THE HONOURABLE SRI JUSTICE K.SURENDER
Criminal Petition No.8224 of 2021
ORDER:
1. This Criminal Petition is filed to quash the proceedings against the petitioner/A4 in CC No.348 of 2021 on the file of Judicial First Class Magistrate at Miryalaguda.
2. The 1st respondent has filed complaint against this petitioner, who is arrayed as A4 and three others for the offence under Section 138 of the Negotiable Instruments Act.
3. Briefly, the case of the complainant is that the petitioner/A4 and others have entered into a financial agreement with the complainant on 05.08.2014 for executing a contract to the Irrigation and Command Area Development (I & CAD) Department. In accordance with the terms and conditions of the said financial agreement between the complainant and the accused, the accused were jointly and severally liable to pay 90% of each and every bill on the actual payments received. For the said reasons, the accused were due an amount of Rs.1,05,00,000/-. Upon insistence of the complainant, five cheques were issued for different amounts and all the cheques were dated 05.01.2021. When the said 2 cheques were presented for clearance, they were returned for the reason of 'insufficient funds'. Though, legal notice was sent, the accused failed to pay the amount covered by the cheques as such the present complaint was filed.
4. Learned counsel appearing for the petitioner/A4 would submit that the petitioner had nothing to do with the transactions and she retired from the partnership on 19.02.2016 by virtue of reconstruction of the partnership deed dated 19.02.2016. She is neither a signatory to the said cheques nor was responsible for the day to day affairs of the said firm. The said fact was also intimated by way of reply notice dated 05.03.2021 to the complainant, however the petitioner was arrayed as A4. He relied upon the judgment of the Hon'ble Supreme Court in the case of Anita Malhotra v. Apparel Export Promotion Council and others [(2012) 1 Supreme Court Cases 520], in which, the Hon'ble Supreme Court relying upon the certified copy of Form 32, accepted that the appellant therein had resigned and consequently quashed the proceedings initiated against her for the offence under Section 138 of the Negotiable Instruments Act. 3
5. The finance agreement dated 05.08.2014 is filed, which is not disputed. As seen from the said finance agreement, the agreement is between A1 company/M/s.Prasad Irrigation Engineering Consultants and complainant. The petitioner is not a signatory to the said financial agreement. In the entire complaint, the complainant had made the said finance agreement as basis to implicate this petitioner. There are no averments in the complaint which specifically mention regarding any role played by this petitioner in the business of A1 company nor in the financial agreement dated 05.08.2014.
6. To fasten criminal liability against a person running a firm or company as a director or a partner or an employee, the role played by such person has to be detailed in the complaint to infer that such person was in fact responsible for the affairs of the firm or company on a daily basis and was also instrumental in the facts leading to issuance of the cheque. The petitioner is sought to be prosecuted for the reason of being partner in A1 Company on the basis of Section 141 of Negotiable Instruments Act. For the sake of convenience, the same is extracted hereunder: 4
"1 [ 141 Offences by companies. --
If the person committing an offence under section 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: 22 [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] Notwithstanding anything contained in sub-section (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. Explanation.-- For the purposes of this section,--
"company" means any body corporate and includes a firm or other association of individuals; and "director", in relation to a firm, means a partner in the firm.]"
7. In view of provision under Section 141 of Negotiable Instruments Act, unless a person was in-charge of or responsible to the company for the conduct of the business of the company as well as the company can only be made vicariously liable. As discussed above, the role of the petitioner is nowhere stated in the entire complaint except stating that she was part of A1 firm. There are no averments both oral and/or documentary to sustain the prosecution against the petitioner making her culpable by virtue of Section 141 of the Negotiable Instruments Act. 5
8. For the said reasons, the Criminal Petition succeeds and the proceedings against the petitioner/A4 in CC No.384 of 2021 on the file of Judicial First Class Magistrate at Miryalaguda, are hereby quashed.
9. Accordingly, this Criminal Petition is allowed. Miscellaneous applications, pending if any, shall stand closed.
_________________ K.SURENDER, J Date: 13.12.2022 kvs 6 THE HON'BLE SRI JUSTICE K.SURENDER Criminal Petition No.8224 of 2021 Date: 13.12.2022 kvs