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2022 (9) TMI 846 - SC - Indian LawsDishonor of Cheque - vicarious liability can be fastened on the partner of the firm or not - role of the respondent as a partner in the firm is sufficient or not - who is the person liable to be proceeded against under the provisions of subsection (1) of Section 141 for being incharge of and responsible to the company at the time the offence was committed? - Section 141 and 138 of the NI Act - HELD THAT - The time when the offence under Section 138 can be said to have been committed by the company. It is common place that an offence means an aggregate of facts or omissions which are punishable by law and, therefore, can consist of several parts, each part being committed at different time and place involving different persons. The provisions of Section 138 would require a series of acts of commission and omission to happen before the offence of, what may be loosely called dishonour of cheque can be constituted for the purpose of prosecution and punishment. Who is liable? - Vicarious liability - HELD THAT - The principles discernible from the aforesaid decision of this Court in the case of Ashutosh Ashok Parasrampuriya 2021 (10) TMI 431 - SUPREME COURT is that the High Court should not interfere under Section 482 of the Code at the instance of an accused unless it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques. This Court clarified that in a given case despite the presence of basic averments, the High Court may conclude that no case is made out against the particular Director/ partner provided the Director/partner is able to adduce some unimpeachable and incontrovertible evidence beyond suspicion and doubt. In the case on hand, it is found that the clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent. There are specific averments that the cheque was issued with the consent of the respondent herein and within her knowledge. This was sufficient to put the respondent herein to trial for the alleged offence. It is said so because the case of the respondent that at the time of issuance of the cheque or at the time of the commission of the offence, she was in no manner concerned with the firm or she was not incharge or responsible for daytoday affairs of the firm cannot be on the basis of mere bald assertion in this regard. The same is not sufficient. It is not in dispute, that no reply was given by the respondent to the statutory notice served upon her by the appellant. In the proceedings of the present type, it is essential for the person to whom statutory notice is issued under Section 138 of the NI Act to give an appropriate reply. The person concerned is expected to clarify his or her stance. If the person concerned has some unimpeachable and incontrovertible material to establish that he or she has no role to play in the affairs of the company/firm, then such material should be highlighted in the reply to the notice as a foundation. If any such foundation is laid, the picture would be more clear before the eyes of the complainant. The complainant would come to know as to why the person to whom he has issued notice says that he is not responsible for the dishonour of the cheque - The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But, if any Director or Partner wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention - Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner. Appeal allowed.
Issues Involved:
1. Quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. 2. Interpretation and application of Section 141 of the NI Act regarding vicarious liability of partners in a firm. 3. Evaluation of the sufficiency of averments in the complaint to hold partners liable. 4. The High Court's exercise of power under Section 482 of the Code of Criminal Procedure. Detailed Analysis: 1. Quashing of Criminal Proceedings under Section 138 of the NI Act: The appellant, engaged in the business of milk products, had filed a complaint under Section 138 of the NI Act against a partnership firm and its partners for the dishonour of a cheque amounting to Rs. 10,00,000. The High Court of Madras quashed the criminal proceedings against one of the partners (respondent) on the grounds that there was no indication of how the respondent was in charge and responsible for the conduct of the business of the firm at the relevant time. 2. Interpretation and Application of Section 141 of the NI Act: The Supreme Court emphasized that Section 141 of the NI Act extends criminal liability to every person who, at the time the offence was committed, was in charge of and responsible to the company/firm for the conduct of its business. The Court reiterated that vicarious liability can be fastened on those who are in charge of and responsible for the conduct of the business of the company or firm. 3. Evaluation of the Sufficiency of Averments in the Complaint: The Court scrutinized the statutory notice and the complaint, noting specific averments that the partners, including the respondent, were in charge of and responsible for the day-to-day affairs of the firm. The Court held that these averments were sufficient to proceed with the trial. It was noted that the respondent did not reply to the statutory notice, which could have clarified her role and potentially exonerated her. 4. The High Court's Exercise of Power under Section 482 of the Code of Criminal Procedure: The Supreme Court critiqued the High Court's decision to quash the proceedings, stating that the High Court adopted a hyper-technical approach. The Court emphasized that quashing of a complaint should be exercised sparingly and only when the complaint does not disclose any offence. The Court highlighted that the High Court should not interfere unless there is unimpeachable and incontrovertible evidence showing that the accused could not have been concerned with the issuance of the cheque. Conclusion: The Supreme Court allowed the appeal, setting aside the High Court's order. It concluded that the complaint contained sufficient averments to proceed against the respondent and that the High Court erred in quashing the proceedings. The Court reiterated the principles of vicarious liability under Section 141 of the NI Act and emphasized the need for a balanced approach in quashing complaints to prevent abuse of process. The case was remanded for trial, ensuring that the respondent would have the opportunity to present her defense during the trial.
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