Karnataka High Court
Anjana Agarwal vs Inflow Technologies Private Limited on 8 November, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2024:KHC:45265
CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF NOVEMBER, 2024 R
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CRIMINAL PETITION NO. 9443 OF 2024
C/W
CRIMINAL PETITION NO. 8100 OF 2023
CRIMINAL PETITION NO. 13150 OF 2023
CRIMINAL PETITION NO. 8523 OF 2024
IN CRL.P No. 9443/2024
BETWEEN:
1. JAI AGARWAL
S/O D K AGARWAL,
AGED ABOUT 41 YEARS,
NO.6A, MATHER GREAT ORCHARD,
VIDYA NAGAR, NEAR PET HOSPITAL,
KADAVANTHARA, ERNAKULAM,
Digitally signed KERALA-682020.
by NAGAVENI
Location: HIGH 2. ANJANA AGARWAL
COURT OF
KARNATAKA W/O RAMAWATHAR AGARWAL,
AGED ABOUT 45 YEARS,
28/1278, HARI PREM BASERA,
INDIRANAGAR, NEAR ELEGAN FLAT,
KP VALLON ROAD, KADAVANTHARA,
KADAVANTHARA S.O.
ERNAKULAM,
KERALA-682020.
...PETITIONERS
(BY SRI. ARUN G., ADVOCATE)
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CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
AND:
INFLOW TECHNOLOGIES PRIVATE LIMITED
INFLOW HOUSE NO.33 AND 34,
INDIRANAGAR, 1ST STAGE,
OFF 100 FEET ROAD,
BANGALORE-560038
REP. BY ITS HEAD-CREDIT SERVICES,
AND AUTHORIZED SIGNATORY,
MR.E.C. PRAVEEN REDDY.
...RESPONDENT
(BY SRI. R. KIRAN, ADVOCATE)
THIS CRL.P IS FILED U/S.482 (FILED U/S.528 BNNS) CR.P.C
PRAYING TO QUASH THE COMPLAINT AND PROCEEDINGS IN
C.C.NO. 9585/2023 (ARISING OUT OF PCR NO. 1439/2023) FOR THE
ALLEGED OFFENCE UNDER SECTION 138 OF NEGOTIABLE
INSTRUMENT ACT, 1881 ON THE FILE HONBLE 36TH ADDITIONAL
CHIEF METROPOLITAN MAGISTRATE AT BANGALORE BY ALLOWING
THE PRESENT PETITION FILED UNDER SEC.482 OF CODE OF
CRIMINAL PROCEDURE 1973.
IN CRL.P NO. 8100/2023
BETWEEN:
ANJANA AGARWAL
AGED ABOUT 48 YEARS
PARTNER
RR INFOCOM
MIG 474, CANAL ROAD,
PANAMPILLY NAGAR, ERNAKULAM
PANAMPILLY NAGAR
KERALA - 682 036
...PETITIONER
(BY SRI. ARUN G., ADVOCATE)
AND:
1. INFLOW TECHNOLOGIES PRIVATE LIMITED
"INFLOW HOUSE" NO.33 AND 34
INDIRANAGAR, 1ST STAGE,
OFF 100 FEET ROAD
BANGALORE - 560 038
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CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
REPRESENTED BY ITS HEAD -CREDIT SERVICES
REP. BY ITS HEAD-CREDIT SERVICES
AND AUTHORIZED SIGNATORY.
