| SooperKanoon Citation | sooperkanoon.com/1235767 |
| Court | Karnataka High Court |
| Decided On | Nov-08-2024 |
| Case Number | CRL.P 8100/2023 |
| Judge | M.NAGAPRASANNA |
| Appellant | Anjana Agarwal |
| Respondent | Inflow Technologies Private Limited |
- 1 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER IN THE HIGH COURT OF KARNATAKA AT BENGALURU R DATED THIS THE8H DAY OF NOVEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.NAGAPRASANNA CRIMINAL PETITION No.9443 OF2024C/W CRIMINAL PETITION No.8100 OF2023CRIMINAL PETITION No.13150 OF2023CRIMINAL PETITION No.8523 OF2024IN CRL.P No.9443/2024 BETWEEN:
1. JAI AGARWAL S/O D K AGARWAL, AGED ABOUT41YEARS, NO.6A, MATHER GREAT ORCHARD, VIDYA NAGAR, NEAR PET HOSPITAL, KADAVANTHARA, ERNAKULAM, KERALA-682020.
2. ANJANA AGARWAL W/O RAMAWATHAR AGARWAL, AGED ABOUT45YEARS, 28/1278, HARI PREM BASERA, INDIRANAGAR, NEAR ELEGAN FLAT, KP VALLON ROAD, KADAVANTHARA, KADAVANTHARA S.O. ERNAKULAM, KERALA-682020. …PETITIONERS (BY SRI. ARUN G., ADVOCATE) - 2 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER AND: INFLOW TECHNOLOGIES PRIVATE LIMITED INFLOW HOUSE NO.33 AND34 INDIRANAGAR, 1ST STAGE, OFF100FEET ROAD, BANGALORE-560038 REP. BY ITS HEAD-CREDIT SERVICES, AND AUTHORIZED SIGNATORY, MR.E.C. PRAVEEN REDDY. …RESPONDENT (BY SRI. R. KIRAN, ADVOCATE) THIS CRL.P IS FILED U/S.482 (FILED U/S.528 BNNS) CR.P.C PRAYING TO QUASH THE COMPLAINT AND PROCEEDINGS IN C.C.No.9585/2023 (ARISING OUT OF PCR No.1439/2023) FOR THE ALLEGED OFFENCE UNDER SECTION138OF NEGOTIABLE INSTRUMENT ACT, 1881 ON THE FILE HONBLE36H ADDITIONAL CHIEF METROPOLITAN MAGISTRATE AT BANGALORE BY ALLOWING THE PRESENT PETITION FILED UNDER SEC.482 OF CODE OF CRIMINAL PROCEDURE1973 IN CRL.P No.8100/2023 BETWEEN: ANJANA AGARWAL AGED ABOUT48YEARS PARTNER RR INFOCOM MIG474 CANAL ROAD, PANAMPILLY NAGAR, ERNAKULAM PANAMPILLY NAGAR KERALA - 682 036 ...PETITIONER (BY SRI. ARUN G., ADVOCATE) AND:
1. INFLOW TECHNOLOGIES PRIVATE LIMITED "INFLOW HOUSE" NO.33 AND34INDIRANAGAR, 1ST STAGE, OFF100FEET ROAD BANGALORE - 560 038 - 3 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER REPRESENTED BY ITS HEAD -CREDIT SERVICES REP. BY ITS HEAD-CREDIT SERVICES AND AUTHORIZED SIGNATORY. MR.E.C. PRAVEEN REDDY PH No.888445966 EMAIL ID: PRAVEEN.R@INFLOWTECHNOLOGIES.COM2 RR INFOCOM27668, LAKSHMI PRABHA LIG- 571, 11TH CROSS ROAD, COCHIN- 682 032 REP. BY ITS MANAGING PARTNER MR.RENU J.
