Telangana High Court
Tabrez Alam vs The State Of Telangana on 6 June, 2024
THE HONOURABLE SMT. JUSTICE K. SUJANA
CRIMINAL PETITION No.6845 OF 2023
ORDER:
This Criminal Petition is filed under Section 482 of Code
of Criminal Procedure, 1973 (for short 'Cr.P.C.') to quash the
proceedings against the petitioners/accused Nos.3 and 4 in
STC.NI.No.121 of 2023 on the file of the learned IX
Metropolitan Magistrate, Cyberabad, Kukatpally, registered for
the offences punishable under Section 138 read with 141 and
142 of the Negotiable Instruments Act, 1881 (for short 'the NI
Act').
2. Brief facts of the case are that respondent No.2/de facto
complainant lodged a private complaint against the petitioners
and other accused stating that it is a company i.e., TFL Quinn
India Private Limited, engaged in the leather chemical
business and manufactures and sells a wide variety of
specialty chemicals, organic, dyestuffs, etc. It is further
stated that respondent No.2 and accused No.1 entered into
the Distributorship Agreement on 17.12.2021, wherein
accused No.1-company as its distributor to distribute the
products within the territory of Kanpur as agreed between the
parties. Accused No.1 is represented through accused Nos.2
SKS,J
to 4. It is further stated that the said agreement came into
effect from 01.01.2022. As per the terms of the said
agreement, accused No.1 has to issue purchase orders in
favour of respondent No.2 which inturn, would supply the
goods and raise invoices. Respondent No.2 supplied the
products as per the purchase orders. Accused No.1 accepted
the products and made part payment from time to time. From
May, 2022, accused No.1 started delaying the payments
without any reason. Despite reminding several times, the
accused gave baseless grounds for not making the payment.
3. It is further stated that on 14.02.2023, the total
outstanding amount was Rs.93,59,396/-, including interest.
Later, accused No.1 has given five blank cheques to
respondent No.2 and the same were dishonored with an
endorsement 'payment stopped by drawer'. Thereafter,
respondent No.2 issued legal notice to accused No.1. Instead
of paying the cheque amount, the accused has sent an evasive
reply. Basing on the said complaint, the learned IX
Metropolitan Magistrate, Cyberabad, Kukatpally has taken
cognizance of the same and numbered as STC.NI.No.121 of
2023.
SKS,J
4. Heard Sri E. Sudhanshu Rao, learned counsel
appearing on behalf of the petitioners as well as Sri S.
Ganesh, learned counsel appearing on behalf of respondent
No.1-State and Sri A.Sanjay Kishore, learned counsel
appearing on behalf of respondent No.2.
5. Learned counsel for the petitioners submitted that
petitioners/accused Nos.3 and 4 are only the partners, but
not the signatories of accused No.1-company. When they are
only partners, the mandatory requirement under Section 141
of NI Act is not applicable. It is further submitted that except
stating the names of the petitioners in the complaint, there
are no specific allegations against them in the alleged
transactions. Therefore, he prayed the Court to quash the
proceedings against the petitioners.
6. In support of his submissions, learned counsel for the
petitioners relied on the judgment of the Hon'ble Supreme
Court in Siby Thomas vs. Somany Ceramics Limited 1 ,
wherein in paragraph No.18 it is held as follows:
"18. Thus, in the light of the dictum laid down in
Ashok Shewakramani case, it is evident that a
vicarious liability would be attracted only when the
(2024) 1 Supreme Court Cases 348
SKS,J
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."
7. Learned counsel for the petitioners further relied on the
judgment of the Hon'ble Supreme Court in Sunita Palita and
others vs. Panchami Stone Quarry 2, wherein it is observed
that a non-executive Director, who is not involved in the day
to day affairs of the company or in the running of its business,
is no way responsible for the day to day running of the
accused company.
8. On the other hand, learned counsel for respondent No.2
submitted that the petitioners are parties in the said
agreement as partners of accused No.1-company and that
they are not resigned, as such, they are responsible for the
(2022) 10 Supreme Court Cases 152
SKS,J
day to day affairs of the accused No.1-company and therefore,
prayed the Court to dismiss the petition.
9. In support of his submissions, learned counsel for
respondent No.2 relied on the judgment of the Hon'ble
Supreme Court in S.P. Mani and Mohan Dairy vs. Dr.
Snehalatha Elangovan 3, wherein in paragraph Nos. 45 and
47 it is held as follows:
"45. Once the necessary averments are made in the
statutory notice issued by the complainant in regard
to the vicarious liability of the partners and upon
receipt of such notice, if the partner keeps quiet and
does not say anything in reply to the same, then the
complainant has all the reasons to believe that what
he has stated in the notice has been accepted by the
notice. In such circumstances what more is expected
of the complainant to say in the complaint.
