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2023 (3) TMI 224 - HC - Indian LawsDishonor of Cheque - failure to complete part of the promise - legal and legitimate dues or not - signatory of the cheque - vicarious liability for an offence - HELD THAT - The Hon'ble Supreme Court in the case of ALKA KHANDU AVHAD VERSUS AMAR SYAMPRASAD MISHRA ANR. 2021 (3) TMI 381 - SUPREME COURT has set out preconditions for a person to be prosecuted under Section 138 of the Negotiable Instruments Act. It was held that there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. It is, thus, settled that the complainant has to make specific averments as are required under the law in order to hold the accused vicariously responsible for the offence. The petitioner is, admittedly, the wife of Mr. Gunjan Jain, who is the partner in the accused firm, M/s Swift Construction Expert. There is, however, no manner of doubt that on the date when the alleged offence was committed by the company, the petitioner was not a partner and had nothing to do with the affairs of the partnership firm. It is a settled law that the powers of quashing should be used sparingly, and where the factual matrix in a complaint are laid down clearly and not in a routine manner where bald and unspecified averments are made against the accused persons, the complaint ought not to be quashed. However, where ingredients of an offence are lacking against an accused, it is the duty of the Court to discharge such accused. Holding a Trial against the petitioner under Section 138 read with Section 141, is utmost abuse of the process of law and the Learned Trial Court has passed the summoning order without any application of mind. Petition allowed.
Issues Involved:
1. Quashing of the order taking cognizance for an offence under Section 138 of the Negotiable Instrument Act. 2. Quashing of the complaint number 10567/2020. 3. Determination of the petitioner's liability under Section 138 and Section 141 of the NI Act. Issue-wise Detailed Analysis: 1. Quashing of the order taking cognizance for an offence under Section 138 of the Negotiable Instrument Act: The petitioner sought quashing of the order dated 31.03.2021, passed by the learned MM (NI Act, Patiala House Courts, New Delhi), which took cognizance of an offence under Section 138 of the NI Act. The complaint alleged that the accused firm issued cheques that were dishonored. The petitioner argued that she was neither a signatory to the cheques nor a partner in the accused firm. The court emphasized that for a person to be prosecuted under Section 138, the cheque must be drawn by that person on an account maintained by him, and the cheque must be issued for the discharge of any debt or liability. The court referred to the Supreme Court's judgment in Alka Khandu Ahvad v. Amar Syamprasad Mishra, which clarified that only the signatory to the cheque can be prosecuted under Section 138. 2. Quashing of the complaint number 10567/2020: The petitioner also sought quashing of the entire complaint. The court examined the Deed of Admission and Retirement and the registration certificate of the accused firm, which showed that the petitioner was not a partner. The court noted that the cheques were issued by the accused firm and signed by the authorized signatory, not the petitioner. The court found that the complaint did not specify the petitioner's role or capacity in the accused firm and that mere participation in negotiations does not amount to being responsible for the conduct of the business. The court concluded that the petitioner, being the wife of the partner, cannot be held vicariously liable under Section 138 read with Section 141 of the NI Act. 3. Determination of the petitioner's liability under Section 138 and Section 141 of the NI Act: The court referred to Section 141 of the NI Act, which deals with offences by companies and vicarious liability. It reiterated that specific averments are necessary to hold a person vicariously liable. The court cited the Supreme Court's judgment in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, which stated that sufficient averments must show that the person was in charge and responsible for the conduct of the business. The court found that the complaint lacked specific allegations against the petitioner regarding her responsibility for the business conduct of the accused firm. The court also referred to the Supreme Court's judgment in Alka Khandu Avhad v. Amar Syamprasad Mishra, where it was held that a person who is not a signatory to the cheque and does not maintain the account cannot be prosecuted under Section 138. Conclusion: The court concluded that the petitioner was not a partner in the accused firm, not a signatory to the cheques, and not responsible for the conduct of the business. The court held that the complaint and the summoning order lacked material and specific averments against the petitioner. Therefore, the court allowed the petition, set aside the impugned order dated 31.03.2021, and quashed the complaint number 10567/2020 in relation to the petitioner. The court emphasized that the powers of quashing should be used sparingly, but where the ingredients of an offence are lacking, it is the duty of the court to discharge the accused.
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