NAIR ALSO AT RR INFOCOM613564, INTUC ROAD, NEAR SOUTH OVER BRIDGE, RAVIPURAM, VALANJAMBALAM, COCHIN - 682 016 REP. BY ITS MANAGING PARTNER MR. RENU J NAIR3 RENU J NAIR, MANAGING PARTNER RR INFOCOM MATHER SHREENE ORCHARD TOWER25 VIDYA NAGAR ROAD, VIDYA NAGAR, COCHIN - 682 020 4. JAI AGARWAL PARTNER RR INFOCOM MIG474 CANAL ROAD, PANAMPILLY NAGAR, ERNAKULAM PANAMPILLY NAGAR KERALA - 682 036 5. MRINALI KUMAR PARTNER R.R. INFOCOM MATHER SHREENE ORCHARD TOWER25, VIDYA NAGAR ROAD, VIDYA NAGAR, COCHIN - 682 020 ...RESPONDENTS (BY SRI. R. KIRAN, ADVOCATE) - 4 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER THIS CRL.P IS FILED U/S.407 CR.P.C PRAYING TO QUASH THE COMPLAINT AND PROCEEDINGS IN C.C.NO.7311/2023 (ARISING OUT OF PCR NO.1437/2023) FOR THE ALLEGED OFFENCE UNDER SECTION138OF NEGOTIABLE INSTRUMENT ACT, 1881, ON THE FILE OF36H ADDITIONAL CHIEF METROPOLITAN MAGISTRATE AT BENGALURU BY ALLOWING THE PRESENT PETITION FILED UNDER SECTION482OF CR.P.C., 1973, IN THE INTEREST OF JUSTICE. IN CRL.P No.13150/2023 BETWEEN: JAI AGARWAL S/O D.K. AGARWAL AGED ABOUT41YEARS, NO.6A, MATHER GREAT ORCHARD, VIDYA NAGAR, NEAR PET HOSPITAL, KADAVANTHARA, ERNAKULAM, KERALA - 682020 ...PETITIONER (BY SRI. ARUN G., ADVOCATE) AND: INFLOW TECHNOLOGIES PRIVATE LIMITED "INFLOW HOUSE" NO.33 AND34 INDIRANAGAR, 1ST STAGE, OFF100FEET ROAD, BANGALORE - 560038 REP. BY ITS HEAD - CREDIT SERVICES AND AUTHORIZED SIGNATORY, MR E.C.PRAVEEN REDDY ...RESPONDENT (BY SRI. R. KIRAN, ADVOCATE) THIS CRL.P IS FILED U/S.407 CR.P.C PRAYING TO QUASH THE COMPLAINT AND PROCEEDINGS IN C.C.NO.7311/2023 (ARISING OUT OF PCR.NO.1437/2023) FOR THE OFFENCE P/U/S138OF NEGOTIABLE INSTRUMENTS ACT ON THE FILE OF XXXVI ADDL.C.M.M., BENGALURU BY ALLOWING THE PRESENT PETITION FILED U/S482OF CR.P.C.-. 5 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER IN CRL.P No.8523/2024 BETWEEN:
1. JAI AGARWAL S/O D K AGARWAL, AGED ABOUT41YEARS, NO.6A, MATHER GREAT ORCHARD, VIDYA NAGAR, NEAR PET HOSPITAL, KADAVANTHARA, ERNAKULAM, KERALA - 682020.
2. ANJANA AGARWAL W/O RAMAWATHAR AGARWAL, 28/1278, HARI PREM BASERA, INDIRANAGAR, NEAR ELEGAN FLAT, KP VALLON ROAD, KADAVANTHARA, KADAVANTHARA S O. ERNAKULAM, KERALA - 682020. ...PETITIONERS (BY SRI. ARUN G., ADVOCATE) AND: INFLOW TECHNOLOGIES PRIVATE LIMITED "INFLOW HOUSE" NO.33 AND34 INDIRANAGAR, 1ST STAGE, OFF100FEET ROAD, BANGALORE - 560038. REP. BY ITS HEAD - CREDIT SERVICES AND AUTHORIZED SIGNATORY, MR E.C PRAVEEN REDDY ...RESPONDENT (BY SRI. R. KIRAN, ADVOCATE) THIS CRL.P IS FILED U/S.482 (FILED U/S.528 BNNS) CR.P.C PRAYING TO QUASH THE COMPLIANT AND PROCEEDINGS IN C.C.NO.9504/2023 (ARISING OUT OF PCR NO.1438/2023) FOR THE ALLEGED U/S.138 OF NI ACT1881ON THE FILE OF THE HONBLE36h ACMM AT BENGALURU BY ALLOWING THE PRESENT PETITION FILED U/S.482 OF CR.P.C. 1973.-. 6 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY,
ORDERWAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA ORAL
ORDERHeard the learned counsel Sri.Arun G., appearing for the petitioner/s and the learned counsel Sri.R.Kiran, appearing for the respondent/s in all these cases.
