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TMI Blog2024 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. In a company, every Director is not responsible for the conduct of the business of the company but in a partnership firm all the working partners are responsible for the conduct of day-to-day business of the firm as every partner is a representative of the other partners of the firm. In view of the above, the averment that an accused is a partner is sufficient to show that that partner is responsible for the conduct of the affairs of the firm. All the judgments relied on by the learned Counsel for the Petitioner, which pertains to directors of a firm, are, therefore, clearly distinguishable. A perusal of the abovementioned Section shows that until and unless a public notice of the retirement is given, a partner of the firm continues to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement. There is nothing on record to show that a public notice has been given. However, since Ms. Anju Khanna, i.e. the Petitioner No. 1 herein, was only a sleeping partner of the firm, this Court is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returned unpaid on 04.11.2013, 06.11.2013 and 08.11.2013 respectively for the reasons funds insufficient for cheque bearing No. 358077 and Stop Payment for cheques No. 358075 358076. It is stated that the Respondent No. 2/Complainant gave a notice under Section 132 of the NI Act to the Petitioners herein on 11.11.2013 demanding the cheque amount but even after receiving the said notice, the Petitioners have not returned the money back to the Respondent No. 2. Thereafter, the Respondent No. 2 filed a complaint case against the accused persons, including the Petitioners herein, under Section 138 of the NI Act. 4. Summons were issued against the accused persons, including the Petitioners herein. It is stated that the Petitioners herein filed an application seeking discharge which was dismissed by the learned Metropolitan Magistrate vide Order dated 04.12.2019, on the ground that the learned Metropolitan Magistrate does not have the power under the CrPC to discharge the accused persons. It is stated that the said Order was taken up in revision before the learned Additional Session Judge and the same was dismissed vide Order dated 31.08.2021. 5. It is stated that one of the accused pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king partners of the firm. A retirement deed dated 25.08.2013 has also been filed along with the present Petition stating that Petitioner No. 1 herein and Mr. Prem Nath Khanna had retired from the Partnership firm. 10. It is the contention of the learned Counsel for the Petitioner that the essence of the Complaint is that the Petitioners herein are Partners of the Partnership firm and are, therefore, liable to be proceeded ahead under the NI Act. He states that the Petitioner are not the signatories of the cheques. He draws the attention of this Court to Section 141 (1) of the NI Act which states that if the offence is committed by a company then every person who at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. He states that the explanation to Section 141 states that the company means any body corporate and includes a firm or other association of individuals. Learned Counsel for the Petitioner, thereafter, draws the attention of this Court to various judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company. ***** 27. Unfortunately, the High Court did not deal the issue in a proper perspective and committed error in dismissing the writ petitions by holding that in the complaints filed by Respondent 2, specific averments were made against the appellant. But on the contrary, taking the complaint as a whole, it can be inferred that in the entire complaint, no specific role is attributed to the appellant in the commission of offence. It is settled law that to attract a case under Section 141 of the NI Act a specific role must have been played by a Director of the company for fastening vicarious liability. But in this case, the appellant was neither a Director of the accused Company nor in charge of or involved in the day-to-day affairs of the Company at the time of commission of the alleged offence. There is not even a whisper or shred of evidence on record to show that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the business of the Partnership Firm in question. He states that the averments made in paragraph No. 2-7 of the Complaint are not sufficient compliance of the requirements under the NI Act. 13. Per contra, Learned Counsel for Respondent No. 2/Complainant/Bank contends that the role of a Partner of a firm and the role of a Director of a firm are distinct. He contends that every partner is allowed to take part in the business and has to conduct the business which is not the position of every Director of the firm. He draws the attention of this Court to the partnership deed which clearly reflects that except Petitioner No. 1 herein, who is a sleeping partner, all other partners are working partners of the Partnership firm in question and, therefore, were responsible for the day-to-day working of the firm. He further states that it is now well settled that it is not necessary to incorporate the language of Section 141 NI Act verbatim in the complaint and the complaint has to be read as a whole and if the substance of the allegations made in the complaint fulfil the requirements of Section 141 NI Act, the complaint has to proceed and, therefore, no interference is called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taking part in the conduct of the business; (b) the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm; (c) where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits; (d) a partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six per cent. per annum; (e) the firm shall indemnify a partner in respect of payments made and liabilities incurred by him (i) in the ordinary and proper conduct of the business; and (ii) in doing such act, in an emergency, for the purpose of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under similar circumstances; and (f) a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm. 19. Section 18, which states that the partner is the agent of the firm, reads as under: Section 18. Partner to be agent of the firm. Subject to the provisions of this Act, a partner is the agent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to carry on the business of the kind carried on by the firm, binds the firm. Section 23 states that an admission or representation made by a partner concerning the affairs of the firm is evidence against the firm, if it is made in the ordinary course of business. Section 25 states that every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. 25. In a company, every Director is not responsible for the conduct of the business of the company but in a partnership firm all the working partners are responsible for the conduct of day-to-day business of the firm as every partner is a representative of the other partners of the firm. In view of the above, the averment that an accused is a partner is sufficient to show that that partner is responsible for the conduct of the affairs of the firm. All the judgments relied on by the learned Counsel for the Petitioner, which pertains to directors of a firm, are, therefore, clearly distinguishable. 26. The Apex Court in S.P. Mani Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 , has analysed Sections 138 and 141 of the NI Act and after discussing various judgments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) Sh. Sanjay Khanna 15% d) Sh. Sandeep Khanna 15% ***** 9. That all the partners except Smt. Anju Khanna shall be the working partners. It is specially agreed that Smt. Anju Khanna shall be sleeping partner and will not be involved in day-to-day working of the firm. 28. A perusal of the partnership deed shows that other than Smt. Anju Khanna, i.e. the Petitioner No. 1 herein, all other partners were responsible for the conduct of day-to-day business of the Partnership Firm in question. In S.P. Mani Mohan Dairy (supra) the Apex Court has categorically held that it is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole and if the substance of the allegations made in the complaint fulfils the requirements of Section 141, the complaint has to proceed and is required to be tried with. The Apex Court has also held that in construing a complaint a hyper-technical approach should not be adopted so as to quash the same and the laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind as th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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