MR.E.C. PRAVEEN REDDY
PH NO. 888445966
EMAIL ID: [email protected]
2. RR INFOCOM
27/668, LAKSHMI PRABHA
LIG- 571, 11TH CROSS ROAD,
COCHIN- 682 032
REP. BY ITS MANAGING PARTNER
MR.RENU J. NAIR
ALSO AT
RR INFOCOM
61/3564, INTUC ROAD,
NEAR SOUTH OVER BRIDGE,
RAVIPURAM, VALANJAMBALAM,
COCHIN - 682 016
REP. BY ITS MANAGING PARTNER
MR. RENU J NAIR
3. RENU J NAIR,
MANAGING PARTNER
RR INFOCOM
MATHER SHREENE ORCHARD TOWER 25D
VIDYA NAGAR ROAD, VIDYA NAGAR,
COCHIN - 682 020
4. JAI AGARWAL
PARTNER RR INFOCOM
MIG 474, CANAL ROAD,
PANAMPILLY NAGAR, ERNAKULAM
PANAMPILLY NAGAR
KERALA - 682 036
5. MRINALI KUMAR
PARTNER R.R. INFOCOM
MATHER SHREENE ORCHARD TOWER 25D,
VIDYA NAGAR ROAD, VIDYA NAGAR,
COCHIN - 682 020
...RESPONDENTS
(BY SRI. R. KIRAN, ADVOCATE)
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CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
THIS CRL.P IS FILED U/S.407 CR.P.C PRAYING TO QUASH
THE COMPLAINT AND PROCEEDINGS IN C.C.NO.7311/2023
(ARISING OUT OF PCR NO.1437/2023) FOR THE ALLEGED
OFFENCE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT
ACT, 1881, ON THE FILE OF 36TH ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE AT BENGALURU BY ALLOWING THE
PRESENT PETITION FILED UNDER SECTION 482 OF CR.P.C.,
1973, IN THE INTEREST OF JUSTICE.
IN CRL.P NO. 13150/2023
BETWEEN:
JAI AGARWAL
S/O D.K. AGARWAL
AGED ABOUT 41 YEARS,
NO.6A, MATHER GREAT ORCHARD,
VIDYA NAGAR, NEAR PET HOSPITAL,
KADAVANTHARA, ERNAKULAM,
KERALA - 682020
...PETITIONER
(BY SRI. ARUN G., ADVOCATE)
AND:
INFLOW TECHNOLOGIES PRIVATE LIMITED
"INFLOW HOUSE" NO.33 AND 34,
INDIRANAGAR, 1ST STAGE,
OFF 100 FEET ROAD,
BANGALORE - 560038
REP. BY ITS HEAD - CREDIT SERVICES
AND AUTHORIZED SIGNATORY,
MR E.C.PRAVEEN REDDY
...RESPONDENT
(BY SRI. R. KIRAN, ADVOCATE)
THIS CRL.P IS FILED U/S.407 CR.P.C PRAYING TO QUASH
THE COMPLAINT AND PROCEEDINGS IN C.C.NO.7311/2023
(ARISING OUT OF PCR.NO.1437/2023) FOR THE OFFENCE P/U/S
138 OF NEGOTIABLE INSTRUMENTS ACT ON THE FILE OF XXXVI
ADDL.C.M.M., BENGALURU BY ALLOWING THE PRESENT
PETITION FILED U/S 482 OF CR.P.C.
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CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
IN CRL.P NO. 8523/2024
BETWEEN:
1. JAI AGARWAL
S/O D K AGARWAL,
AGED ABOUT 41 YEARS,
NO.6A, MATHER GREAT ORCHARD,
VIDYA NAGAR, NEAR PET HOSPITAL,
KADAVANTHARA, ERNAKULAM,
KERALA - 682020.
2. ANJANA AGARWAL
W/O RAMAWATHAR AGARWAL,
28/1278, HARI PREM BASERA,
INDIRANAGAR, NEAR ELEGAN FLAT,
KP VALLON ROAD, KADAVANTHARA,
KADAVANTHARA S O.
ERNAKULAM,
KERALA - 682020.
...PETITIONERS
(BY SRI. ARUN G., ADVOCATE)
AND:
INFLOW TECHNOLOGIES PRIVATE LIMITED
"INFLOW HOUSE" NO.33 AND 34,
INDIRANAGAR, 1ST STAGE,
OFF 100 FEET ROAD,
BANGALORE - 560038.
REP. BY ITS HEAD - CREDIT SERVICES
AND AUTHORIZED SIGNATORY,
MR E.C PRAVEEN REDDY
...RESPONDENT
(BY SRI. R. KIRAN, ADVOCATE)
THIS CRL.P IS FILED U/S.482 (FILED U/S.528 BNNS)
CR.P.C PRAYING TO QUASH THE COMPLIANT AND PROCEEDINGS
IN C.C.NO.9504/2023 (ARISING OUT OF PCR NO.1438/2023)
FOR THE ALLEGED U/S.138 OF NI ACT 1881 ON THE FILE OF
THE HONBLE 36th ACMM AT BENGALURU BY ALLOWING THE
PRESENT PETITION FILED U/S.482 OF CR.P.C. 1973.
