Madras High Court
R.Sumathi vs )Rahja Manickam on 30 September, 2021
Crl.OP.Nos.27705 & 27966/2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 30.09.2021
CORAM
THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN
Crl.OP.Nos.27705 & 27966/2015 & MP.Nos.1, 1, 2 & 2/2015 [4 MPs] in
Crl.P.Nos.27705 & 27966/2015
[Video Conferencing]
R.Sumathi ... Petitioner
in both Petitions
Versus
Sri Balaji Yarns,
Rep. by its Partners,
1)Rahja Manickam,
2)S.Jayakumar
Having its place of business at
No.44 B, Rakkipalayam Road,
Ammapalyam,
Anuparpalyam Post, Avinashi Taluk,
Rep. By its Office In-charge &
Power of Attorney Agent, S.Mani ... Respondent
in both petitions
Common Prayer : - Criminal Original Petitions filed under Section
482 of Cr.P.C., to call for records in C.C.No.29/2017 and CC.No.28/2017
pending on the file of Learned Judicial Magistrate Court, Avinashi and
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quash all further proceedings in the said case as against the petitioner
herein.
For Petitioner in both
Petitions : Mr.R.Baskar
For Respondent in both
Petitions : Mr.N.Umapathi
COMMON ORDER
(1) Heard Mr.R.Baskar, learned counsel for the petitioner and
Mr.N.Umapathi, learned counsel for the respondent.
(2) Since common arguments were advanced with respect to both the
petitions, a common order is passed.
(3) In both the petitions, parties are also the same and they are also
agitating more or less on the same issue.
(4) Two complaints came to be filed by the respondent in both the
petitions, under Section 138 of the Negotiable Instruments Act read
with 200 Cr.P.C., before the learned Judicial Magistrate No.1, at
Tiruppur.
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(5) The complaint given with respect to Crl.OP.No.27705/2015 had
originally been taken cognizance as CC.No.306/2015 by the learned
Judicial Magistrate, Fast Track Court at Magisterial Level at
Tiruppur. I am also informed that it had been subsequently
transferred to the learned Judicial Magistrate at Avinashi and
registered as CC.No.29/2017.
(6) The complaint with respect to Crl.OP.No.27966/2015 had originally
been taken cognizance as CC.No.304/2015 by the learned Judicial
Magistrate, Fast Track Court at Magisterial Level at Tiruppur and
subsequently, had been transferred to the Court of Judicial
Magistrate, Avinashi, and renumbered as CC.No.28/2017.
(7) The respondent in both the cases/complainant is Sri Balaji Yarns,
represented by its Partners. They had, transactions with A1, viz., SRS
Knitting at Tiruppur, which is a Partnership Firm. The partners had
been shown as A2 and A3. They are spouses.
(8) In view of the business transactions, two cheques had been issued
towards an existing liability. Both the cheques were dated
08.12.2008. The first cheque bore No.640583 and the second cheque
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bore No.090309. They were both drawn on the South Indian Bank
Limited, Main Branch, Tiruppur. The first cheque was for a sum of
Rs.2,62,850/- and the second cheque was for a sum of Rs.3,73,200/-.
(9) Crl.OP.No.27705/2015 is with respect to cheque amount
Rs.2,62,850/- and Crl.OP.No.27966/2015 is with respect to cheque
amount Rs.3,73,200/-. Both the cheques when presented for
payment, returned dishonoured. In view of that particular fact, after
issuing notice and after going through required procedural process,
the defacto complainant had given two separate complaints, originally
before the learned Judicial Magistrate/Fast Track Court at Magisterial
Level, Tiruppur and which Court had taken cognizance of both the
complaints as aforesaid, as CC.Nos.306/2015 and 304/2015. On
transfer, they are now pending on the file of the Court of Judicial
Magistrate, Avinashi.
(10) Mr.R.Baskar, learned counsel for the petitioner raised one issue, viz.,
that the petitioner herein/A3 who is also incidentally a partner of
A1/Firm, had not signed the cheques. It is also pointed out that
except for the allegation, she was responsible for all transactions and
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also for the day-to-day activities of A1/Firm, it is specifically pointed
out that the only further statement made in the complaints is that the
cheques were signed by A2/her husband in her presence.
