H.Tirupathi vs M/S. Fortune Hybrid Seeds Limited
2023 Latest Caselaw 3589 Tel

       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

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 &

Special Leave Petition (Crl.) No.12 of 2020, dated 10.10.2023

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

2003(1) AWC 612 SC

2000 (4) CTC 232: 2000 (6) SCALE 578

AIR 2022 Supreme Court 4883

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

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

THE HON'BLE SRI JUSTICE K.SURENDER

CRIMINAL PETITION NO. 495 OF 2019

Dt.06.11.2023

kvs