IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION No. 8950 of 2010 For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH =========================================
========================================= N EASWARAM & 1 Applicant(s) Versus STATE OF GUJARAT & 1 Respondent(s) ========================================= Appearance :
MR SAURIN A SHAH for Applicant(s) : 1 2.
MR LB DABHI, ADDL. PUBLIC PROSECUTOR for Respondent(s) : 1, MS HETVI H SANCHETI for Respondent(s) : 2, ========================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 11/04/2012 CAV JUDGMENT [1.0] Present Criminal Miscellaneous Application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “CrPC”) has been preferred by the applicants herein – original accused Nos.2 and 4 to quash and set aside the impugned complaint being Criminal Case No.1013/2010 pending in the Court of learned Metropolitan Magistrate Court No.3, Ahmedabad filed by respondent No.2 – original complainant punishable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “NI Act”).
[2.0] That respondent No.2 herein – original complainant has filed the impugned complaint being Criminal Case No.1013/2010 in the Court of learned Metropolitan Magistrate, Ahmedabad against the applicants and others for the offences punishable under Section 138 read with Section 141 of the NI Act for dishonour of cheque issued by original accused No.1 partnership firm. That in the said complaint, the learned Magistrate has directed to issue summons against the accused persons inclusive of the applicants herein – original accused Nos.2 and 4 for the offences punishable under Section 138 of the NI Act. Hence, the applicants herein – original accused Nos.2 and 4 have preferred the present Criminal Miscellaneous Application under Section 482 of the CrPC to quash and set aside the impugned criminal proceedings / criminal complaint so far as the applicants herein are concerned.
[3.0] Shri Saurin Shah, learned advocate appearing on behalf of the applicants has vehemently submitted that as such the applicants herein – original accused Nos.2 and 4 have not committed any offence as alleged for the offence punishable under Section 138 of the NI Act. It is submitted that the applicants are arraigned as accused as Partners of the original accused No.1 partnership firm and the applicants are sought to be prosecuted invoking Section 141 of the NI Act.
[3.1] It is further submitted by Shri Saurin Shah, learned advocate appearing on behalf of the applicants that while lodging the complaint the only averment against the applicants are that they are partners of the partnership firm and in charge of day to day functioning of the business of the said partnership firm. It is submitted that aforesaid averments are incomplete averments for establishing the offence under Section 141 of the NI Act. It is submitted that in the present case the averments “and was responsible” as required under Section 141 have not been averred. It is submitted that therefore in absence of such averments in the complaint, applicants cannot be held vicariously liable under Section 141 of the NI Act for the offence alleged to have been committed by the original accused No.1 partnership firm.
[3.2] Shri Shah, learned advocate appearing on behalf of the applicants has further submitted that the partners who are not the signatory to the cheque, which is dishonoured, and the specific role for such partners has not been averred in the complaint nor any documents specifying the role of such partners is produced before the learned Magistrate by the complainant, then in such an eventuality, issuing of summonses to such partners is per se bad in law. Shri Saurin Shah, learned advocate appearing on behalf of the applicants has heavily relied upon the following decisions of the Hon'ble Supreme Court in support of his above submissions and in support of his prayer to quash and set aside the impugned complaint so far as the applicants herein are concerned.
1. Monaben Ketanbhai Shah and Anr. v. State of Gujarat & Ors. AIR 2004 SC 4274
2. Ramrajsingh v. State of M.P. & Anr.
AIR 2009 SC (Supp.) 1726
3. Saroj Kumar Poddar v. State (NCT of Delhi) & Anr. AIR 2007 SC 912
4. Harshendra Kumar D. v. Rabatilata Koley Etc. 2011 (2) SCALE 278 [3.3] It is further submitted by Shri Saurin Shah, learned advocate appearing on behalf of the applicant that as such the learned Magistrate has not taken cognizance of offence under Section 141 of the NI Act. It is submitted that as the applicants are not signatory to the cheque and therefore, if they are sought to be prosecuted under Section 141 of the NI Act, a separate cognizance for the offence under Section 141 of the NI Act is required to be taken by the learned Magistrate as offence under Section 138 of the NI Act and under Section 141 of the NI Act, both are distinct and separate. Therefore, it is submitted that when the learned Magistrate has not taken cognizance against the applicants for the offence under section 141 of the NI Act, they cannot be further prosecuted for the offence under Section 138 of the NI Act.