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CRL.P No. 9443 of 2024
C/W CRL.P No. 8100 of 2023
CRL.P No. 13150 of 2023
AND 1 OTHER
THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA
ORAL ORDER
Heard the learned counsel Sri.Arun G., appearing for the
petitioner/s and the learned counsel Sri.R.Kiran, appearing for
the respondent/s in all these cases.
2. The petitioners in all these cases are erstwhile
partners of R.R.INFOCOM. Since these are batch of petitions
projecting a solitary issue in law they are taken up together
and considered by this common order. The issue is whether
the partners who have retired from partnership firm can be
prosecuted for an offence punishable under Section 138 of the
Negotiable Instruments Act, 1881, (hereinafter referred to as
'NI Act' for short) for a cheque that is rendered by the existing
partner.
3. Crl.P.No.9443/2024 is preferred by accused Nos.3
and 4 - Jai Agarwal and Anjana Agarwal in C.C.No.9585/2023.
Crl.P.No.8100/2023 is preferred by accused No.4 - Anjana
Agarwal in C.C.No.7311/2023. Crl.P.No.13150/2023 is
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preferred by accused No.3 - Jai Agarwal in C.C.No.7311/2023.
Crl.P.No.8523/2024 is preferred by accused Nos.3
and 4 - Jai Agarwal and Anjana Agarwal in C.C.No.9504/2023.
The instrument involved in the subject transactions are three
different cheques totally amounting to Rs.3,27,00,000/-. The
complainant is the respondent - Inflow Technologies Private
Limited in all these cases.
4. It transpires that a transaction between the
R.R.INFOCOM and Inflow Technologies Private Limited is with
regard to certain purchase orders placed by R.R.INFOCOM and
the deliveries made by the complainant - Inflow Technologies
Private Limited. The payment due date on these purchase
orders are of different dates. They are 18.10.2020, 21.09.2020
and 29.11.2020. At that point in time, it transpires that the
petitioner/s in all these cases were partners in the said firm
i.e., R.R. INFOCOM. On 11.10.2021, these petitioners who are
arrayed as accused in the afore-said cases retire from the
partnership and the partnership is reconstituted by drawing up
an agreement between the retiring and continuing partners of
R.R.INFOCOM. The averment is that all necessities in law with
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regard to intimation of retired partners is complied with. The
partners retire on 11.10.2021. The existing partner one
Renu J. Nair who is accused No.2 in all these cases issues three
cheques, albeit towards the payment that had to be made on
18.10.2020, 21.09.2020 and 29.11.2020. The
instruments/cheques were issued on 30.11.2022, 02.12.2022
and 05.12.2022. Those cheques were presented for its
realization and were returned with an endorsement "payment
stopped by drawer". It is then a notice is issued by the
complainant initiating proceedings under the N.I.Act. The
complainant narrates that the notice were sent to the
petitioners as well. The learned counsel for the petitioner
defends contending that no notice was received by them. Be
that as it may.
5. The proceedings were then initiated before the
concerned Court invoking Section 200 of the Cr.P.C., drawing
all these persons along with the firm and accused No.2 as
accused in these proceedings. The proceedings are now
pending as criminal cases aforesaid. The issuance of summons
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is what has driven these petitioners to this Court in the subject
petitions.
6. The learned counsel Sri.Arun G., appearing for the
petitioners in all these cases would contend that the petitioners
were no doubt partners on the date on which the supply was
made or the delivery was made and the payment due date.
But the cheques are not issued by the present petitioners, it is
issued by the existing partner after the partnership was
reconstituted when these petitioners came out of the
partnership.
7. The learned counsel for the petitioner/s would
further contend that the complaint averments are omnibus
against accused Nos.1 to 4 and no particular role or
responsibility being continued after the retirement of these
petitioners, as partners is averred and therefore, the learned
counsel would submit that the proceedings against these
petitioners are necessarily to be quashed.
