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2025 (4) TMI 357 - HC - Indian LawsDishonour of Cheque - legally enforceable debt or not - vicarious liability of designated partner of the LLP u/s 138/141 of the Negotiable Instruments Act 1881 - HELD THAT - It cannot be said that mere mentioning in the complaint that the petitioner is the key person responsible for the management of the accused no.1 and thereby is jointly and severally liable for the offence under section 138/141 of the N.I. Act in the complaint is sufficient compliance of section 141 of N.I Act. When clause 41C and 73 of the LLP agreement stipulates that a partner of the LLP agreement can borrow a loan in the name of the LLP only upon written consent of the LLP/other partners it was required to be averred as to whether the consent of the petitioner herein was taken or not in the context of his specific denial in the reply. Clause 41(g)(k) of the agreement specially mandates that the entire loan borrowed in the name of LLP must be approved by Mr. Kakrania and Mr. Baid then how the petitioner can be fastened with the allegations levelled in the complaint - Section 41(c) and 73 makes it clear that partner will not be responsible for wrongful act and in reply to demand notice it has been specially stated that the alleged act is the wrongful act of accused no. 2 then why the present petitioner has been made responsible in the complaint specially when it has been specifically alleged in the reply that accused no. 2 was made accused of financial irregularities which culminated several criminal proceedings and said accused no.2 is solely responsible for taking all fiscal and financial decisions of the LLP and that accused no.2 had misutilized his positon and entered into financial transaction for his personal gain and enrichment and not for the benefit of the firm and that such transaction was beyond the knowledge of the other partners. From the facts and circumstances of the case it is clear that the reply was given by the petitioner herein through Email on 10th June 2021 and from the order sheet it is clear that complaint was lodged much thereafter on 1st July 2021. From the complaint in question it is found that except a bald statement that the petitioner and other accused persons are the key persons and petitioner along with other accused persons are jointly and severally liable for the offences under section 138/141 of N.I Act no attempt has been made in the complaint to indicate even prima facie that petitioner is vicariously liable to the alleged transaction discarding the reply as underlined above. The statutory requirement contained in section 141 of N.I Act had not been complied with in respect of present petitioner specially in the context of reply given by the petitioner herein denying his liability. It may be true that it is not necessary for the complaint to specifically reproduce the wordings of the section but what is required is a clear statement of fact in the context of petitioner s denial of his liability so as to enable the court to arrive at a prima facie opinion that the petitioner/accused no.3 is vicariously liable. Conclusion - The averment in the complaint filed by the opposite party herein are not sufficient to satisfy the mandatory requirements under section 141 of N.I Act. Since the averments in the complaint are not sufficient to attract the rigour of section 141 to create vicarious liability upon the petitioner herein he is entitled to succeed in this Application. The petitioner has therefore made out a case for quashing the criminal complaint in relation to him in exercise of the jurisdiction under section 482 of the Cr.P.C. Revision allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 138 of the N.I. Act addresses the punishment for the dishonor of cheques issued in discharge of legally enforceable debt. Section 141 extends liability to individuals responsible for the conduct of the company's business. The legal framework requires specific averments in the complaint to establish vicarious liability. Precedents such as SMS Pharmaceuticals Ltd. v. Neeta Bhalla and others, K.K. Ahuja v. V.K. Vora, and Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. emphasize the need for specific allegations against individuals for vicarious liability. Court's Interpretation and Reasoning The Court noted that Section 141 of the N.I. Act requires a clear averment in the complaint that the accused was in charge of and responsible for the conduct of the business of the company at the time of the offense. The Court emphasized that merely being a director or partner does not automatically make one liable under Section 141. The complaint must contain specific allegations about the individual's role and responsibility in the company's affairs. Key Evidence and Findings The petitioner argued that he was not involved in the financial decisions of the LLP and that the cheque in question was issued by another partner, Manish Kakrania, who was responsible for financial matters. The petitioner provided a reply to the demand notice, denying liability and asserting that the transaction was unauthorized and unknown to him. Application of Law to Facts The Court examined the complaint and found that it lacked specific allegations regarding the petitioner's involvement in the management and administration of the LLP. The complaint merely stated that the petitioner was a key person responsible for management without detailing his specific role or responsibility. The Court found that the statutory requirements under Section 141 were not met. Treatment of Competing Arguments The complainant argued that as a designated partner, the petitioner was vicariously liable under Section 141, and it was unnecessary to detail his role in the complaint. The complainant relied on the presumption under Section 139 of the N.I. Act. However, the Court found that the complaint did not satisfy the necessary legal requirements to establish vicarious liability, especially in light of the petitioner's specific denial of involvement. Conclusions The Court concluded that the complaint did not contain sufficient averments to hold the petitioner vicariously liable under Section 141 of the N.I. Act. The petitioner successfully demonstrated that he was not involved in the financial transaction, and the complaint failed to contradict his specific denial of liability. SIGNIFICANT HOLDINGS The Court held that:
The Court allowed the petitioner's application under Section 482 of the Cr.P.C, quashing the criminal proceedings against him in the complaint case.
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