Delhi High Court
Sanjay Aggarwal vs M/S. J.K. Iron & Steel ... on 25 March, 2009
Author: Sunil Gaur
* HIGH COURT OF DELHI : NEW DELHI
Judgment reserved on : March 12, 2009
Judgment delivered on : March 25, 2009
+ Crl. M.C. No. 2701/2007 &
Crl. M.A. No. 9548/2007 (Stay)
% Sanjay Aggarwal ... Petitioner
Through: Mr. Ateev Mathur & Mr. Manish
Paliwal, Advocate
versus
M/s. J.K. Iron & Steel Manufacturing Co. ... Respondent
Through: Ms. Anita Abraham, Advocate
CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR
1. Whether the Reporters of local papers may
be allowed to see the judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be reported
in the Digest?
SUNIL GAUR, J.
1. What is being sought in this petition, is quashing of criminal
complaint No.15/2005 (New No.3413/07, titled M/s. J.K. Iron &
Steel Manufacturing vs. M/s. Sanjay Steel Tube Co.) under
Section 138 read with section 141 of Negotiable Instruments Act,
Crl. M.C. No. 2701/2007 Page 1
1881.
2. In the aforesaid complaint, Petitioner in the capacity of one of
the partners of M/s. Sanjay Steel Tube Co. was summoned as an
accused vide order of 15th January 2005 by the trial court and the
said order is also impugned in this petition.
3. M/s. Sanjay Steel Tube Co., (hereinafter referred to as
accused firm) is a partnership firm consisting of two partners only
and Petitioner is one of the partners of the accused firm.
Petitioner's challenge in this petition, is based upon section 141 of
the Negotiable Instruments Act, 1881 as it has been contended on
behalf of the Petitioner that there are no averments in the
complaint that the Petitioner was in charge of or was responsible
to the accused firm for the conduct of the business of the accused
firm and therefore, Petitioner cannot be deemed to be guilty in
respect of dishonoring of a cheque of Rupees three lacs, issued by
another partner of the accused firm.
4. Learned counsel for Petitioner relies upon decisions reported
in AIR 2006 SC 3086; (2004) 7 SCC 15; 2005 (4) SCALE 354;
(2005) 8 SCC 89, to contend that in the absence of any averment
of Petitioner being in charge of or responsible for the business of
Crl. M.C. No. 2701/2007 Page 2
the accused firm, Petitioner cannot be made an accused by the
Respondent in the complaint in question. Nothing else is urged on
behalf of the Petitioner.
5. On behalf of the Respondent, attention has been drawn to
sections 19, 20, 25 and 26 of the Indian Partnership Act, 1932, to
point out that the liability is of the firm for the wrongful act of the
partner of the said firm and on the implied authority of a partner,
another partner acts on behalf of the firm and the said implied
authority binds the firm. Reliance has been placed upon decision
of the Apex Court reported in (2007) 5 SCC 108, to contend that
the question whether the accused at the relevant time was not
incharge or responsible for the business of the accused
company/firm, is a matter which is required to be considered at
trial.
6. After having heard both the sides and upon perusal of the
decisions cited before me, I find that the latest decision on the
subject by the Apex Court, is the case of "N. Rangachari vs.
Bharat Sanchar Nigam Ltd., (2007) 5 SCC 108, which takes note
of decisions cited by petitioner and it provides the latest
interpretation of section 141 of the Negotiable Instruments Act,
Crl. M.C. No. 2701/2007 Page 3
1881 in the following words:-
"In the case on hand, reading the complaint as a
whole, it is clear that the allegations in the complaint
are that at the time at which the two dishonoured
cheques were issued by the company, the appellant
and another were the Directors of the company and
were incharge of the affairs of the company. It is not
proper to split hairs in reading the complaint so as to
come to a conclusion that the allegations as a whole
are not sufficient to show that at the relevant point of
time the appellant and the other are not alleged to be
persons incharge of the affairs of the company.
Obviously, the complaint refers to the point of time
when the two cheques were issued, their presentment,
dishonour and failure to pay in spite of notice of
dishonour. We have no hesitation in overruling the
argument in that behalf by the learned Senior Counsel
for the appellant.
We think that, in the circumstances, the High
Court has rightly come to the conclusion that it is not a
fit case for exercise of jurisdiction under Section 482 of
the Code of Criminal Procedure for quashing the
complaint. In fact, an advertence to Sections 138 and
141 of the Negotiable Instruments Act shows that on
the other elements of an offence under Section 138
being satisfied, the burden is on the Board of Directors
Crl. M.C. No. 2701/2007 Page 4
or the Officers incharge of the affairs of the company to
show that they are not liable to be convicted. Any
restriction on their power or existence of any special
circumstance that makes them not liable is something
that is peculiarly within their knowledge and it is for
them to establish at the trial such a restriction or to
show that at the relevant time they were not incharge
of the affairs of the company. Reading the complaint as
a whole, we are satisfied that it is a case where the
contentions sought to be raised by the appellant can
only be dealt with at the conclusion of the trial."
7. In the aforesaid latest pronouncement of the Apex Court, the
clinching observations made are as under:-
"It appears to us that an allegation in the complaint that
the named accused are the directors of the company
itself would usher in the element of their acting for and
on behalf of the company and of their being in-charge
of the company."
8. Above said clinching observations squarely applies to the
facts of the instant case as the accused-firm has been made a
party in the criminal complaint in question, through its both
partners, i.e., Petitioner and the other partner is Ajay Aggarwal.
Petitioner's firm has been arrayed as an accused through both its
partners and the Petitioner has averred in this petition that the
Crl. M.C. No. 2701/2007 Page 5
other partner of the accused firm is his brother and the Petitioner is
not aware of the whereabouts of his brother/co-partner.
9. To claim the protection of the first proviso to sub-section (1)
of section 141 of Negotiable Instruments Act, 1881, Petitioner has
to aver in the present petition that the issuance of the dishonored
cheque in question by his co-partner was without his knowledge.
There is no such averment in the present petition.
10. In view of the latest pronouncement of the Apex Court, in the
case of N. Rangachari (supra), the claim of the Petitioner to the
protection of section 141 of Negotiable Instruments Act, 1881, is
left open, to be claimed by the Petitioner at trial.
11. In the light of the aforesaid, this court is not inclined to
exercise its extra-ordinary inherent jurisdiction under Section 482
of Cr. P.C. to quash the criminal complaint in question, as this
power has to be exercised sparingly and in appropriate cases. It is
so said, as the Apex Court in the case of Inder Mohan Goswami &
Anr. Vs. State of Uttaranchal & Others, AIR 2008 SC 251, has
opined as under:-
Crl. M.C. No. 2701/2007 Page 6
"Inherent powers under Section 482 Cr.P.C. though wide
have to be exercised sparingly, carefully and with great
caution and only when such exercise is justified by the tests
specifically laid down in this section itself. Authority of the
court exists for the advancement of justice. If any abuse of
the process leading to injustice is brought to the notice of the
court, then the Court would be justified in preventing injustice
by invoking inherent powers in absence of specific provisions
in the Statute."
12. Thus, this petition is liable to be dismissed and is accordingly
dismissed with the observation that anything stated herein shall
have no bearing on merits at trial.
13. This petition as well as pending application are accordingly
disposed of.
Sunil Gaur, J.
March 25, 2009
pkb
Crl. M.C. No. 2701/2007 Page 7