8. The learned counsel appearing for the respondent -
complainant would vehemently refute the submissions seeking
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to contend that the judgment on which reliance is placed at the
time of grant of the interim order is inapplicable to the facts of
the case. He would submit that, that was a judgment dealing
with the Director of a Company resigning and proceedings
being taken up, against a resigned Director. He would seek to
place reliance upon the following judgments:
"1. (2024) 4 SCC 305 in Rajesh Viren Shah vs.
Redington (India) Limited passed by the Hon'ble
Supreme Court.
2. (2011) 13 SCC 88 in Raalis India Limited vs.
Poduru Vidya Bhushan and Others passed by the
Hon'ble Supreme Court.
3. MANU/TN/0012/2004 in Ap. V. Sundaram vs.
L. Karupuswamy passed by the High Court of
Madras.
4. 2018 SCC OnLine Guj 3562 in Urmiben
Pareshbhai Kothiya vs. HDFC Bank Ltd. passed by
the High Court of Gujarat at Ahmedabad.
5. (2023) 10 SCC 685 in S.P. Mani and Mohan
Diary vs. Dr Snehalatha Elangovan passed by the
Hon'ble Supreme Court.
6. Crl.M.C.2988/2022, Crl.M.As.12571/2022,
12573/2022 in Anju Khanna & Ors. Vs. State
(Govt of NCT of Delhi) & Anr. Passed by the High
Court of Delhi at New Delhi.
7. CRM-M-11650-2019 in Kamaljit Singh vs. State
of Punjab and another passed by the High Court
of Punjab and Haryana at Chandigarh.
8. 2005 (3) CTC 497 in Harihar Davey vs. Kamlesh
Steel Enterprises, a partnership firm, rep. by its
Partner, Jaya D. Davey, No.2, Philips Street,
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Chennai and others passed by the High Court of
Madras."
9. The learned counsel would take this Court through
several paragraphs of all the aforesaid judgments, to contend
that mere retirement of a partner would not suffice to escape
the liability under Section 138 of the Negotiable Instruments
Act. It should be made known in terms of law that the partners
have retired and therefore, the liability continues till such an
action is taken in accordance with law. He would contend that
whether the petitioners are retired as partners or not, is a
matter of fact which should be trashed out only in a full blown
trial, and not in a proceeding under Section 482 of the Cr.P.C.
10. The learned counsel would submit that the purport
of the judgments relied upon by him, is towards what he has
submitted, as noted hereinabove. He would seek dismissal of
these petitions.
11. The learned counsel for the petitioner/s would join
issue by contending that the judgments so relied on by the
learned counsel appearing for the complainant would not be
applicable to the facts of the case and what is applicable is the
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judgment of the Apex Court in the case of Siby Thomas v.
Somany Ceramics Ltd., reported in (2024) 1 SCC 348,
wherein the Apex Court considers the very issue of retiring
partners being hauled into a proceeding under Section 138 of
the N.I. Act.
12. I have given my anxious consideration to the
contentions of respective learned counsel and have perused the
material on record.
13. The afore-narrated facts are not in dispute. The
petitioners being partners in the Company - accused No.1
R.R.INFOCOM is a matter of record, the petitioners retiring
from the partnership and on the reconstitution of the
partnership is also a matter of record, as the document is
appended to the petitions. The retirement of these partners
would happen on 11.10.2021. By then, the transaction between
the respondent - complainant and the Company had taken
place and certain amounts were due to be paid. Pending
payment to the complainant, the petitioners retire on
11.10.2021. These are undisputed facts.
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AND 1 OTHER
14. The cheque is issued by accused No.2, who
represents accused No.1 on three different dates. On
30.11.2022, 02.12.2022 and 05.12.2022. Therefore, it is an
admitted fact that the cheques are issued after the exit of the
petitioners from the partnership firm. The cheques are not
signed by these petitioners. The cheques are admittedly signed
by accused No.2, who represents accused No.1 - Company.
Therefore, the petitioners in the considered view of this Court
cannot be hauled into these proceedings, as they had by the
time the instrument i.e. the cheque signed by accused No.2
representing accused No.1, had retired from the partnership.