2. The petitioners in all these cases are erstwhile partners of R.R.INFOCOM. Since these are batch of petitions projecting a solitary issue in law they are taken up together and considered by this common order. The issue is whether the partners who have retired from partnership firm can be prosecuted for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, (hereinafter referred to as 'NI Act' for short) for a cheque that is rendered by the existing partner.
3. Crl.P.No.9443/2024 is preferred by accused Nos.3 and 4 - Jai Agarwal and Anjana Agarwal in C.C.No.9585/2023. Crl.P.No.8100/2023 is preferred by accused No.4 - Anjana Agarwal in C.C.No.7311/2023. Crl.P.No.13150/2023 is - 7 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER preferred by accused No.3 - Jai Agarwal in C.C.No.7311/2023. Crl.P.No.8523/2024 is preferred by accused Nos.3 and 4 - Jai Agarwal and Anjana Agarwal in C.C.No.9504/2023. The instrument involved in the subject transactions are three different cheques totally amounting to Rs.3,27,00,000/-. The complainant is the respondent - Inflow Technologies Private Limited in all these cases.
4. It transpires that a transaction between the R.R.INFOCOM and Inflow Technologies Private Limited is with regard to certain purchase orders placed by R.R.INFOCOM and the deliveries made by the complainant - Inflow Technologies Private Limited. The payment due date on these purchase orders are of different dates. They are 18.10.2020, 21.09.2020 and 29.11.2020. At that point in time, it transpires that the petitioner/s in all these cases were partners in the said firm i.e., R.R. INFOCOM. On 11.10.2021, these petitioners who are arrayed as accused in the afore-said cases retire from the partnership and the partnership is reconstituted by drawing up an agreement between the retiring and continuing partners of R.R.INFOCOM. The averment is that all necessities in law with - 8 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER regard to intimation of retired partners is complied with. The partners retire on 11.10.2021. The existing partner one Renu J.
Nair who is accused No.2 in all these cases issues three cheques, albeit towards the payment that had to be made on 18.10.2020, 21.09.2020 and 29.11.2020. The instruments/cheques were issued on 30.11.2022, 02.12.2022 and 05.12.2022. Those cheques were presented for its realization and were returned with an endorsement "payment stopped by drawer". It is then a notice is issued by the complainant initiating proceedings under the N.I.Act. The complainant narrates that the notice were sent to the petitioners as well. The learned counsel for the petitioner defends contending that no notice was received by them. Be that as it may.
5. The proceedings were then initiated before the concerned Court invoking Section 200 of the Cr.P.C., drawing all these persons along with the firm and accused No.2 as accused in these proceedings. The proceedings are now pending as criminal cases aforesaid. The issuance of summons - 9 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER is what has driven these petitioners to this Court in the subject petitions.
6. The learned counsel Sri.Arun G., appearing for the petitioners in all these cases would contend that the petitioners were no doubt partners on the date on which the supply was made or the delivery was made and the payment due date. But the cheques are not issued by the present petitioners, it is issued by the existing partner after the partnership was reconstituted when these petitioners came out of the partnership.
7. The learned counsel for the petitioner/s would further contend that the complaint averments are omnibus against accused Nos.1 to 4 and no particular role or responsibility being continued after the retirement of these petitioners, as partners is averred and therefore, the learned counsel would submit that the proceedings against these petitioners are necessarily to be quashed.
8. The learned counsel appearing for the respondent - complainant would vehemently refute the submissions seeking - 10 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER to contend that the judgment on which reliance is placed at the time of grant of the interim order is inapplicable to the facts of the case. He would submit that, that was a judgment dealing with the Director of a Company resigning and proceedings being taken up, against a resigned Director. He would seek to place reliance upon the following judgments:
"1. (2024) 4 SCC305in Rajesh Viren Shah vs. Redington (India) Limited passed by the Hon'ble Supreme Court.
