Saraswathy Amma & Anr. vs M/S. Swil Limited & Anr.
1999 Latest Caselaw 1197 Del

JUDGMENT

M.S.A. Siddiqui, J.

1. The petitioners Smt. A. Saraswathy Amma and Smt. Sarojini Amma have filed two separate petitions under Section 482, Cr. P.C. for quashing the order dated 15.11.1997 passed by the M.M., New Delhi. I propose to dispose of both the petitions by this common order.

2. M/s. Malabar Cashewnuts and Allied Products is a registered partner- ship firm of which the present petitioners were partners. The respondent filed a complaint under Section 138 of the Negotiable Instruments Act (for short the Act) against M/s. Malabar Cashewnuts and Allied Products and four others including the petitioners who are shown as partners of the accused firm. The complaint contained the allegations that four cheques were issued on behalf of the accused firm for the debts due to the respondent Company and said cheques were dishonoured by the drawee bank on the ground of insufficiency of funds in the account. On 12.8.1996, the respondent Company issued notices to the accused firm as well as to the petitioners demanding payment of the amounts covered by the cheques but despite service of the notices no amount was paid. Hence the complaint alleged that all the accused persons have committed the offence under Section 138 of the Act. On the complaint being filed, learned M.M. issued process against the accused persons.

3. After entering appearance, the petitioners filed an application before the learned Magistrate asking him to recall the process. Having failed in their attempt, the petitioners have come up before this Court under Section 482, Cr. P.C.

4. It is undisputed that A. Suresh Kumar, who is arraigned as fifth accused in the complaint, is the son of the petitioner Smt. Saraswathy Amma and brother of the accused A. Sasiskant, that the petitioners Smt. Saraswa- thy Amma and Smt. Sarojini Amma are sisters. It is also undisputed that the petitioners are partners of the accused firm and they had executed a gener- al power of attorney in favour of the accused No. 5. Learned Counsel for the petitioners contended that the complaint against the petitioners is not maintainable as they were not responsible to the accused firm for the conduct of its business. A bare reading of Section 141 of the Act would show that three categories of persons have been brought within the purview of the penal liability through the legal fiction envisaged therein. They are : (1) the company or the firm which committed the offence; (2) every one who was incharge of and was responsible for the business of the company or the firm; (3) any other person who is a director or a manager or a secretary or officer of the company, with whose connivance the company or the firm has committed the offence. In the instant case, the petitioners have been arraigned as accused on the allegations that they were incharge and were responsible for the business of the accused firm. It has to be borne in mind that the person incharge and responsible to a partnership for the conduct of its business need not be a partner of such firm. He can be a managing partner or a manager or an employee of a partnership firm. What is required by the provisions of Section 141 of the Act is that he should be authorised to be incharge for the conduct of the business of the firm. In other words, what is required for holding a person vicariously liable for the offence committed by a company or a firm is the actual role played by such person in the management and conduct of the business of the company or the firm, as the case may be. Simply because a person is a director of the company or a partner of a firm, it does not necessarily mean that he fulfills both the above requirements so as to make him vicariously liable. There must be specific accusation against each of the persons arraigned as accused that such person was incharge of and responsible for the conduct of the business of the company or the firm at the relevant time when the alleged offence was committed by the company or the firm. The said require- ment cannot be left to the wild imagination of the complainant, M.C.D. Vs. R.K. Rohtagi & Ors., .

5. In the instant case, the complaint shows that the petitioners had executed a general power of attorney in favour of the accused No. 5. Prima facie, this fact alone is sufficient to negative the contention of the respondent that the petitioners were incharge and were responsible for the conduct of the business of the accused firm. In the instant case, there is not even a whisper nor a shred of evidence nor anything to show apart from the presumption drawn by the respondent that there is any act committed by the petitioners from which a reasonable inference can be drawn that they could also be vicariously liable. Consequently, the impugned order cannot be sustained in law as it has resulted in miscarriage of justice. It ap- pears that while examining the matter for issuing process, the learned Magistrate did not consider the said aspect. In this context, I may useful- ly excerpt the following observations of their Lordships of the Supreme Court in M/s. Pepsi Foods Ltd. & Anr. Vs. Special Judicial Magistrate, AIR 1998 SC 128-IV (1997) CCR 108 (SC) = VI (1998) SLT 502 :

"Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complaint to succeed in bringing charge home to the accused."

6. However, if the respondent can at any stage produce evidence which satisfies the Court that the petitioners had also committed the alleged offence, the Court can take cognizance against them and tried them along- with the other accused persons. I would, however, make it plain that the mere fact that the proceedings have been quashed against the petitioners will not prevent the Trial Court from exercising its discretion under Section 319, Cr. P.C. if it is fully satisfied that a case for taking cognizance against them has been made out on the evidence led before it.

7. For the foregoing reasons, the petition is allowed and the impugned order directing issue of process against the petitioner is quashed.