The accused No.2 does not get into the partnership on
reconstitution, but continues to be a partner and could be
described as an existing partner. Therefore, the existing
partner issues the cheques close to twelve months after the
retirement of these petitioners.
15. Insofar as the judgments relied on by the learned
counsel appearing for the respondent - complainant, there
cannot be any qualm about the principles laid down therein in
those cases they were either the Directors of the Company,
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which are different from partners of the Company, as the
statutory liability or statutory obligations are different under
the Partnership Act or the Companies Act, as the case would
be.
16. The learned counsel has placed heavy reliance upon
the judgment rendered by the High Court of Gujarat and which
follows the judgment rendered by the High Court of Madras.
In the judgment rendered by High Court of Madras, plea of the
accused therein was the complainant had by deceit or
erroneously taken the signature of the accused on the cheque.
That is not the issue in the case at hand. The case at hand is
plain and simple that the petitioners retired on 11.10.2021.
Three cheques were issued by the existing partner accused
No.2, who represented accused No.1, twelve months after the
retirement. Therefore, what would govern the case at hand are
not the judgments that are relied on by the learned counsel for
the complainant, but the judgment of the Apex Court in the
case of Siby Thomas (supra). The Apex Court in the case of
Siby Thomas (supra) has held as follows:
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6. In view of the rival contentions as above it is
apposite to refer to the averments in Paras 3 and 4 of the
complaint, which is annexed to the SLP. They read thus:
"3. That Accused 1 is a partnership-firm with the
name and style of M/s Tile Store, having its office at 5-
654/B, Jyothis Complex, Bypass Road, Eranhipalam,
Calicut-673 006 (Kerala), while Accused 2 to 6 are the
partners of Accused 1. Accused 2 to 6 being the
partners are responsible for the day-to-day conduct
and business of Accused 1.
4. That Accused 1 through its partners i.e.
Accused 2 to 6, on the basis of the authority
vested in them approached to the complainant
for purchasing the ceramic tiles, sanitary wares
and bath fitting from the complainant on credit
basis. The request of Accused 1 was accepted by
the complainant and the accused agreed to pay
the amount of the goods purchased by them to
the complainant within one month and it was
also agreed that if the accused failed to make the
payment within one month in that case they
shall also be liable to pay interest @ 24% p.a. on
the balance sale consideration till its full
realisation."
7. As noticed hereinbefore, the parties are at
issue over the question as to whether the
averments in the complaint satisfy the
requirements under Section 141(1) of the NI Act.
True that in Para 3 it is stated that Accused 1 is a
partnership firm and Accused 2 to 6 are the
partners of Accused 1 and they, being the partners,
are responsible for the day-to-day conduct and
business of Accused 1. In Para 4 what is stated is
that Accused 1 through its partners i.e. Accused 2
to 6, on the basis of the authority vested in them
approached the complainant for purchasing the
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ceramic tiles, sanitary wares and bath fittings from
the complainant on credit basis. Indubitably,
besides the aforesaid averments no other
averments are made in the complaint in regard to
the appellant's role. Therefore, the question is
whether the averments referred to hereinbefore are
sufficient to prosecute the appellant under Section
138 of the NI Act, on the afore-extracted
averments. We are not oblivious of the fact that the
appellant has also got a contention that he retired
from the partnership firm much prior to the
issuance of the cheque in question.
8. It is only proper and profitable to refer to sub-
section (1) of Section 141 of the NI Act in view of the
rival contentions. It reads thus:
"141. Offences by companies.--(1) 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:
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."
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9. Bearing in mind the averments made in the
complaint in relation to the role of the appellant and sub-
section (1) of Section 141, we will have to appreciate the
rival contentions. Going by the decision relied on by the
respondent in S.P. Mani case [S.P. Mani & Mohan
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] it is the primary responsibility of
the complainant to make specific averments in the
complaint, so as to make the accused vicariously liable.