47. Our final conclusions may be summarized as
under:-
a. The primary responsibility of the
complainant is to make specific averments in the
complaint so as to make the accused vicariously
liable. For fastening the criminal liability, there
is no legal requirement for the complainant to
show that the accused partner of the firm was
aware about each and every transaction. On the
2022 SCC OnLine SC 1238
SKS,J
other hand, the first proviso to sub-section (1) of
Section 141 of the Act clearly lays down that if
the accused is able to prove to the satisfaction of
the Court that the offence was committed
without his/her knowledge or he/she had
exercised due diligence to prevent the
commission of such offence, he/she will not be
liable of punishment.
b. The complainant is supposed to know
only generally as to who were in charge of the
affairs of the company orn firm, as the case may
be. The other administrative matters would be
within in 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. It is only the Directors of the
Company or the partners of the firm, as the case
may be, who have the special knowledge about
therole they had played in the company or the
partners in a firm to show before the Court that
at the relevant point of time they were not in
charge of the affairs of the company. Advertence
to Sections 138 and Section 141 respectively of
the NI Act shows that on the other elements of
an offence under Section 138 being satisfied, the
burden is on the Board of Directors or the
officers in charge of the affairs of the
company/parterns of a firm to show that they
were not liable to be convicted. The existence of
SKS,J
any special circumstances that makes them not
liable is something that is peculiarly within their
knowledge and it is for them to establish at the
trial to show that at the relevant time they were
not in charge of the affairs of the company or the
firm.
c. Needless to say, the final judgment
and order would depend on the evidence
adduced. Criminal liability is attracted only
onthose, who at the time of commission of
offence, were in charge of and were responsible
for the conduct of the business of the firm. But
vicarious criminal liability can be inferred
against the partners of a firm when it is
specifically averred in the complaint about the
status of the partners 'qua' the firm. This would
make them liable to face the prosecution but it
does not lead to eventually found to be not
guilty, as a necessary consequence thereof would
be acquittal.
d. If any Director wants the process to
be quashed by filing a petition under Section
482 of the Code on the ground that only a bald
averment is made in the complaint and that
he/she is really not concerned with the issuance
of the cheque, he/she must in order to persuade
the High Court to quash the process either
furnish some sterling incontrovertible material or
acceptable circumstances to substantiate
his/her contention. He/she must make out a
SKS,J
case that making him/her stand the trial would
be an abuse of Court."
10. Having regard to the rival submissions made by both
the learned counsel and having gone through the material
available on record, the prime contention of the learned
counsel for the petitioners is that they are not the signatories
and they are only the partners in accused No.1-company.
Therefore, the allegations leveled against them do not
constitute any offence. As per the law laid down in the above
judgments relied by the petitioners, whether a particular
Director was in charge and responsible for conduct of
business of the company and he is the signatory, if the
partners of the company are not aware of the day to day
affairs, each and every transactions, they are not liable for the
punishment under Section 138 of the NI Act.
11. Learned counsel for respondent No.2 relied on the
observation made by the Hon'ble Apex Court in S.P. Mani
and Mohan Dairy (supra), wherein it is observed that if the
partners are aware about the day to day affairs of the
company, they are vicariously liable for the issuance of
cheques also. Further, the complainant has to state the same
in the legal notice, as well as, in the complaint.
SKS,J
12. In the present case, a perusal of the legal notice shows
that there is no reference about the vicarious liability, whereas
the same is averred in complaint. Learned counsel for the
petitioner contended that cheques were issued as security
prior to the agreement i.e., on 13.07.2021. In support of this
contention, a letter sent by the respondent acknowledging the
receipt of the said cheques, wherein the date was mentioned
as 13.07.2021, which is prior to the date of agreement i.e.,
17.12.2021, and the same shows that the petitioners are not
partners as on the date of issuance of the cheques. Therefore,
the judgment relied on by respondent No.2 with regard to
vicarious liability is not applicable to the present case. As the
petitioners are not parties to the agreement on the date of
issuance of cheques, they are not liable for the offence
punishable under Section 138 of NI Act.
13. In the present case, petitioners are not signatories and
they are only the partners of the said company. Therefore, the
allegations leveled against the petitioners do not constitute
any offence and the proceedings against them are liable to be
quashed.
SKS,J
14. Accordingly, the criminal petition is allowed and the
proceedings against the petitioners/accused Nos.3 and 4 in
STC.NI.No.121 of 2023 on the file of the learned IX
Metropolitan Magistrate, Cyberabad, Kukatpally, are hereby
quashed.
Miscellaneous petitions, if any pending, shall also stand
closed.
___________
K. SUJANA
Date: 06.06.2024
SAI