2. (2011) 13 SCC88in Raalis India Limited vs. Poduru Vidya Bhushan and Others passed by the Hon'ble Supreme Court.
3. MANU/TN/0012/2004 in Ap. V. Sundaram vs. L. Karupuswamy passed by the High Court of Madras.
4. 2018 SCC OnLine Guj 3562 in Urmiben Pareshbhai Kothiya vs. HDFC Bank Ltd. passed by the High Court of Gujarat at Ahmedabad.
5. (2023) 10 SCC685in S.P. Mani and Mohan Diary vs. Dr Snehalatha Elangovan passed by the Hon'ble Supreme Court.
6. Crl.M.C.2988/2022, Crl.M.As.12571/2022, 12573/2022 in Anju Khanna & Ors. Vs. State (Govt of NCT of Delhi) & Anr. Passed by the High Court of Delhi at New Delhi.
7. CRM-M-11650-2019 in Kamaljit Singh vs. State of Punjab and another passed by the High Court of Punjab and Haryana at Chandigarh.
8. 2005 (3) CTC497in Harihar Davey vs. Kamlesh Steel Enterprises, a partnership firm, rep. by its Partner, Jaya D. Davey, No.2, Philips Street, - 11 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER Chennai and others passed by the High Court of Madras.
9. The learned counsel would take this Court through several paragraphs of all the aforesaid judgments, to contend that mere retirement of a partner would not suffice to escape the liability under Section 138 of the Negotiable Instruments Act. It should be made known in terms of law that the partners have retired and therefore, the liability continues till such an action is taken in accordance with law. He would contend that whether the petitioners are retired as partners or not, is a matter of fact which should be trashed out only in a full blown trial, and not in a proceeding under Section 482 of the Cr.P.C.
10. The learned counsel would submit that the purport of the judgments relied upon by him, is towards what he has submitted, as noted hereinabove. He would seek dismissal of these petitions.
11. The learned counsel for the petitioner/s would join issue by contending that the judgments so relied on by the learned counsel appearing for the complainant would not be applicable to the facts of the case and what is applicable is the - 12 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER judgment of the Apex Court in the case of Siby Thomas v. Somany Ceramics Ltd., reported in (2024) 1 SCC348 wherein the Apex Court considers the very issue of retiring partners being hauled into a proceeding under Section 138 of the N.I. Act.
12. I have given my anxious consideration to the contentions of respective learned counsel and have perused the material on record.
13. The afore-narrated facts are not in dispute. The petitioners being partners in the Company - accused No.1 R.R.INFOCOM is a matter of record, the petitioners retiring from the partnership and on the reconstitution of the partnership is also a matter of record, as the document is appended to the petitions. The retirement of these partners would happen on 11.10.2021. By then, the transaction between the respondent - complainant and the Company had taken place and certain amounts were due to be paid. Pending payment to the complainant, the petitioners retire on 11.10.2021. These are undisputed facts.-. 13 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER14 The cheque is issued by accused No.2, who represents accused No.1 on three different dates. On 30.11.2022, 02.12.2022 and 05.12.2022. Therefore, it is an admitted fact that the cheques are issued after the exit of the petitioners from the partnership firm. The cheques are not signed by these petitioners. The cheques are admittedly signed by accused No.2, who represents accused No.1 - Company. Therefore, the petitioners in the considered view of this Court cannot be hauled into these proceedings, as they had by the time the instrument i.e. the cheque signed by accused No.2 representing accused No.1, had retired from the partnership. The accused No.2 does not get into the partnership on reconstitution, but continues to be a partner and could be described as an existing partner. Therefore, the existing partner issues the cheques close to twelve months after the retirement of these petitioners.
15. Insofar as the judgments relied on by the learned counsel appearing for the respondent - complainant, there cannot be any qualm about the principles laid down therein in those cases they were either the Directors of the Company, - 14 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER which are different from partners of the Company, as the statutory liability or statutory obligations are different under the Partnership Act or the Companies Act, as the case would be.