Relying on para 58.2 of the said decision the learned
counsel appearing for the respondent would also submit
that the complainant is supposed to know only generally
as to who were in charge of the affairs of the company or
firm, as the case may be and he relied on mainly the
following recitals thereunder : (SCC p. 716, para 58)
"58. ... 58.2. The complainant is supposed to know
only generally as to who were in charge of the affairs
of the company or firm, as the case may be. The other
administrative matters would be within the special
knowledge of the company or the firm and those who
are in charge of it. In such circumstances, the
complainant is expected to allege that the persons
named in the complaint are in charge of the affairs of
the company/firm."
10. We are of the considered view that the respondent
has misread the said decision. Under the sub-caption
"Specific averments in the complaint", in para 51 of S.P.
Mani case [S.P. Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203]
and paras 34.1 and 34.4 of Gunmala Sales case [Gunmala
Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1
SCC (Civ) 433 : (2015) 1 SCC (Cri) 580] as also in para
52 of S.P. Mani case [S.P. Mani & Mohan
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] , it was held in the decision
in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203]
thus : (SCC pp. 714-715, paras 51-52)
"51. In Gunmala Sales [Gunmala Sales (P)
Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC
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AND 1 OTHER
(Civ) 433 : (2015) 1 SCC (Cri) 580] , this Court after
an exhaustive review of its earlier decisions on Section
141 of the NI Act, summarised its conclusion as under
: (SCC pp. 126-27, para 34)
'34. ... 34.1. Once in a complaint filed under
Section 138 read with Section 141 of the NI Act the
basic averment is made that the Director was in
charge of and responsible for the conduct of the
business of the company at the relevant time when
the offence was committed, the Magistrate can
issue process against such Director.
34.2-34.3. * * *
34.4. No restriction can be placed on the High
Court's powers under Section 482 of the Code. The
High Court always uses and must use this power
sparingly and with great circumspection to prevent
inter alia the abuse of the process of the Court.
There are no fixed formulae to be followed by the
High Court in this regard and the exercise of this
power depends upon the facts and circumstances of
each case. The High Court at that stage does not
conduct a mini trial or roving inquiry, but nothing
prevents it from taking unimpeachable evidence or
totally acceptable circumstances into account which
may lead it to conclude that no trial is necessary
qua a particular Director.'
52. The principles of law and the dictum as laid
in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu
Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580] , in our opinion, still holds the
field and reflects the correct position of law."
11. In the light of the afore-extracted recitals
from the decision in Gunmala Sales (P) Ltd. v. Anu
Mehta [Gunmala Sales (P) Ltd. v. Anu Mehta,
(2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 : (2015)
1 SCC (Cri) 580] , quoted with agreement in S.P.
Mani case [S.P. Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri)
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203] and in view of sub-section (1) of Section 141
of the NI Act it cannot be said that in a complaint
filed under Section 138 read with Section 141 of the
NI Act to constitute basic averment it is not
required to aver that the accused concerned is a
person who was in charge of and responsible for
the conduct of the business of the company at the
relevant time when the offence was committed. In
para 53 of S.P. Mani case [S.P. Mani & Mohan
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] it was held thus : (SCC p.
715)
"53. In the case on hand, we find clear and
specific averments not only in the complaint but
also in the statutory notice issued to the
respondent."
It is thereafter that in the decision in S.P. Mani case [S.P.
Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10
SCC 685 : (2024) 1 SCC (Cri) 203] in para 58.1 it was
held that the primary responsibility of the complainant is
to make specific averments in the complaint so as to
make the accused vicariously liable.
12. Bearing in mind the afore-extracted recitals
from the decisions in Gunmala Sales [Gunmala
Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 :
(2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580]
and S.P. Mani case [S.P. Mani & Mohan
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] , we have carefully gone
through the complaint filed by the respondent. It is
not averred anywhere in the complaint that the
appellant was in charge of the conduct of the
business of the company at the relevant time when
the offence was committed. What is stated in the
complaint is only that Accused 2 to 6 being the
partners are responsible for the day-to-day conduct
and business of the company. It is also relevant to
note that an overall reading of the complaint would
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not disclose any clear and specific role of the
appellant.
13. In the statutory notice dated 10-9-2015
(Annexure P-6) at Para 3 it was averred thus:
"3. That for liquidation of the aforesaid legal
liability/outstanding, you Noticee 2 to 6 issued Cheque
No. 005074 dated 21-8-2015, amounting to Rs
27,46,737 drawn on Punjab National Bank, Ernhipalam
(Kozhikode) Branch in favour of my client from the
account of
Noticee 1."