Making above submissions and relying upon the above decisions, it is requested to allow the present application and quash and set aside the impugned complaint so far as the applicants herein – original accused Nos.2 and 4 are concerned.
4.0] Present application is vehemently opposed by Ms. Hetvi Sancheti, learned advocate appearing on behalf of respondent No.2 – original complainant. It is submitted that as such there are specific averments and allegations in the complaint against the applicants also that the applicants are also in day to day affairs and management of the original accused No.1, which are sufficient at this stage to prosecute the applicants.
[4.1] Relying upon the recent decision of the Hon'ble Supreme Court in the case of Rallis India Ltd. v. Poduru Vidya Bhusan & Ors. reported in 2011 (4) SCALE 614, it is submitted that as held by the Hon'ble Supreme Court, in complaint exact wordings as required under Section 141 of the NI Act need not be reproduced and even if it is averred that all the partners are looking after the day to day affairs of the firm, that suffices the requirement as envisaged under Section 141 of the NI Act. Ms. Sancheti, learned advocate appearing on behalf of the original complainant has heavily relied upon paras 4 and 12 of the aforesaid decision of the Hon'ble Supreme Court in the case of Rallis India Ltd. (Supra).
[4.2] Ms. Sancheti, learned advocate appearing on behalf of the original complainant has also relied upon the decision of the Hon'ble Supreme Court in the case of N.K. Wahi v. Shekhar Singh and Ors. reported in (2007) 9 SCC 481 (Para 8) in support of her above submissions.
[4.3] It is further submitted by Ms. Sancheti, learned advocate appearing on behalf of the original complainant that even otherwise in the complaint there are specific averments that original accused No.2 to 4 are the partners of the said firm and all are in charge of day to day function of the business of the said partnership firm and further a specific role that the accused had been purchasing paper mill machinery from the complainant and the accused have also been issuing receipts for the delivery of the machines and the payments of the same are also being made.
[4.4] It is further submitted by Ms. Sancheti, learned advocate appearing on behalf of the original complainant that as such it has come on record by way of firm's documents that even applicant No.1 is the Managing Partner of the accused firm and therefore, even otherwise as per the law laid down by the Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. reported in (2005) 8 SCC 89. No other averments under Section 141 of the NI Act are required.
[4.5] Now, so far as the contention on behalf of the applicants that no summons has been issued against the accused under Section 141 of the NI Act is concerned, relying upon the decision of this Court in the case of M/s. Vardhman Stamping Pvt. Ltd. v. M/s. IMP Power Ltd. & Ors. reported in 2007 Cri.L.J. 273, it is submitted that as held by this Court, even if process or summons is not issued against the accused specifically under Section 141 of the NI Act, the same is of no consequence and on that ground the impugned complaint cannot be quashed. It is further submitted that even as per Section 465 of the CrPC, only because of the reason of irregularity in complaint, summonses, warrants etc., no finding or sentence passed by the Court of competent jurisdiction shall be reversed or altered.
[4.6] Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Monaben Ketanbhai Shah (Supra) is concerned, it is submitted that on facts the said decision shall not be applicable in the present case. It is submitted that in the case before the Hon'ble Supreme Court, there were absolutely no averments in the entire complaint and only the name of the Directors/partners were mentioned in the cause title of the complaint.
[4.7] Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Harshendra Kumar D. (Supra) and Saroj Kumar Poddar (Supra) are concerned, it is submitted that in the facts of the present case, the aforesaid decisions are also not applicable. It is submitted that in any case the decisions in the case of Rallis India Ltd. (Supra) is later in point of time and therefore, the said decision would have a binding effect.
Making above submissions and relying upon above decisions, it is requested to dismiss the present application.
[5.0] Shri L.B. Dabhi, learned Additional Public Prosecutor appearing on behalf of the State has supported the learned advocate appearing on behalf of respondent No.2 – original complainant and has requested to dismiss the present application.
[6.0] Heard the learned advocates appearing on behalf of the respective parties at length. At the outset it is required to be noted that respondent No.2 – original complainant has filed the impugned complaint against the applicants and others for the offences punishable under Section 138 of the NI Act for dishonour of cheque issued by original accused No.1 partnership firm – Veera Cholaa Paper Mills and applicants and other persons are arraigned as accused as partners. In the complaint, in paras 2 & 3 it is averred as under:
2. The accused No.1 is a partnership firm registered under the provisions of Indian Partnership Act and is doing the business at the address stated hereinabove and accused Nos.2 to 4 are the Partners of the said firm and all are in charge of day to day function of the business of the said company.
