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TMI Blog2017 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/original complainant in paragraph Nos.2 and 5 of the compliant that petitioner/accused No.4 was incharge of and was responsible for the affairs of the Partnership Firm in its day to day conduct of business. It is further averred that even cheques were issued with the knowledge and consent of all accused persons, who had taken active part in the transaction. These averments are certainly sufficient to put the writ petitioner/accused for trial. He may, on his part, establish that the offence was committed without his knowledge or that he had exercised due diligence to prevent the commission of offence, but that will be the subject matter of the defence in the trial and such defence may be established by cross-examining the complainant or by adducing defence evidence. He may point out at the trial that he is just a sleeping partner of the firm. At this stage, what is required to be considered is whether there is sufficient ground for prosecuting the writ petitioner/accused No.4 and that ground is established by averments made in the complaint. Mere averments in the petition that the writ petitioner/accused No.4 was a sleeping partner having no knowledge of the transaction in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having no concern with affairs of the firm. He was not Managing Partner of accused No.1 partnership firm. The learned Advocate further argued that the learned trial Court erred in not conducting inquiry under Section 202 of the Code of Criminal Procedure and, as such, the petitioner/respondent No.4 could not point out all these facts. In a very casual manner, verification statement is made wherein it was alleged that accused No.3 is the partner of the firm a fact which is totally incorrect. Ultimately, this Court was required to quash proceedings against original accused No.3. According to the learned Advocate appearing for the petitioner mens rea can be inferred only when the knowledge of the transaction is attributed or participation in action is alleged by the complainant. In the case in hand, there is no evidence to connect the writ petitioner/accused No.4 with the crime in question and, as such, the learned trial Court ought not to have taken cognizance of the alleged offence against the petitioner/ respondent No.4. 5 Mr.Samrat Thakkar, learned Advocate appearing for the petitioner further argued that basic doctrine test is not fulfilled in the case in hand and the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of an responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any offence or designation in a company may be liable if he satisfies the maini reequirement of being in charge of an responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of every person the section would have said every director, manager or secretary in a company is liable ..... etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. 7 He further reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in subsection (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other offficer of the company, such director, manager, secretary or other offficer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purposes of this section,- (a) company means any body corporate and includes a firm or other association of indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt states that the Accused No.1 is a Partnership firm and Accused no.2 to 5 are the partners of the Accused no.1 firm and all of them are responsible for day to day conduct of the business and affairs for the Accused No.1 firm. The Accused no.2 to 5 are also authorized signatory of Accused no.1 and they are operating the bank account of the Accused no.1 as partners thereof. 13 In paragraph 5 of the complaint, relevant averment is to the following effect : The cheques are issued with the knowledge and consent of all the accused and all the accused have taken active part in the transaction. The details of the said cheques are as under :- Cheque Nos. Date Amount (Rs.) 008234 01.01.2016 4,00,000/- 008480 01.01.2016 5,00,000/- 14 In other words, according to complainant/respondent No.2 herein, accused Nos.2 to 5 (excluding accused No.3) are Partners of accused No.1 Partnership Firm and as they are responsible for day to day conduct of the business and affairs of the accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to quash the complaint because the complaint contains the basic averment which is sufcient to make out a case against the Director. c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque nor the Managing Director or Managing Partner, as the case may be, at the time of commission of offence was incharge of and responsible to the Firm or Company for conduct of business. No particular form in this regard is necessary. It is not at all necessary to plead that such a Partner or Director has any specific role in respect of the transaction leading to issuance of the cheque. Section 141 of the N.I.Act makes the Partner or Director incharge of and responsible for the Firm or the Company for conducting business of the Firm or Company, liable for penal consequences. Valuable reference can be had to this proposition from the Judgments of the Honourable Apex Court in the matter of A.K.Singhaniya v. Gujrath State Fertilizers Company Ltd. reported in AIR 2014 SC 71, Katta Sujatha v. Fertilizer Chemicals, Travancore reported in (2002) 7 SCC 655, K.K.Ahuja v. V.K.Vora, reported in (2009) 10 SCC 48 and National Small Scale Industries Corporation v. Harmeet Singh reported in (2010) 3 SCC 330. 19 When tested on the touchstone of this position of law, as stated in foregoing paragraphs, averments in the complaint made by respondent No.2/original complainant, satisfy all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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