(11) The said averments have been interpreted in two different ways by
both the learned counsels.
(12) Mr.R.Baskar, learned counsel for the petitioner insists that the said
averments are not sufficient to attract the offence u/s.138 of the
Negotiable Instruments Act.
(13) On the other hand, Mr.N.Umapathi, learned counsel for the
respondent insists that the said averments are more than sufficient to
array the present petitioner herein as an accused and that she should
necessarily have to face the prosecution. It is also alleged by the
learned counsel for the respondent that these are issues to be
examined during the course of trial and that, on a prima facie reading
of the complaints, this Court can never come to any conclusion
whether she was directly involved or whether she was not directly
involved either with the day-to-day affairs of the Partnership Firm or
on the fact that the cheques have been allegedly signed in her
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presence. It is stated that these are issues for trial and can be proved
only during the course of trial.
(14) The learned counsels also relied on the judgments, viz., [1] 2018 [14]
SCC 202 [Ashoke Mal Bafna Vs. Upper India Steel Mfg. & Engg. Co.
Ltd.] ; [2] 2020 [3] MWN [Cri] DCC 85 [Mad] [Y.G.Rajendran Vs.
Molly Abraham] ; [3] 2020 [3] MWN [Cri.] DCC 4 [Mad] [Vijaya
Arun Vs. New Link Overseas Finance Limited] ; and also [4] 2019
[15] SCC 550 [A.R.Radha Krishna Vs. Dasari Deepthi and Others].
(15) In all the four judgments, the point which had been stressed by the
Hon'ble Supreme Court of India is that there should be averments that
the Director who is arrayed as an accused, should be shown to be
having control over the affairs of the Company and should be in-
charge of the day-to-day affairs of the Company. It had been stated
that if averments in the complaint do not cross that particular
threshold or test, then the Director can seek to quash the complaint as
against him/her.
(16) In the instant case also, it is stated by the learned counsel for the
petitioner that the averments are not sufficient whereas, the learned
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counsel for the respondent insist that the averments are sufficient.
(17) Now, let me examine the provisions under Section 138 of the
Negotiable Instruments Act, 1881.
(18) Section 138 of the NI Act, reads thus:-
138. Dishonour of cheque for insufficiency, etc., of
funds in the account.—Where any cheque drawn by a
person on an account maintained by him with a banker
for payment of any amount of money to another person
from out of that account for the discharge, in whole or
in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, without prejudice
to any other provision of this Act, be punished with
imprisonment for a term which may be extended to two
years, or with fine which may extend to twice the
amount of the cheque, or with both:
Provided that nothing contained in this section
shall apply unless— (a) the cheque has been presented
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to the bank within a period of six months from the date
on which it is drawn or within the period of its validity,
whichever is earlier;
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a
notice; in writing, to the drawer of the cheque, within
thirty days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the
payment of the said amount of money to the payee or,
as the case may be, to the holder in due course of the
cheque, within fifteen days of the receipt of the said
notice.
Explanation.—For the purposes of this section,
“debt of other liability” means a legally enforceable
debt or other liability.''
(19) There is a further section, viz., Section 141 of the Act, which relates
to offences by a Company.
(20) Section 141 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
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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.
(2) 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
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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
— (a) “company” means anybody corporate and
includes a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a
partner in the firm.''
(21) I am more deeply concerned with Explanations to Section 141 of NI
Act, 1881.
(22) There is one specific distinction while examining the position of a
Director and examining the position of a Partner of a Partnership
Firm.
(23) A Director receives a remuneration for services rendered for and
behalf of the Company. It is to be noted that there are various
categories of Director. There may be a whole time Director. There
may be a Professional Director. There may be a Managing Director
and there may be a Director simplicitor. Since the post of the Director
consists of such categories, the Hon'ble Supreme Court of India had
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interfered with the prosecution against Companies and had thought it
fit that it would only be appropriate that guidelines are given to
Courts to examine whether the named Director in a criminal
prosecution had a direct role in the affairs of the Company or rather
had a direct control over the affairs of the Company. It should also be
examined whether the named Director who seeks shelter from the
Court, had a direct role in the transactions with the respondent. These
are all aspects which will have to be examined so far as a Director is
concerned. These are all points which had been stated in all the
aforementioned judgments, which I would gladly follow.
