2022 (11) TMI 333 - HC - Indian Laws

Dishonor of Cheque - vicarious liability of the non-signing partners - the case of petitioner is that the cheque in question had been drawn and issued by the other partners and was not issued by the petitioners - Section 141 of NI Act - HELD THAT - The learned Metropolitan Magistrate found that accused No.5 and 12 were the signatories of the cheque and the accused No.10, 11, 12, 14, 15 and 16 are the license holder on behalf of the accused firm. The learned Metropolitan Magistrate did not find any specific role, so far as, other accused are concerned and, accordingly, he dropped the complaint against the remaining accused except to direct for issuance of summon against accused No.1, 5, 10, 11, 12, 14, 15 and 16. It is settled that in terms of explanation of Section 141 of the NI Act, the expression company would mean any body corporate and includes a firm or other association of individuals. Sub-section 1 of Section 141 postulates that where an offence is committed under Section 138 by a company, the company as well as every person who, at the time when the offence was committed, was in charge of and was responsible to the company for the conduct of the business shall be deemed to be guilty of the offence - In the instant case specific averments have been made with respect to the present petitioners which have been considered by the concerned Metropolitan Magistrate. So far as the arguments advanced by the learned counsel appearing on behalf of the petitioners are concerned, the same would not require to be considered at the stage of summoning the petitioners. The Hon ble Supreme Court in the matter of S. P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan 2022 (9) TMI 846 - SUPREME COURT has dealt with the issue extensively, where, the High Court of Madras in exercise of its power under Section 482 of Cr.P.C allowed the petition and quashed the complaint under Section 138 of the NI Act on the ground of non-fulfillment of the requirement of Section 141 of the NI Act. The high court in that case held that merely by reciting the words used under Section 141 of the NI Act in the complaint, no vicarious liability can be fastened on the partners of the firm. In the absence of any sterling circumstances/evidence being produced by the petitioners, this court does not find it appropriate to exercise its power under Section 482 of the Cr.P.C. to quash the instant complaint - Application dismissed.

Summary

Issues:
Petitioners challenging summoning order under Section 138 of NI Act for joint liability in partnership firm.

Analysis:
1. The petitions challenged a summoning order under Section 138 of the Negotiable Instruments Act, 1881, regarding joint liability in a partnership firm. The petitioners argued that they were not responsible for the day-to-day functioning of the accused firm, as the cheque in question was issued by other partners, not by them. They relied on legal precedents to support their case.

2. The complaint specifically named the petitioners as partners in the accused firm and highlighted that they held licenses issued by the State of Uttarakhand on behalf of the firm. The Metropolitan Magistrate considered the roles of different accused individuals and dropped the complaint against some while directing summoning against others based on their involvement and responsibilities in the firm.

3. Section 141 of the NI Act defines the liability of individuals in a company or firm for offences under Section 138. The court noted that specific averments were made in the complaint regarding the petitioners, which were duly considered by the Metropolitan Magistrate. The court emphasized that at the summoning stage, the arguments of the petitioners' counsel did not need to be evaluated.

4. The Supreme Court's decision in S. P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan highlighted the importance of specific averments in complaints to establish vicarious liability. The court summarized that the complainant's responsibility is to make specific averments to hold accused partners vicariously liable, without needing to prove their awareness of every transaction.

5. The court concluded that the complaints against the petitioners were valid, considering the specific allegations against them and the roles they held in the firm. The court dismissed the petitions challenging the summoning orders, stating that the complaints demonstrated sufficient grounds for proceeding with the case.

6. The court clarified that it had only assessed the facts to review the summoning orders' validity and that the trial court should independently decide the complaint based on its merits, without being influenced by the observations made in the present judgment.