A partner can be held liable for an offence under Section 406 IPC if he is entrusted with dominion over partnership property under a special agreement between the partners.

The accused, against whom the respondent has preferred a complaint for offences u/Ss. 406, 420 and 477-A I.P.C. pending before the Judicial Magistrate, Sivakasi as SC No. 3 of 1990 invoke the inherent powers of this Court u/S. 482 Cr.P.C. to quash the above proceedings.

2. The allegations made in the complaint are briefly as follows : Petitioners 1, 2 and the respondent are brothers and the 3rd petitioner is the sons of the second petitioner. They and one Ramamurthy and one A. B. Athiban are partners of the National Fire Works Factory by virtue of a partnershipdeed dated 24-3-1983, the principal place of business being No. 74/1, Police Station Road, Sivakasi. The above National Fire Works Factory consists of several units numbering 32 as mentioned in the complaint. The first petitioner being the eldest of the partners had been managing the day-to-day administration of the fire and was carrying on all the business transactions for and on behalf of the partners. Under a special agreement, he was entrusted with this administration and was having dominion over all the movable and immovable properties of the firm. Petitioners 2 and 3 were actively assisting him, while the other partners were excluded from he management of the firm. The respondent later learned that the petitioners had removed part of the finished goods and raw materials from the firm's godown to unauthorised places, transferred funds to their individual accounts and discounted the firm's bills, hundies in the name of the companies individually owned by them or their relatives. They had converted the finished goods and raw materials of the firm to their own use by obtaining bank drafts in their personal names. To facilitate this wrongful gain, they had made false entries in the books of accounts. The other partners had been cheated by the fraudulent acts of the petitioners. The petitioners, therefore, had committed offences u/Ss. 406, 420 and 477-A I.P.C.

3. On receipt of the complaint, the learned Magistrate had taken the sworn statement of the complainant respondent, who also produced the other partner Ramamurthy, whose statement was also recorded. That learned Magistrate chose to conduct an enquiry u/S. 202 Cr.P.C. and ordered the production of certain documents relating to the accounts of the firm, bank records and finally, considering the materials then available before him, took the complaint on file for the above offences and issued process to the petitioners, who have invoked the inherent powers of this Court to qaush the proceedings.

4. Thiru N. T. Vanamamalai, learned Senior Counsel for the petitioners would urge that since the complaint proceeded on the allegation that the first petitioner had been managing the day-to-day administration of the firm, being the eldest of the partners and had been assisted by petitioners 2 and 3, all the petitioners being partners, could not in law commit an offence u/S. 406 I.P.C. with reference to partnership assets. According to the learned counsel, each partner would be in possession of partnership assets on his own behalf, as well as on behalf of the other partners, under which circumstance, anyone of the partner cannot be said to be holding the partnership properties in a fiduciary capacity on behalf of the other partners, consequently ruling out, offence under section 406 I.P.C. with reference to partnership properties. The learned counsel would also contend that any grievance of a partner against the other Partners relating to partnership assets, had only to be resolved in a civil forum and in the instant case, the respondent had in fact filed a civil suit for dissolution of the partnership and rendition of accounts, in which suit, a preliminary decree has been passed. Referring to certain documents produced in a typed set by the respondent, the learned counsel would contend that even those documents showed that the benefit of non-disclosure of the income to the Income-tax Authorities, had been apportioned a