THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION NO.495 OF 2019
ORDER:
1. This Criminal Petition is filed by petitioner/A3 to quash the proceedings in C.C.No.307 of 2017 on the file of IV Special Magistrate at Hyderabad.
2. The 1st respondent filed complaint alleging that cheque for Rs.13,10,963/- dated 10.04.2017 was issued on behalf of A1 company. The cheque was signed by A2 and A5. The said cheque when presented for clearance was returned unpaid for the reason of 'account closed'. Notice was issued by the 1st respondent. Since accused failed to pay the amount covered by the cheque, criminal complaint was filed arraying this petitioner also, who is the partner in A1 Firm as A3.
3. Learned counsel appearing for the petitioner would submit that there are no specific allegations against this petitioner as to how he was responsible in the transactions pertaining to the complainant company. In the absence of specific allegations in the complaint regarding complicity of the petitioner, the question of petitioner being made 2 vicariously liable on behalf of A1 for the cheque issued and signed by A2 and A5, does not arise. He relied on the judgment of the Hon'ble Supreme Court in the case of Siby Thomas v. M/s.Somany Ceramics Limited 1, wherein it was held as follows:
"16. Thus, in the light of the dictum laid down in Ashok Shewakramani's case (supra), it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company.
A bare perusal of Section 141(1) of the NI Act, would reveal that only that 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 alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. In such circumstances, paragraph 20 in Ashok Shewakramani's case (supra) is also relevant. After referring to the Section 141(1) of NI Act, in paragraph 20 it was further held thus:
"20 On a plain reading, it is apparent that the words "was in charge of" and "was responsible to the company for the conduct of the business of the company" cannot be read disjunctively and the same ought be read conjunctively in view of use of the word "and" in between."
4. He also relied on the judgment of Hon'ble Supreme Court in the case of Smt.Katta Sujatha v. Fertilizers & 1 Special Leave Petition (Crl.) No.12 of 2020, dated 10.10.2023 3 Chem.Travencore 2 and the case of K.P.G.Nair v. Jindal Menthol India Limited 3.
5. On the other hand, learned counsel appearing for the 1st respondent would submit that the petitioner has not placed any material on record to substantiate that he cannot be fastened with vicarious liability in the transaction. The complainant has made specific averment in the complaint that A2 is the managing partner, A3 and A5 are other partners in the partnership firm, the petitioner and others have actively interacted with the complainant company in connection with business transactions and all of them are responsible for day to day affairs of the A1 firm.
6. Counsel relied on the judgment of Hon'ble Supreme Court in the case of S.P.Mani and Mohan Diary v. Dr.Snehalatha Elangovan 4, wherein it was held that when there are specific averments in the complaint and also in statutory notice, the proceedings cannot be quashed and it is for the partner in a firm to produce evidence that he did not 2 2003(1) AWC 612 SC 3 2000 (4) CTC 232: 2000 (6) SCALE 578 4 AIR 2022 Supreme Court 4883 4 have knowledge about the transactions in question. Since no document is filed by the petitioner, criminal trial has to go on and it is for the petitioner to agitate his defence before the trial Court.
7. According to the complaint, there were transactions between the complainant and A1 firm over a period of time and the complainant company was maintaining a running account of A1 company. In the complaint it is not mentioned that this petitioner had at any point of time dealt with any of the transactions with the complainant company. A general accusation that all the partners 2 to 5 have interacted and dealt with the transactions would not suffice in the back ground of the judgment of the Hon'ble Supreme Court in Siby Thomas's case (supra). The Hon'ble Supreme Court held that merely because a person is managing the affairs of the company, per se, he would not become in-charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. Further, it was held that the words "was in- charge of" and "was responsible to the company for the 5 conduct of the business of the company" have to be read conjunctively. Unless both the aspects are satisfied, a person cannot be prosecuted under Section 141 of the Negotiable Instruments Act.
8. The general averments made in the complaint regarding the involvement of this petitioner are not sufficient to make the petitioner vicariously liable and prosecute the case under Section 138 of the Negotiable Instruments Act.
9. Accordingly, the Criminal Petition stands allowed quashing the proceedings against the petitioner/A3 in C.C.No.307 of 2017 on the file of IV Special Magistrate at Hyderabad. Consequently, miscellaneous applications, if any, shall stand closed.
_________________ K.SURENDER, J Date: 06.11.2023 kvs 6 THE HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION NO. 495 OF 2019 Dt.06.11.2023 kvs