ORDER
B. Seshasayana Reddy, J.
1. This criminal petition has been filed by the petitioner-A-3 in C.C. No. 1647 of 2004 on the file of the II Additional Chief Metropolitan Magistrate, Nampally, Hyderabad to quash the proceeding therein so far as she is concerned.
2. The brief facts of the case giving raise to filing of this criminal petition under Section 482 Cr.P.C. by A-3 in C.C.1647 of 2004 are: Third respondent M/s. United Construction Company is a partnership concern. Petitioner herein and 4th respondent are wife and husband and they are partners in the said partnership concern. The petitioner and respondents 3 and 4 entered into a memorandum of understanding with second respondent-complainant on 08.12.2003 agreeing to pay Rs. 70,00,000/- to the second respondent-complainant. It is alleged that the petitioner and her husband (A-2) in pursuance of Clause (4) of the said memorandum of understanding paid a sum of Rs. 70,00,000/- and issued four cheques as detai led below:
1) Cheque No. 104236, dated 29.12.2003 drawn on Dena Bank, Nampally Branch, Hyderabad, for Rs. 10,00,000/-;
2) Cheque No. 104237, dated 10.01.2004 drawn on Dena Bank, Nampally Branch, Hyderabad, for Rs. 15,00,000/-;
3) Cheque No. 104238, dated 20.01.2004 drawn on Dena Bank, Nampally Branch, Hyderabad, for Rs. 25,00,000/-;
4) Cheque No. 104239, dated 30.01.2004 drawn on Dena Bank, Nampally Branch, Hyderabad, for Rs. 20,00,000/-.
The second respondent-complainant presented the cheques on 03.03.2004 and the cheques came to be bounced on 04.03.2004 and returned to him on 05.03.2004. Subsequently, the accused compromised the matter by entering into a supplementary memorandum of understanding on 05.04.2004 and paid a sum of Rs. 25,00,000/- through demand draft bearing No. 891874, dated 15.04.2004, and issued a cheque bearing No. 104282, dated 15.10.2004 drawn on Dena Bank, Nampally Branch, Hyderabad, for Rs. 43,00,000/-. The second respondent-complainant presented the said cheque on 19.10.2004 and thereupon the cheque came to be bounced on 20.10.2004. A statutory notice came to be issued by the second respondent-complainant to the accused on 01.11.2004. Since the accused failed to pay the amount covered under the cheque, the second respondent-complainant presented a complaint before the IV Metropolitan Magistrate, Hyderabad. The learned Magistrate took the complaint on file as C.C. No. 1647 of 2004 and issued process. Hence, this criminal petition by A-3 in C.C. No. 1647 of 2004 to quash the proceeding therein.
3. Heard learned Counsel appearing for the petitioner and learned Counsel appearing for the second respondent.
4. Learned Counsel appearing for the petitioner-A-3 submits that the petitioner-A-3 was not responsible for the day-to-day affairs of the partnership concern and therefore, initiation of criminal proceeding against the petitioner- A-3 amounts to abuse of process of Court. A further submission has been made by the learned Counsel for the petitioner that the complaint averments do not indicate that the petitioner-A-3 is responsible for the day-to-day affairs of the partnership concern or the petitioner-A-3 is a signatory to the cheque in question and therefore, the criminal proceeding against the petitioner-A-3 in C.C. No. 1647 of 2004 is liable to be quashed. In support of her submissions, reliance has been placed on the decisions of the Supreme Court in Monaben v. State of Gujarat : 2004CriLJ4249 and S.M.S. Pharmaceuticals Limited v. Neeta Bhalla : 2005CriLJ4140 .
5. In Monaben v. State of Gujarat (1st supra) the Supreme Court held that averment in the complaint that the accused at the relevant time were in-charge of and responsible to firm for the conduct of its business is necessary to make them liable for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the Act'). Para.6 of the judgment needs to be noted and it is thus:
6. From the above, it is evident that in the complaint there are no averments against the appellants except stating in the title that they are partners of the firm. Learned Counsel for the respondents/complainant contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The Criminal liability has been fastened on those who, at the time of the commission of the offence, was in-charge of and was responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in-charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint.
In S.M.S. Pharmaceuticals Limited v. Neeta Bhalla (2nd supra), the Supreme Court held, it is necessary to aver that at the time the offence was committed the person accused was in charge of, and responsible for the conduct of business of the company.
6. Learned Counsel appearing for the second respondent-complainant submits that the petitioner and her husband (respondent No. 4 herein) are the working partners of the partnership concern and they are in-charge of day-to-day affairs of the company and thus, the petitioner and her husband are liable for the dishonour of the cheque in question. He also refers the contents of the partnership deed, which is filed along with the material papers in the vacate stay petition.