16. The learned counsel has placed heavy reliance upon the judgment rendered by the High Court of Gujarat and which follows the judgment rendered by the High Court of Madras. In the judgment rendered by High Court of Madras, plea of the accused therein was the complainant had by deceit or erroneously taken the signature of the accused on the cheque. That is not the issue in the case at hand. The case at hand is plain and simple that the petitioners retired on 11.10.2021. Three cheques were issued by the existing partner accused No.2, who represented accused No.1, twelve months after the retirement. Therefore, what would govern the case at hand are not the judgments that are relied on by the learned counsel for the complainant, but the judgment of the Apex Court in the case of Siby Thomas (supra). The Apex Court in the case of Siby Thomas (supra) has held as follows: - 15 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER6 In view of the rival contentions as above it is apposite to refer to the averments in Paras 3 and 4 of the complaint, which is annexed to the SLP. They read thus: “3. That Accused 1 is a partnership-firm with the name and style of M/s Tile Store, having its office at 5- 654/B, Jyothis Complex, Bypass Road, Eranhipalam, Calicut-673 006 (Kerala), while Accused 2 to 6 are the partners of Accused 1. Accused 2 to 6 being the partners are responsible for the day-to-day conduct and business of Accused 1.
4. That Accused 1 through its partners i.e. Accused 2 to 6, on the basis of the authority vested in them approached to the complainant for purchasing the ceramic tiles, sanitary wares and bath fitting from the complainant on credit basis. The request of Accused 1 was accepted by the complainant and the accused agreed to pay the amount of the goods purchased by them to the complainant within one month and it was also agreed that if the accused failed to make the payment within one month in that case they shall also be liable to pay interest @ 24% p.a. on the balance sale consideration till its full realisation.
7. As noticed hereinbefore, the parties are at issue over the question as to whether the averments in the complaint satisfy the requirements under Section 141(1) of the NI Act. True that in Para 3 it is stated that Accused 1 is a partnership firm and Accused 2 to 6 are the partners of Accused 1 and they, being the partners, are responsible for the day-to-day conduct and business of Accused 1. In Para 4 what is stated is that Accused 1 through its partners i.e. Accused 2 to 6, on the basis of the authority vested in them approached the complainant for purchasing the - 16 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER ceramic tiles, sanitary wares and bath fittings from the complainant on credit basis. Indubitably, besides the aforesaid averments no other averments are made in the complaint in regard to the appellant's role. Therefore, the question is whether the averments referred to hereinbefore are sufficient to prosecute the appellant under Section 138 of the NI Act, on the afore-extracted averments. We are not oblivious of the fact that the appellant has also got a contention that he retired from the partnership firm much prior to the issuance of the cheque in question.
8. It is only proper and profitable to refer to sub- section (1) of Section 141 of the NI Act in view of the rival contentions. It 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 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.” - 17 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER9 Bearing in mind the averments made in the complaint in relation to the role of the appellant and sub- section (1) of Section 141, we will have to appreciate the rival contentions. Going by the decision relied on by the respondent in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. it is the primary responsibility of the complainant to make specific averments in the complaint, so as to make the accused vicariously liable. Relying on para 58.2 of the said decision the learned counsel appearing for the respondent would also submit that the complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be and he relied on mainly the following recitals thereunder : (SCC p. 716, para
58) “58. … 58.2. The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within 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.
10. We are of the considered view that the respondent has misread the said decision. Under the sub-caption “Specific averments in the complaint”, in para 51 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. and paras 34.1 and 34.4 of Gunmala Sales case [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC103: (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580]. as also in para 52 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. , it was held in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. thus : (SCC pp. 714-715, paras 51-52) “51. In Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC103: (2015) 1 SCC - 18 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER (Civ) 433 : (2015) 1 SCC (Cri) 580]. , this Court after an exhaustive review of its earlier decisions on Section 141 of the NI Act, summarised its conclusion as under : (SCC pp. 126-27, para
34) ‘34. … 34.1. Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director. 34.2-34.3. * * * 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.’ 52. The principles of law and the dictum as laid in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC103: (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580]. , in our opinion, still holds the field and reflects the correct position of law.