(24) A partner is placed on a slightly different footing. A partner gains
when a Partnership Firm gets a profit and a partner loses if the
Partnership Firm suffers a loss. The role of a partner oscillates with
the role of the Partnership Firm. It is not strictly like a Director.
There is a share in the profits and a share in the loss with respect to
every transaction of the Partnership Firm. Unless specifically
mentioned in the Partnership Deed, every partner either suffers from a
loss owing to such transaction or gains from such a transaction.
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There is also a category of a sleeping partner or a minor inducted for
the benefit of the Partnership.
(25) Here is a case where both A2 and A3 are admittedly partners of
A1/Firm. They are jointly responsible for both the profits to be
earned by A1/Firm and for the losses to be suffered by A1/Firm. On
dissolution, a partner is entitled for accounts and to be paid out
his/her particular share which had been infused in the Partnership
Firm. Accounts will only have to be settled and the Partnership Firm
can be reconstituted. There is a rendition of accounts. There are
occasions where the Partnership Firm also dissolves. For eg., when a
partner becomes insolvent or when a partner unfortunately dies.
These are contingencies which are not attracted vis-a-vis a Director
and a Company.
(26) A Director is appointed and can be removed. A person can be
nominated as a Director and even be nominated as a Professional
Director. There are also occasions when the Government nominates,
in some cases, a person to be appointed as a Director for a Company.
Their interest is with respect to the remuneration to be received by
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them from the Company.
(27) The interest of a Partner is different. The interest of partners swing
according to the manner in which the Partnership Firm functions. If
there is a profit, the partner gains. If there is a loss, a partner suffers a
loss. At that particular point of time, there cannot be any distinction
between the roles of two evenly placed partners.
(28) In the present case, both A2 and A3 are partners of A1/Firm. When a
cheque is issued for a particular transaction on behalf of the
Partnership Firm, then both have a co-existing liability with respect to
ensuring that the cheque is honoured. If the cheque is dishonoured
and the prosecution is launched, then both have a co-existing liability
to face such prosecution unless the Partnership Deed specifically
excludes a particular partner or includes a partner as a sleeping
partner or a minor partner only for the benefit of the Partnership
Firm. In all other circumstances, both partners sink together or
survive together.
(29) No specific pleading had been put forth by the present petitioner to
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point out that she has no direct interest over the Partnership Firm, or
that she will not share the profits of the Partnership Firm or that she
would not be put to loss if the Partnership Firm suffers a loss. It is to
be reliably presumed that both partners have an even interest in the
A1/Firm . If that is the case, then both partners are liable to answer
any complaint and I would therefore dismiss the present petition.
(30) With respect to the averments made, the respondent had specifically
stated that the petitioner herein is also responsible for the day-t0-day
activities of the Firm. It had been very specifically stated that the
cheques were signed in her presence. Those are facts to be
established and trial is the answer.
(31) However, I would give more than ample opportunity to the petitioner
herein/A2 to put forth all such defences with respect to the specific
role played by her in the Partnership Firm which is an issue on fact
and cannot be determined by this Court on a reading of the documents
presented. If the petitioner herein/A2 is able to establish during the
course of trial that she never had any direct role in the transactions of
A1/ Partnership Firm or that she would not gain if the Partnership
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Firm gets a profit or that she would not suffer a loss if the Partnership
Firm ends up in loss over any particular transaction, then, evidence
adduced in that regard would certainly be properly appreciated by the
learned Magistrate.
(32) All these issues require that the trial process to go on and therefore, I
would hold that inciting the parties to adduce evidence would be the
proper course to be adopted to examine the points put forth by the
petitioners herein, who is A3 in both the Calendar Cases.
(33) The Criminal Original Petitions are dismissed. Consequently,
connected miscellaneous petitions are closed.
30.09.2021
AP
Internet : Yes
To
1.The Judicial Magistrate
Avinashi.
2.The Public Prosecutor
High Court, Madras.
C.V.KARTHIKEYAN, J.,
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Crl.OP.Nos.27705 & 27966/2015
AP
Crl.OP.Nos.27705 & 27966/2015
30.09.2021
https://www.mhc.tn.gov.in/judis/