14. In response to that in Annexure P-7 reply the
appellant herein stated thus:
"In this regard, I would like to convey you that, I
have retired from M/s Tile Store as partner way back
on 28-5-2013 and I am not a partner of M/s Tile Store
any more. (Copy of retirement deed enclosed).
During the time of my retirement, there were no
dues to M/s Somany Ceramics Ltd. from M/s Tile Store
as full payments were made for the consignments
taken from them. (Copy of accounts statements up to
31-5-2013 enclosed.)"
15. In the light of the aforesaid circumstances the
averments of the respondent in Paras 5 and 6 of the
complaint are also to be seen. In Para 5 of the complaint,
it was alleged that Accused 1 through Accused 2 had
purchased the goods from the complainant on credit basis
through proper sales invoices and, in Para 6 it was alleged
that for liquidation of legal liability outstanding Accused 2
and 3 issued Cheque No. 005074 dated 21-8-2015
amounting to Rs 27,46,737 drawn upon Punjab National
Bank, Ernhipalam (Kozhikode), in favour of the
complainant from the account of Accused 1. The appellant
is Accused 4 in the complaint.
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16. In view of the factual position relating the
averments revealed from the complaint as aforesaid it is
relevant to refer to the decisions relied on by the learned
counsel appearing for the appellant. In the decision
in Anita Malhotra case [Anita Malhotra v. Apparel Export
Promotion Council, (2012) 1 SCC 520 : (2012) 1 SCC
(Civ) 329 : (2012) 1 SCC (Cri) 496] in para 22 it was held
thus : (SCC p. 528)
"22. This Court has repeatedly held that in case of
a Director, the complaint should specifically spell out
how and in what manner the Director was in charge of
or was responsible to the accused company for
conduct of its business and mere bald statement that
he or she was in charge of and was responsible to the
company for conduct of its business is not sufficient.
(Vide National Small Industries Corpn. Ltd. v. Harmeet
Singh Paintal [National Small Industries Corpn.
Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 :
(2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] .)
In the case on hand, particularly, in Para 4 of the
complaint, except the mere bald and cursory
statement with regard to the appellant, the
complainant has not specified her role in the day-to-
day affairs of the Company. We have verified the
averments as regards to the same and we agree with
the contention of Mr Akhil Sibal that except
reproduction of the statutory requirements the
complainant has not specified or elaborated the role of
the appellant in the day-to-day affairs of the
Company. On this ground also, the appellant is
entitled to succeed."
17. Paras 21 to 23 of Ashok Shewakramani
case [Ashok Shewakramani v. State of A.P., (2023) 8 SCC
473 : (2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 :
2023 INSC 692] is also relevant for the purpose of the
case and it, insofar as relevant, reads thus : (SCC pp.
478-79)
"21. Section 141 is an exception to the normal rule
that there cannot be any vicarious liability when it
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comes to a penal provision. The vicarious liability is
attracted when the ingredients of sub-section (1) of
Section 141 are satisfied. The section provides that
every person who at the time the offence was
committed was in charge of, and was responsible to
the Company for the conduct of business of the
company, as well as the company shall be deemed to
be guilty of the offence under Section 138 of the NI
Act.
22. In the light of sub-section (1) of Section 141,
we have perused the averments made in the
complaints subject-matter of these three appeals. The
allegation in Para 1 of the complaints is that the
appellants are managing the company and are busy
with day-to-day affairs of the company. It is further
averred that they are also in charge of the company
and are jointly and severally liable for the acts of
Accused 1 company. The requirement of sub-section
(1) of Section 141 of the NI Act is something different
and higher. Every person who is sought to be roped in
by virtue of sub-section (1) of Section 141 of the NI
Act must be a 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. Merely because somebody is managing the
affairs of the company, per se, he does not become in
charge of the conduct of the business of the company
or the person responsible for the company for the
conduct of the business of the company. For example,
in a given case, a manager of a company may be
managing the business of the company. Only on the
ground that he is managing the business of the
company, he cannot be roped in based on sub-section
(1) of Section 141 of the NI Act.
