Vicarious liability of partners under the Benami Property Transactions Act requires specific averments linking individual partners to the firm's conduct; absence of such allegations can lead to discharge.

ORDER :

Sunder Mohan, J.

These two Criminal Revision Cases have been filed by the accused facing prosecution in C.C.No.20 of 2021 filed under Section 53 of the Prohibition of Benami Property Transactions Act, 1988 (as amended by Act 43 of 2016) [hereinafter referred to as 'the PBPT Act']. Crl.R.C.No.872 of 2023 has been filed by Accused No.3 and Crl.R.C.No.956 of 2023 has been filed by Accused Nos.1 and 2. For the sake of convenience, the parties are referred to as per their ranking before the trial Court.

2. (i) It is the case of the respondent that post-demonetisation in the year 2017 there were cash deposits to the tune of Rs.68.71 Crores made into the bank of the Partnership Firm viz., first accused, in which the second accused and the third accused are the Partners; that the accused did not have the requisite sources to make such a huge deposits; that the accused could not produce the source of making such huge deposits; that the income declared during the previous years was very less; that the sudden increase in profits declared by the first accused is improbable and does not commensurate with the business and financial standing of first accused and hence, first accused along with second accused, who is its Managing Partner and third accused, who is the Director, are jointly liable for the aforesaid offence.

(ii) The petitioners sought for discharge on various grounds before the trial Court. The learned Judge dismissed the discharge petitions on the ground that the Court at the stage of charge framing cannot shift and weigh the evidence and that the respondent has made out a prima facie case to proceed further against the petitioners. Being aggrieved, the petitioners are before this Court.

3. Mr.R.John Sathyan, the learned senior counsel appearing for the third accused, the petitioner in Crl.RC.No.872 of 2023 would submit that the petitioner was only a dormant partner in the partnership firm/first accused; that all the affairs was taken care of only by her husband/second accused; that the petitioner had sent a reply to the show cause notice, although a separate show cause notice was not sent to the petitioner; that in the reply, the petitioner had stated that she is only a dormant partner; that even thereafter, the respondent has not chosen to collect any evidence to establish her role in the affairs of the firm; and that in any case, the respondent has not even made the requisite averments in the complaint to invoke the provisions of Section 62 of the PBPT Act, which provides for vicarious liability of officers of the firm/company if the offence is committed by the firm/company

4.(i) Mr.S.Manuraj, the learned counsel appearing for the first and second accused/petitioners in Crl.RC.No.956 of 2023 would submit that the 1^st petitioner/first accused viz., the firm had sufficient means to make the deposit; that merely because in the previous years the profit shown is less, the respondent cannot assume that the petitioners could not have earned the money deposited in the bank account; that the sum of Rs.68.71 Crores is the turn over of the first accused firm from cash sales and cash advances which is accumulated for a period of seven months before the period of demonetisation and was deposited after the commencement of the scheme of demonetisation; that the alleged beneficial owner has not been traced by the respondent and therefore, the learned Judge ought to have discharged the petitioners.

(ii) As regards the role of the 2^nd petitioner/second accused, the learned counsel would submit that the respondent has not made any averments in the impugned complaint stating that the Managing Partner/seco