7. Section 482 Cr.P.C. saves the inherent powers of the High Court. The High Court possess the inherent powers to be exercised exdebito justitiae to do real justice and substantial justice for administration of which alone Courts exist. The power has to be exercised to prevent abuse of the process of the Court or to otherwise secure the ends of justice. It is well settled that inherent powers of Court should be used sparingly and with circumspection when there is reason to believe that process of law is being misused to harass a citizen proceedings can be quashed only if taking the facts, as alleged in the complaint, no offence is made out. Section 482 envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule, which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have inherent powers apart from express provisions of law, which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognizes and preserves inherent powers of the High Courts. All Courts, whether civil or criminal, possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur id sine quo res ipsa esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the Court does not function as a Court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself.
8. As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution vide decision of Supreme Court in Minu Kumari v. State of Bihar : 2006CriLJ2468 .
9. Section 141 of the Negotiable Instruments Act reads as follows:
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.
(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 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 any body corporate and includes a firm or other association of individuals; and
(b) 'director' in relation to a firm, means a partner in the firm.
Whether a person is in-charge or responsible to the partnership concern for conduct of the business is to be adjudicated on the basis of materials to be placed by the parties. Sub-Section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether allegations contained are sufficient to attract culpability is a matter for adjudication at the trial.
10. Under Scheme of the Act, if the person committing an offence under Section 138 of the Act is a company; by application of Section 141 it is deemed that every person who is in charge of and responsible to the company/partnership concern for conduct of the business of the company/partnership concern as well as the company/partnership concern are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of the proviso to Sub-section (1). The burden in this regard has to be discharged by the accused.
11. The three categories of persons covered by Section 141 are as follows:
(1) The company who committed the offence.
(2) Everyone who was in charge of and was responsible for the business of the company.
(3) Any other person who is a director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence.
A similar question came up for consideration before the Supreme Court and interpretation of Section 141 fell for consideration before the Supreme Court in S.V. Muzumdar v. Gujarat State Fertilizer Co. Ltd. : 2005CriLJ2566 , wherein it has been held that whether or not the evidence to be led would establish the accusations is a matter for trial. It needs no reiteration that proviso to Sub-section (1) of Section 141 enables the accused to prove his innocence by discharging the burden, which lies on him.
12. It is not in dispute that the petitioner and her husband are the partners of M/s. United Construction Company. It is specifically averred in the complaint that the cheque in question came to be issued in pursuance of the supplementary memorandum of understanding on 15.04.2004. Pars 3 and 4 of the complaint need to be noted and they are thus:
3. It is submitted that the above cheques were presented on 03.03.2004 and the same were bounced on 04.03.2004 and returned to the complainant on 05.04.2004. The bouncing of cheques constitute an offence punishable under Section 138 of the Negotiable Instrument Act and my client issued notices thereon and subsequently, the Accused have compromised the matter by entering into supplementary Memorandum of Understanding on 15.04.2004 and paid a sum of Rs. 25,00,000/- (Twenty five Lakhs only) through Demand Draft No. 891874 dated 15.04.2004 for the remaining balance amount of Rs. 43,00,000/- for which, the accused 1 to 3 gave a cheque bearing No. 104282 dated 15.10.2004 drawn on Dena Bank, Nampally, Hyderabaqd.
4. It is submitted that the said cheque was presented on 19.10.2004 through the bank of the complainant, Vijaya Bank, Public Garden Road Branch, Adids, Hyderabad. The said cheque was bounced on 20.10.2004 and returned to the complainant on 23.10.2004. The accused Nos. 1 to 3 intentionally bounced the cheque by stopping the payment and not arranged the funds and also not having balance as on the date and played fraud and bounced the cheque. Under the circumstances, the complainant issued legal notice dated 01.11.2004 under registered post acknowledgement and the same were refused to receive by the accused on 6.11.2004. The refusal and avoiding to receive the amounts to service of notices on the accused and the refused postal covers are filed herewith.
As per the deed of partnership, the petitioner and her husband, who is the 4th respondent herein, are partners of M/s. United Construction Company. Their shares are 40 : 60. Clause 17 of the deed of partnership manifests that the petitioner and the 4th respondent herein are working partners. For better understanding, I may refer Clause 17 of the deed of partnership and it is thus:
a) The working partners shall be paid such remunerations as may be mutually decided by the partners from time to time. It has been that the both partners will be working partners i.e. 1) Syed Ahmedullah; 2) Mrs. N. Ahmedullah. Shall be the working partners to look after the day to day affairs of business of the partnership and the aforesaid partners will be paid a remuneration of Rs. 60,000/- each per annum for the service rendered to the firm. b) Provided always that the remuneration payable to the working partners shall not exceed the maximum permissible limit under Section 40(b) and other related provisions under Income-tax Act as amended from time to time.
The material brought on record clearly establishes, prima facie, that the petitioner is one of the two working partners of the partnership firm at the relevant point of time. Therefore, this is not a fit case to quash the proceeding in exercise of powers under Section 482 Cr.P.C.
13. Accordingly, the criminal petition is dismissed.