2003 (9) TMI 822 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the initiation of proceedings under Section 138 of the Negotiable Instruments Act against all partners of the firm is proper.
2. Applicability of Section 141 of the Negotiable Instruments Act and Section 25 of the Indian Partnership Act.
3. Whether the proceedings should be quashed under Section 482 of the Cr.P.C.

Detailed Analysis:

1. Initiation of Proceedings Under Section 138 of the Negotiable Instruments Act

The petitioners challenged the initiation of proceedings under Section 138 of the Negotiable Instruments Act, arguing that there was no specific averment in the complaint as required under Section 141 of the Act. The respondent-complainant had issued a legal notice to all partners of the firm, demanding payment for dishonored cheques. The third petitioner replied but did not specify who was responsible for the firm's business. The court noted that the complainant, being a stranger to the firm's internal affairs, was justified in impleading all partners as accused, especially when the notice did not clarify the responsible individuals.

2. Applicability of Section 141 of the Negotiable Instruments Act and Section 25 of the Indian Partnership Act

Section 25 of the Partnership Act states that every partner is liable jointly and severally for all acts of the firm. Section 141 of the Negotiable Instruments Act extends liability to every person in charge of and responsible for the conduct of the company's business. The court emphasized that the complainant would not know the internal management of the firm and relied on the lack of clarity in the reply notice from the accused. Therefore, the court held that all partners could be proceeded against, as the complainant was not at fault in impleading them.

3. Quashing of Proceedings Under Section 482 of the Cr.P.C.

The court referred to various precedents, including the Supreme Court's decision in U.P. Pollution Control Board v. Modi Distillery, which held that a company could not take advantage of its own lapse in not providing details of responsible persons. The court also noted that inherent power under Section 482 of the Cr.P.C. should be exercised to prevent abuse of process or to secure the ends of justice. Given the inconsistencies in the petitioners' statements about who issued the cheques and their responsibilities, the court found no grounds to quash the proceedings at this stage.

Conclusion:

The petition was dismissed, but the court allowed the petitioners to file a memo or application before the Trial Court to clarify that only the managing partner was responsible for the cheques. The Trial Court was directed to consider such a memo or application on its merits.