11. In the light of the afore-extracted recitals from the decision in Gunmala Sales (P) Ltd. v. Anu Mehta [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC103: (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580]. , quoted with agreement in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) - 19 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER203 and in view of sub-section (1) of Section 141 of the NI Act it cannot be said that in a complaint filed under Section 138 read with Section 141 of the NI Act to constitute basic averment it is not required to aver that the accused concerned is a person who was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed. In para 53 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. it was held thus : (SCC p.
715) “53. In the case on hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent.” It is thereafter that in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. in para 58.1 it was held that the primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable.
12. Bearing in mind the afore-extracted recitals from the decisions in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC103: (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580]. and S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC685: (2024) 1 SCC (Cri) 203]. , we have carefully gone through the complaint filed by the respondent. It is not averred anywhere in the complaint that the appellant was in charge of the conduct of the business of the company at the relevant time when the offence was committed. What is stated in the complaint is only that Accused 2 to 6 being the partners are responsible for the day-to-day conduct and business of the company. It is also relevant to note that an overall reading of the complaint would - 20 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER not disclose any clear and specific role of the appellant.
13. In the statutory notice dated 10-9-2015 (Annexure P-6) at Para 3 it was averred thus: “3. That for liquidation of the aforesaid legal liability/outstanding, you Noticee 2 to 6 issued Cheque No.005074 dated 21-8-2015, amounting to Rs 27,46,737 drawn on Punjab National Bank, Ernhipalam (Kozhikode) Branch in favour of my client from the account of Noticee 1.
14. In response to that in Annexure P-7 reply the appellant herein stated thus: “In this regard, I would like to convey you that, I have retired from M/s Tile Store as partner way back on 28-5-2013 and I am not a partner of M/s Tile Store any more. (Copy of retirement deed enclosed). During the time of my retirement, there were no dues to M/s Somany Ceramics Ltd. from M/s Tile Store as full payments were made for the consignments taken from them. (Copy of accounts statements up to 31-5-2013 enclosed.)
15. In the light of the aforesaid circumstances the averments of the respondent in Paras 5 and 6 of the complaint are also to be seen. In Para 5 of the complaint, it was alleged that Accused 1 through Accused 2 had purchased the goods from the complainant on credit basis through proper sales invoices and, in Para 6 it was alleged that for liquidation of legal liability outstanding Accused 2 and 3 issued Cheque No.005074 dated 21-8-2015 amounting to Rs 27,46,737 drawn upon Punjab National Bank, Ernhipalam (Kozhikode), in favour of the complainant from the account of Accused 1. The appellant is Accused 4 in the complaint.-. 21 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER16 In view of the factual position relating the averments revealed from the complaint as aforesaid it is relevant to refer to the decisions relied on by the learned counsel appearing for the appellant. In the decision in Anita Malhotra case [Anita Malhotra v. Apparel Export Promotion Council, (2012) 1 SCC520: (2012) 1 SCC (Civ) 329 : (2012) 1 SCC (Cri) 496]. in para 22 it was held thus : (SCC p.
528) “22. This Court has repeatedly held that in case of a Director, the complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. (Vide National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC330: (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113]. .) In the case on hand, particularly, in Para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day-to- day affairs of the Company. We have verified the averments as regards to the same and we agree with the contention of Mr Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day-to-day affairs of the Company. On this ground also, the appellant is entitled to succeed.
17. Paras 21 to 23 of Ashok Shewakramani case [Ashok Shewakramani v. State of A.P., (2023) 8 SCC473: (2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 :
2023. INSC692 is also relevant for the purpose of the case and it, insofar as relevant, reads thus : (SCC pp. 478-79) “21. Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it - 22 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER comes to a penal provision. The vicarious liability is attracted when the ingredients of sub-section (1) of Section 141 are satisfied. The section provides that every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the company, as well as the company shall be deemed to be guilty of the offence under Section 138 of the NI Act.
22. In the light of sub-section (1) of Section 141, we have perused the averments made in the complaints subject-matter of these three appeals. The allegation in Para 1 of the complaints is that the appellants are managing the company and are busy with day-to-day affairs of the company. It is further averred that they are also in charge of the company and are jointly and severally liable for the acts of Accused 1 company. The requirement of sub-section (1) of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section (1) of Section 141 of the NI Act must be a 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. Merely because somebody is managing the affairs of the company, per se, he does not become in charge of the conduct of the business of the company or the person responsible for the company for the conduct of the business of the company. For example, in a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section (1) of Section 141 of the NI Act.
