitioner and the contention of his Counsel Sri Sanghi it would be necessary to look into Section 141 of the A
