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2002 Supreme(Ker) 806

High Court of Kerala
R. Rajendra Babu, J.
Bindu David George - Appellant
Versus
Malanadu Development Society - Respondent
Crl.R.P. No. 1386 of 2002
Decided On : 05-12-2002

Headnote:

Negotiable Instruments Act 1881 – Section 138 & 141 - Conduct of the business of company or firm – Allegations - Alleged offence - Would make it clear that burden would be on partner to prove that offence was committed without his knowledge or that he had exercised due diligence to prevent commission of offence – Held, Thus all partners of firm who are responsible for conduct of business of company or firm are to be arrayed as accused and all of them are liable to be proceeded for offence under S.138 of Negotiable Instruments Act – Order accordingly

ORDER

R. Rajendra Babu, J.

1. The 1st respondent herein, Malanadu Development Society, filed C.C. 101/ 01 before the J.F.C.M. Court - I, Kanjirappally against the 1st accused M/s. Kamadenu Milk and Milk Products, Kuttikattukulangara, partnership firm and its three partners alleging commission of an offence under S.138 of the Negotiable Instruments Act, as the cheques issued by the 2nd accused, the managing partner of the firm, had been dishonoured due to insufficiency of funds in the account of the firm. The 3rd accused, who was one of the partners of the firm, filed C.M.P. 3873/02 stating that she was only a sleeping partner of the firm and she had nothing to do with the issuance of the cheque and the conduct of the business of the firm and as such she should be discharged of the alleged offence. The court below, after considering the allegations in the complaint, rejected the above prayer. Aggrieved by the above order, the 3rd accused has come up in - revision.

2. Heard the learned counsel for the revision petitioner, the 1st respondent and also the learned Public Prosecutor.

3. The main argument advanced by the learned counsel for the petitioner was that the petitioner was only a sleeping partner of the firm and was not responsible for the issue of the cheque and a complaint under S.138 of the Negotiable Instruments Act would be maintainable only against the firm and also the managing partner who issued the cheque. It was further submitted that the 3rd accused who was not responsible for the issue of the cheque was not liable to be proceeded against under S.138 of the Negotiable Instruments Act and as such the proceedings initiated against the petitioner will have to be stopped or dropped. The learned counsel for the 1st respondent complainant submitted that all the partners of the firm who are responsible for the conduct of the business of the firm are liable to be proceeded against in view of S.141 of the Negotiable Instruments Act. It was further submitted that by S.141 of the Act all the partners of a firm who are responsible for the conduct of the business of the firm who are responsible for the conduct of the business of the firm who are responsible for the conduct of the business of the firm shall be deemed to have committed the offence and as such all of them can be proceeded for the offence under S.138 of the Act. S.141 of the Act reads :

"Offences by companies. (1) If the person committing an offence under S.138 is a company, every person who, at the time the 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-s.(1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

The explanation to the above S.141 says : (a) "company" means any body corporate and includes a firm or other association of individual; and

(b) "director", in relation to a firm, means a partner in the firm."

Thus the definition of a company would take in firm also in view of the above explanation. In view of S.141 the partners who are responsible to the firm for the conduct of the business of the firm as well as the firm are to be deemed to be guilty of the offence under S.138 of

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