23. The second allegation in the complaint is that the appellants are busy with the day-to-day affairs of the company. This is hardly relevant in the context of sub-section (1) of Section 141 of the NI Act. The allegation that they are in charge of the company is neither here nor there and by no stretch of the imagination, on the basis of such averment, one cannot conclude that the allegation of the second - 23 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER respondent is that the appellants were also responsible to the company for the conduct of the business. Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section (1) of Section 141 of the NI Act.
18. Thus, in the light of the dictum laid down in Ashok Shewakramani case [Ashok Shewakramani v. State of A.P., (2023) 8 SCC473: (2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 :
2023. INSC692 , 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.
19. In such circumstances, para 24 in Ashok Shewakramani case [Ashok Shewakramani v. State of A.P., (2023) 8 SCC473: (2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 :
2023. INSC692 is also relevant. After referring to Section 141(1) of the NI Act, in para 24 it was further held thus : (SCC p.
480) “24. … 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 - 24 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER disjunctively and the same ought to be read conjunctively in view of use of the word “and” in between.
20. The upshot of the aforesaid discussion is that the averments in the complaint filed by the respondent are not sufficient to satisfy the mandatory requirements under Section 141(1) of the NI Act. Since the averments in the complaint are insufficient to attract the provisions under Section 141(1) of the NI Act, to create vicarious liability upon the appellant, he is entitled to succeed in this appeal. We are satisfied that the appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482CrPC. In the result the impugned order [Siby Thomas v. Somany Constructions Ltd., 2019 SCC OnLine P&H7919 is set aside and the subject criminal complaint filed by the respondent and pending before the learned CJ (JD) JMIC, Bahadurgarh, in the matter titled as Somany Ceramics v. Tile Store vide COMA-321- 2015 (CNRNO : HRJRA1004637-2015), stand quashed only insofar as the appellant, who is Accused 4, is concerned. The appeal stands allowed as above. There will be no order as to costs."
(emphasis supplied) 17. The Apex Court was dealing with an identical situation where the High Court had rejected the petition under Section 482 of the Cr.P.C., on the ground that it would be a question of fact and the retiring partners cannot escape the liability. The Apex Court upturns the view of High Court and - 25 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER holds that unless there is specific averment of the involvement of the retiring partners in the complaint and continued liability, cannot be hauled into the proceedings. The judgment of the Apex Court in the considered view of this Court covers the issue on all its fours, as the petitioners had retired as partners one year before the issuance of the cheque, and there is no averment in the complaint about the involvement of these petitioners even after retirement. In the teeth of the aforesaid facts, permitting further proceedings against these petitioners would become an abuse of process of law and result in miscarriage of justice.
18. For the aforesaid reasons, the following:
ORDERi) The petitions are allowed; and ii) In Crl.P.No.9443/2024: The proceedings in C.C.No.9585/2023, pending on the file of the XXXVI Additional Chief Metropolitan Magistrate, Bengaluru, qua the petitioners, stand quashed; - 26 - NC:
2024. KHC:45265 CRL.P No.9443 of 2024 C/W CRL.P No.8100 of 2023 CRL.P No.13150 of 2023 AND1OTHER In Crl.P.No.8100/2023: The proceedings in C.C.No.7311/2023, pending on the file of the XXXVI Additional Chief Metropolitan Magistrate, Bengaluru, qua the petitioner, stand quashed; In Crl.P.No.13150/2023: The proceedings in C.C.No.7311/2023, pending on the file of the XXXVI Additional Chief Metropolitan Magistrate, Bengaluru, qua the petitioner, stand quashed; In Crl.P.No.8523/2024: The proceedings in C.C.No.9504/2023, pending on the file of the XXXVI Additional Chief Metropolitan Magistrate, Bengaluru, qua the petitioners, stand quashed. Sd/- (M.NAGAPRASANNA) JUDGE KG List No.:
1. Sl No.: 8