IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.N. MANJULA, J.
K.A. Naushad & Ors. - Petitioners
Versus
M/s Liya Creation, Rep. by Mr. Raj P. Jain, Proprietor - Respondent
Crl.O.P.Nos.25320 & 25323 of 2021 and Crl.MP.Nos.13996 &13999 of 2021
Decided On : 01-03-2023
Criminal Procedure Code, 1973 - Section 482 - Negotiable Instruments Act-1881 - Section 138, 141 - Criminal Original Petition filed under Section 482 of Cr.P.C., praying to call for records relating to C.C pending on file of learned Metropolitan Magistrate (FTC-I) and quash same - Held, No doubt, 3rd accused, who is authorized signatory of firm - But as submitted by the learned counsel for petitioners, petitioners 1 and 2 are also working as partners and hence even without any specific avernments as to their specific role in firm, there is prima facie reason to implead them as accused - Unless petitioners are subjected to trial, their specific roles play in company cannot be proved - It is premature to presume those facts now - Since petitioners are working partners and they also actively participate in affairs of company, proceedings against them cannot be quashed for reason stated by petitioners - No prejudice would be caused to petitioners if they could prove during course of trial that they were not aware or in-charge of affairs of the company - But, presumption before proof will cause prejudice for complainant - Since materials available are suggestive of knowledge and involvement of petitioner, Court feel it is appropriate to subject petitioner to undergo process of trial - Criminal Original Petitions dismissed.
ORDER :
[Prayer:- This Criminal Original Petition filed under Section 482 of Cr.P.C., praying to call for records relating to C.C.No.875/2021 pending on the file of learned Metropolitan Magistrate (FTC-I) Allikulam, Egmore and quash the same.
Prayer:- This Criminal Original Petition filed under Section 482 of Cr.P.C., praying to call for records relating to C.C.No.1093 of 2021 pending on the file of learned FTC-I Metropolitan Magistrate Allikulam, Egmore and quash the same.]
These Criminal Original Petitions have been filed to quash the proceedings in C.C.Nos.875 & 1093 of 2021 on the file of the learned Metropolitan Magistrate (FTC-I,), Allikulam, Egmore.
2. The petitioners are arrayed as accused 1 and 2 in C.C.Nos.875 &1093 of 2021 on the file of the learned Metropolitan Magistrate (FTC-I) Allikulam, Egmore. The respondent has preferred a complaint against the petitioners/A1 and A2 and others for the offence under Section 138 of the Negotiable Instruments Act-1881. The 4th accused is a firm namely M/s.Kans Wedding Centre and it was the customer of M/S.Liya Creation, who is the complainant herein. The complainant has supplied materials on credit basis and for which the 4th accused firm had issued cheques towards the repayment of the same. The accused 1 and 2 are the partners of the 4th accused firm. As per the ledger account of the complainant's proprietary concern, for the period between 01.04.2018 to 30.11.2019 the accused had purchased garments and other goods for a total sum of Rs.42,52,483.67 on credit basis. Out of the said amount Rs.9,50,120/- has been paid on various dates. The balance outstanding is Rs.33,02,354.67/-. The accused had issued a cheque dated 15.12.2019 bearing No.102466 for Rs.2,70,205/-towards the repayment of the part of the outstanding amount. When the cheque was presented for collection it was returned as 'funds insufficient' on 17.12.2019. After complying the legal mandates, the respondent has filed a complaints against the petitioners for the offence under Section 138 of the Negotiable Instruments Act-1881 (hereinafter referred as NI Act).
3. Heard the submissions made by the learned counsel on either side and perused the materials available on record.
4. The learned counsel for the petitioners submitted that the 3rd accused is the authorized signatory of the 4th accused firm and the 1st and 2nd accused are not in-charge of the regular affairs of the firm; there is no specific allegations against the petitioners 1 and 2 in the complaint that they have taken any active interest in the business of the partnership firm. The day to day activities of the firm are not done by the petitioners 1 and 2; for the purpose of Section 141 of the Negotiable Instruments Act-1881 those persons who were in-charge or responsible for the conduct of the business of the firm alone can be prosecuted and the petitioners 1 and 2 are unnecessary parties.
5. The learned counsel for the respondent submitted that only if the accused are allowed to undergo trial, it can be known whether they are incharge of the affairs of the company. It is premature to presume that the petitioners 1 to 2 are not responsible for the day to day affairs of the firm. The petitioners 1 to 2 are equal partners and even the partnership deed would show that they are working partners. Since the petitioners are also aware of the transaction, they cannot disown their responsibility.
6. The one and only contention of the learned counsel for the petitioners is that there is no avernment in the complaint to show that the petitioners 1 to 2 are responsible and in-charge of the day to day affairs of the firm and hence, they are unnecessary parties to the proceedings. As per Section 141 of NI Act if a person committed the offence under Section 138 of NI Act happens to be a company or a firm the person who was in-charge or responsible for the conduct of the business at the time of commission of the offence shall be deemed to be guilty.
7. The learned counsel for the re
The main legal point established in the judgment is that partners of a firm can be held vicariously liable for the dishonour of a cheque if they are actively involved in the day-to-day business of th....
Vicarious liability under Section 141 of the Negotiable Instruments Act requires the accused to be in overall control of the firm's business, and prosecution under Section 138 is limited to the drawe....
Vicarious liability under Section 141 of the Negotiable Instruments Act can only be imposed when the partner is in overall control of the day-to-day business of the firm, and the drawer of the cheque....
Directors or partners cannot be accused under Section 138 of the Negotiable Instruments Act, 1881 without specific allegations of their involvement in the day-to-day affairs of the company or firm.
Partners of a partnership firm face joint and several liability for dishonored cheques under Section 138 of the Negotiable Instruments Act, 1881, and cannot claim the same vicarious liability protect....
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 ....
Clear and specific averments are necessary in criminal complaints under N.I. Act to hold individuals vicariously liable; mere association with a firm or vague allegations are insufficient.
Complaint under S.138/141 NI Act quashed for failure to implead/notice partnership firm and partners.
Partners can be held vicariously liable for dishonoured cheques issued by the firm, but liability must be established based on specific involvement in the transaction.
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