Point of Law:Negotiable instruments – Quash of criminal proceedings against one of the Director - petitioner was only a partner of the firm which has issued the cheque and she was not responsible for the conduct of the business of the firm nor did she have any power to open the account or operate the account held by the partnership firm in commercial banks

ORDER :

1. The prayer in this petition is for quashing of all further proceedings in CC No.1104/2015 (PC No.84/2015) on the file of the learned Civil Judge and JMFC, Siruguppa for offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short, ‘NI Act’), insofar as the present petitioner is concerned.

2. Respondent before this Court presented a private complaint in CC No.1104/2015 before the learned Civil Judge and JMFC, Siruguppa alleging commission of offence punishable under Section 138 of N.I. Act against the present petitioner (Accused No.3), M/s. Surya Rice Industries (Accused No.1) and Sri. K. Srinivas Setty (Accused No.2). There is no dispute about the fact that the petitioner is wife of accused No.2-K. Srinivas Setty. There is also no dispute that Accused No.1 is a registered Partnership Firm of which currently the present petitioner and her husband are partners.

3. The complaint under Section 138 of N.I. Act was presented on the footing that the cheque issued on the account held in a Bank by accused No.1/Partnership Firm was returned dishonoured and since the cheque was issued in discharge of legal liability, offence under Section 138 of NI Act has been committed by all accused including the petitioner herein.

4. The petitioner herein contends that since she was a sleeping partner under the terms of the registered Partnership Deed dated 10.01.2008 and since she was not responsible for day-to-day affairs of the partnership firm and also she had not signed the cheque in question, she is not liable to be prosecuted for offence punishable under Section 138 of NI Act and therefore, the complaint insofar as she is concerned is liable to be quashed.

5. Learned counsel appearing for the respondent-complainant, per contra, submits that the complaint was filed on 11.9.2015 and now trial has also been completed and further, since the matter is now posted for final arguments before the learned trial Court, at this stage, accused No.3 who is the present petitioner should not be heard to contend that the complaint against her is not maintainable. He submits that as per the averments made in the complaint, the petitioner and her husband approached the complainant for supply of rice for their partnership firm and the complainant having supplied the rice, the accused having issued the cheque towards payment of consideration and the said cheque having been dishonoured, the present petitioner is also equally liable for prosecution and therefore, the petition filed by her should be dismissed.

6. There is no dispute about the fact that the cheque in question was drawn on the account held by the partnership firm which is accused No.1 and it was signed by accused No.2-K.Srinivas Setty and also that the petitioner had not signed the said cheque. My attention is also drawn to two clauses in the registered Partnership Deed dated 10.01.2008 i.e., Clauses 5 and 7 of the partnership deed which read as under:

“5. The working partners of the firm and remuneration payable to them are as under:

Name of the working partner

1. K. Srinivasa Setty

2. S.V. Prasad

Working partners salary Per month

Rs.20,000/-

Rs.20,000/-

5a. In case of insufficiency of book profit to pay working partners’ salary as above, the same shall be restricted to the extent of book profit.

5b. In case the book profit before charging working partners’ salary is loss, then working partner will not be paid salary as above.

5c. However, the overall remuneration shall not exceed as provided under Section 40(b) of I.T. Act from time to time.

7. The firm may open accounts with any commercial banks and the same would be opened and operated by the Partner K. Srinivas Setty individually.”

(Emphasis supplied)

7. The above clauses of the registered partnership deed extracted show that the present petitioner is not a working partner of the said firm and the account with any commercial bank held by the partnership firm would be opened and operated only by accused No.2-K. Srinivas Setty. It wa