23. The second allegation in the complaint is that
the appellants are busy with the day-to-day affairs of
the company. This is hardly relevant in the context of
sub-section (1) of Section 141 of the NI Act. The
allegation that they are in charge of the company is
neither here nor there and by no stretch of the
imagination, on the basis of such averment, one
cannot conclude that the allegation of the second
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respondent is that the appellants were also responsible
to the company for the conduct of the business. Only
by saying that a person was in charge of the company
at the time when the offence was committed is not
sufficient to attract sub-section (1) of Section 141 of
the NI Act."
18. Thus, in the light of the dictum laid down
in Ashok Shewakramani case [Ashok
Shewakramani v. State of A.P., (2023) 8 SCC 473 :
(2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 :
2023 INSC 692] , 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.
19. In such circumstances, para 24 in Ashok
Shewakramani case [Ashok Shewakramani v. State
of A.P., (2023) 8 SCC 473 : (2023) 4 SCC (Civ) 116 :
(2023) 3 SCC (Cri) 568 : 2023 INSC 692] is also
relevant. After referring to Section 141(1) of the NI
Act, in para 24 it was further held thus : (SCC p.
480)
"24. ... 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
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disjunctively and the same ought to be read
conjunctively in view of use of the word "and" in
between."
20. The upshot of the aforesaid discussion is that
the averments in the complaint filed by the
respondent are not sufficient to satisfy the
mandatory requirements under Section 141(1) of
the NI Act. Since the averments in the complaint
are insufficient to attract the provisions under
Section 141(1) of the NI Act, to create vicarious
liability upon the appellant, he is entitled to succeed
in this appeal. We are satisfied that the appellant
has made out a case for quashing the criminal
complaint in relation to him, in exercise of the
jurisdiction under Section 482CrPC. In the result
the impugned order [Siby Thomas v. Somany
Constructions Ltd., 2019 SCC OnLine P&H 7919] is
set aside and the subject criminal complaint filed by
the respondent and pending before the learned CJ
(JD) JMIC, Bahadurgarh, in the matter titled
as Somany Ceramics v. Tile Store vide COMA-321-
2015 (CNRNO : HRJRA1004637-2015), stand
quashed only insofar as the appellant, who is
Accused 4, is concerned. The appeal stands allowed
as above. There will be no order as to costs."
(emphasis supplied)
17. The Apex Court was dealing with an identical
situation where the High Court had rejected the petition under
Section 482 of the Cr.P.C., on the ground that it would be a
question of fact and the retiring partners cannot escape the
liability. The Apex Court upturns the view of High Court and
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holds that unless there is specific averment of the involvement
of the retiring partners in the complaint and continued liability,
cannot be hauled into the proceedings. The judgment of the
Apex Court in the considered view of this Court covers the issue
on all its fours, as the petitioners had retired as partners one
year before the issuance of the cheque, and there is no
averment in the complaint about the involvement of these
petitioners even after retirement. In the teeth of the aforesaid
facts, permitting further proceedings against these petitioners
would become an abuse of process of law and result in
miscarriage of justice.
18. For the aforesaid reasons, the following:
ORDER
i) The petitions are allowed; and
ii) In Crl.P.No.9443/2024: The proceedings in
C.C.No.9585/2023, pending on the file of the XXXVI
Additional Chief Metropolitan Magistrate, Bengaluru,
qua the petitioners, stand quashed;
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In Crl.P.No.8100/2023: The proceedings in
C.C.No.7311/2023, pending on the file of the XXXVI
Additional Chief Metropolitan Magistrate, Bengaluru,
qua the petitioner, stand quashed;
In Crl.P.No.13150/2023: The proceedings in
C.C.No.7311/2023, pending on the file of the XXXVI
Additional Chief Metropolitan Magistrate, Bengaluru,
qua the petitioner, stand quashed;
In Crl.P.No.8523/2024: The proceedings in
C.C.No.9504/2023, pending on the file of the XXXVI
Additional Chief Metropolitan Magistrate, Bengaluru,
qua the petitioners, stand quashed.
Sd/-
(M.NAGAPRASANNA)
JUDGE
KG