3. That the accused company have business relations with complainant and the accused are purchasing paper mill machinery to manufacture of kraft paper of Ahmedabad from the complainant by placing orders on different dates on credit basis. On the order being placed by the accused, complainant is delivering the kraft paper manufacturing machine through transport company and the said machine on being received, the accused are issuing receipts for the same and the payments of the same are being made afterward. That complainant is maintaining accounts of the accused in their Books of Account regularly.
Thus, from the aforesaid it appears that there are specific averments and allegations against the applicants herein – original accused Nos.2 and 4 also which are necessary under Section 141 of the NI Act.
[6.1] However, relying upon the decision of the Hon'ble Supreme Court in the case of Harshendra Kumar D. (Supra) and Monaben Ketanbhai Shah (Supra), learned advocate appearing on behalf of the applicants has submitted that as in the complaint it is not averred and alleged that the applicants and partners were also responsible as required under Section 141 of the NI Act, they cannot be held vicariously liable and/or prosecuted under Section 141 of the NI Act. However, it is required to be noted that in the recent decision the Hon'ble Supreme Court in the case of Rallis India Ltd. (Supra) refused to quash the complaint/criminal proceedings in exercise of powers under Section 482 of the CrPC and the following averments were held to be sufficient for the partners.
“4. That the Accused No.1 is a partnership firm and Accused No.2 to 7 are partners thereof and Accused No.3 is signatory of the impugned cheques and all partners are looking after day to day affairs of the accused firm and thus the liability as raised by them is joint and several.”
In para 12 of the aforesaid decision, the Hon'ble Supreme Court has observed and held as under:
12. 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 other hand, proviso to 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 knowledge or he had exercised due diligence to prevent the commission of such offence, he will not be liable of punishment. Needless to say, final judgment and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the 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 automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquitted.
Considering the aforesaid recent decision of the Hon'ble Supreme Court and when there are specific averments and allegations in the complaint that the applicants as partners are in charge of day to day functions of the business of the said partnership firm which are sufficient at this stage to prosecute the applicants for the offence punishable under Section 138 read with Section 141 of the NI Act and therefore, the impugned complaint/criminal proceedings are not required to be quashed and set aside at this stage in exercise of powers under Section 482 of the CrPC.
[6.2] Now, so far as the reliance placed upon the case of Monaben Ketanbhai Shah (Supra) is concerned, it is required to be noted that in the case before the Hon'ble Supreme Court as there were absolutely no averments in the entire complaint and only the name of the Directors/partners were mentioned in the cause title of the complaint. Therefore, the aforesaid decision shall not be applicable to the facts of the present case.
[6.3] It is also required to be noted that so far as applicant No.1 herein – original accused No.2 is concerned, it has come on record that he was the Managing Partner of original accused No.1 partnership firm. Therefore, considering the decision of the Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. (Supra) (Para 26), in case of Managing Director/Managing Partner, the specific averments as required under Section 141 of the NI Act need not be there in the complaint. As held by Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. (Supra), the accused persons who are Chairman, Managing Director and Joint Managing Directors by virtue of the offices can be said to be in charge and responsible for conduct of the business of the company.
[6.4] Now, so far as the contention on behalf of the applicants that as the learned Magistrate has not taken the cognizance for offence under Section 141 of the NI Act and therefore, to quash and set aside the impugned complaint is concerned, it is required to be noted that as such the substantive offence is under Section 138 of the NI Act. However, in aid of section 141 of the NI Act, the Directors/Parnters who were in day to day management of the partnership firm are held vicariously liable. Therefore, when the learned Magistrate has taken cognizance and issued summons against the applicants for the offence under Section 138 of the NI Act, the impugned complaint is not required to be quashed and set aside on the ground that a separate cognizance is not taken by the learned Magistrate for the offence under Section 141 of the NI Act.
[7.0] In view of the above and for the reasons stated above, the present application fails and the same deserves to be dismissed and is, accordingly, dismissed. Rule is discharged. Adinterim relief granted earlier stands vacated forthwith.
(M.R. Shah, J.) menon