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Issues involved: Interpretation of Section 141 of the Negotiable Instruments Act, quashing of criminal proceedings against partners of a Firm.
Interpretation of Section 141 of the Negotiable Instruments Act: The High Court held that only partners of a Firm who are in-charge of the affairs of the Company and responsible to it can be proceeded against under Section 141 of the Negotiable Instruments Act. It was noted that not every partner of the Firm can automatically be implicated under this provision. However, the High Court quashed the criminal proceedings on the grounds that the necessary averments as required by Section 141 were not made in the complaint petition. Legal Fiction under Section 141 of the Negotiable Instruments Act: Section 141 of the Negotiable Instruments Act creates a legal fiction where Directors of a Company, including partners of a Firm, can be deemed to have committed an offence along with the Company if they are in-charge of the Company's affairs and responsible to it. In this case, respondent No. 3, as the authorised signatory of the Company, and respondent No. 2, the Firm, were involved in the matter. Decision and Outcome: The Supreme Court allowed the appeal in part, setting aside the High Court's judgment concerning the involvement of respondent Nos. 2 and 3. The Court upheld the quashing of proceedings against respondent Nos. 4 and 5, as the necessary averments were not made against them. This decision was based on the precedent set in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. 2005CriLJ4140.
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