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2017 (11) TMI 1996 - HC - Indian LawsDishonor of Cheque - insufficient funds - liability of signatory of firm as well as liability on the firm along with its partners - Section 141 of Negotiable Instruments Act - HELD THAT - The Supreme Court in STANDARD CHARTERED BANK VERSUS STATE OF MAHARASHTRA AND ORS. ETC. 2016 (4) TMI 532 - SUPREME COURT observed that an allegation in the complaint to the effect that the respondents being the Chairman, Managing Director, Executive Director and wholetime Director were and are the persons responsible and in charge of day-to-day business of Accused 1 viz. when the offence was committed is sufficient for prosecution of the respondents. However, in the present case, the allegation is that the firm along with its partners is responsible. Here there is no allegation that the applicants are in charge and responsible for day to day business of the firm. The basic allegation required for prosecuting the applicants is missing in the complaint and the applicants cannot be prosecuted merely because they are the partners in the firm - the complaint filed against the applicants under Section 138 of Negotiable Instruments Act is liable to be dismissed as it lacks basic allegation against the applicants. Application allowed.
Issues Involved:
Quashing of criminal complaint under Section 482 of Cr.P.C. regarding liability under Section 138 of Negotiable Instruments Act. Analysis: The judgment pertains to an application under Section 482 of Cr.P.C. seeking to quash proceedings in a criminal complaint case under Section 138 of the Negotiable Instruments Act. The complaint alleged that the second respondent, a signatory of a dishonored cheque, and the firm along with its partners, were liable under Section 141 of the Act. However, it was noted that the complaint lacked specific allegations showing that the applicants were responsible for the day-to-day business of the firm, a crucial element for establishing liability under Section 141. The court referred to the Supreme Court's ruling in the Standard Chartered Bank case, emphasizing that liability under Section 141 of the Act arises from being in charge of and responsible for the conduct of the company's business at the time of the offense. The judgment highlighted that mere designation or holding office in a company is insufficient to establish criminal liability, stressing the importance of actual involvement in the company's affairs at the relevant time. Furthermore, the court analyzed various judgments on the issue and reiterated that for prosecution under Section 141, the complaint must specifically allege that the accused individuals were responsible and in charge of the day-to-day business of the company when the offense occurred. In the absence of such allegations against the applicants in the present case, the court concluded that the basic allegation required for prosecuting the applicants was missing in the complaint, leading to the dismissal of the complaint against them. Ultimately, the court quashed the complaint against the applicants under Section 138 of the Negotiable Instruments Act, stating that the lack of essential allegations rendered the complaint insufficient to prosecute the applicants solely based on their partnership in the firm. As a result, the application seeking to quash the complaint succeeded, and the complaint against the applicants was dismissed.
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