Madurai Bench of Madras High Court
M.M. SUNDRESH, J.
K. Kathirvel & Another
Versus
Kirorimal Kasiram, Represented by its Manager
Crl.O.P(MD)Nos.9584 to 9591 of 2009 & M.P(MD)Nos.1 & 3 of 2010; 1 & of 2010; 1 of 2010; 1 of 2010; 1 of 2010; 1 of 2010; 1 of 2010 & 1 of 2010
Decided On : 30-04-2010
Negotiable Instruments Act - Vicarious Liability - Section 141 - Summary of Acts and Sections: Section 141 of the Negotiable Instruments Act, 1881 - The court discussed the legal provisions of Section 141 of the Negotiable Instruments Act, 1881, which creates vicarious liability for company directors and partners. The court emphasized the necessity of specific and unambiguous averments in the complaint to establish vicarious liability. The court also highlighted the distinction between the liabilities of managing directors, directors, and other officers of the company under Section 141.
Fact of the Case:
The respondent, a complainant, alleged that the petitioners, partners of a firm, were involved in a fraudulent transaction resulting in the dishonor of cheques. The petitioners sought to quash the proceedings against them, arguing that there were no clear averments establishing their responsibility for the conduct of the firm's business.
Finding of the Court:
The court analyzed the complaints and legal notice to determine if sufficient averments were made in accordance with Section 141 of the Negotiable Instruments Act, 1881. The court emphasized the necessity of specific and unambiguous averments to establish vicarious liability. It held that the complaints contained clear and unambiguous averments about the petitioners' involvement, making the complaints maintainable against them.
Issues: The main issue was whether the complaints contained sufficient averments in accordance with Section 141 of the Negotiable Instruments Act, 1881, to establish the petitioners' vicarious liability for the fraudulent transaction.
Ratio Decidendi: The court emphasized the necessity of specific and unambiguous averments in the complaint to establish vicarious liability under Section 141 of the Negotiable Instruments Act, 1881. It highlighted the distinction between the liabilities of managing directors, directors, and other officers of the company under Section 141.
Final Decision: The court dismissed all the Criminal Original Petitions and the connected Miscellaneous Petitions, holding that the complaints contained sufficient averments to establish the petitioners' vicarious liability under Section 141 of the Negotiable Instruments Act, 1881.
In view of the fact the petitioners and the respondent are one and the same in all the cases with similar issues both factual and legal, they have been taken up together for disposal.
2. The respondent is the complainant before the learned Judicial Magistrate No.I, Madurai.
3. It is the case of the respondent that there have been number of transactions between the petitioners and the respondent. The first accused is a Partnership firm and the accused 2 to 6 are its partners.
4. The petitioners herein are two of the partners of the first accused firm. All the accused persons including the petitioners herein made a request to the respondent for payment of certain amount to be paid to some other concern and accordingly, on their request, the respondent has made the payment. Thereafter, the fourth accused has signed the cheques which were given to the respondent by all the accused. At the request of all the accused, the first respondent presented the cheques which got returned.
5. The respondent issued a legal notice which was not received by the accused 1 to 4. A.5 and A.6 have sent reply on an untenable grounds.
6. Since all the accused persons joined together with an intention to cheat the respondent after getting the money and after giving the cheques which have been returned as 'insufficient funds', the complaints have been filed.
7. The said proceedings which have been taken up on file by the learned Judicial Magistrate No.I, Madurai, have been challenged before this Court, seeking to exercise the power of this Court under Section 482 of the Code of Criminal Procedure at the instance of the petitioners who are A.2 and A.3 in all the complaints.
8. The learned Counsel for the petitioners/A.2 and A.3 in all the cases, submitted that the proceedings against the petitioners are liable to be quashed since there is no clear averment that the petitioners are in-charge and responsible for the conduct of the business of the firm.
9. According to the learned Counsel for the petitioners, merely because the petitioners are partners, they cannot be made as accused. The learned Counsel for the petitioners submitted that there is no evidence to show that the petitioners were in-charge and responsible for the conduct of the business at the relevant point of time.
10. In support of his contention, the learned Counsel for the petitioners relied upon the following decisions:
(i) S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla and another [(2005) 8 Supreme Court Cases 89].
(ii) Sabitha Ramamurthy and another v. R.B.S.Channabasavaradhya [(2006) 10 Supreme Court Cases 581].
(iii) Saroj Kumar Poddar v. State (NCT of Delhi) and another [(2007) 3 Supreme Court Cases 693].
(iv) S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla and another [(2007) 4 Supreme Court Cases 70].
(v) N.K.Wahi v. Shekar Singh and others [(2007) 9 Supreme Court Cases 481].
(vi) Ramrajsingh v. State of Madhya Pradesh and another [(2009) 6 Supreme Court Cases 729].
(vii) K.K.Ahuja v. V.K.Vora and another [2009 (5) CTC 81].
(viii) Monaben Ketanbhai Shah and another v. State of Gujarat and others [(2004) 7 Supreme Court Cases 15] and submitted that the proceedings will have to be quashed.
11. Per contra, the learned Counsel for the respondent submitted that the allegations against the petitioners as well as the other accused are very clear and specific. It has been specifically averred in the complaint that all the petitioners sought for money, cheques have been given by all of them, but signed by one of them and the cheques have been presented only on their advice. It is further submitted that even in the notice issued by the respondent, the above said facts have been clearly stated. Further, the learned Counsel for the respondent submitted that the ingredients under Section 141 of the Negotiable Instruments Act, 1881, have been complied with. Therefore, the learned Counsel for the petitioners prayed for the dismissal of the petitions.
12. The one and only issue to
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