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TMI Blog2025 (4) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... la/Respondent No.2 (wife of Deepak Singla), acting on behalf of the accused partnership firm namely- M/s Bell Enterprises (hereafter 'accused firm'), entered into a Distributorship Agreement dated 20.01.2016 with the complainant company / respondent, for resale and marketing of various products/ goods as mentioned in the said agreement. 3. It is stated that at the time of the execution of the Distributorship Agreement, the accused firm issued a blank cheque drawn on Punjab National Bank and a bank guarantee of Rs. 3,00,00,000/- as a security towards the supply of products on a timely basis. 4. It is the case of the complainant that the goods were supplied to the accused firm as and when a purchase order was issued and invoices were raised by the complainant against such supply. The details provided by the complainant/ respondent in regard to the invoices is given below: S.No. Tax Invoice Date Amount 1. 5079100209 16.05. 2016 4,99,74,435/- 2. 5002100908 26.05.2016 15,91,043/- 3. 5075103126 26.05.2016 1,13,23,247/- 4. 5091104220 27.05.2016 8,23,140/- Total 6,37,11,865/- 5. The complainant alleged that the accused firm issued a cheque for a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct cheque dated 17.07.2016 by Sh. Deepak Singla, nor at the time of its dishonour on 12.10.2016. He submitted that since the petitioner had already resigned on 14.06.2016, and was not in charge of managing the affairs of the accused firm at the time of the alleged dishonour of the subject cheque, no liability would be attracted against him under Section 138 read with Section 141 of the NI Act. He submitted that neither any specific averment regarding the role of the petitioner in the transaction has been made in the complaint nor in the demand notice. 9. The learned senior counsel submitted that, the fact that the petitioner was not involved in the day-to-day affairs of the accused firm, with effect from 14.06.2016, and that Respondent No. 2 is being inducted as a new partner, has been well within the knowledge of Respondent No 1, as is evident from the acceptance of the fresh cheque dated 17.07.2016 issued by the new partners of the accused firm in lieu of the security cheque as well as the fact that even the new partners have been arrayed as accused persons in the present complaint. 10. He relied upon the judgement passed by the Hon'ble Apex Court in Katta Sujatha v. Fertilizer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge of the conduct of the business of the accused firm, at the relevant time when the offence was committed, and that merely stating that he managed the day-to-day affairs of the accused firm is insufficient to attract such liability under the said provision. 13. He further submitted that the learned Trial Court has mechanically passed the impugned orders without application of mind and without appreciating that the petitioner was not involved in the day-to-day affairs of the accused firm. [Ref: Pepsi Foods Ltd. v. Special Judicial Magistrate : (1998) 5 SCC 749]. 14. The learned counsel for Respondent No. 1 disputed the contention of the petitioner and submitted that the petitioner was actively involved in the day-to-day affairs of the accused firm. He placed reliance on the judgements passed by the Hon'ble Apex Court in S.P. Mani & Mohan Dairy v. Snehalatha Elangovan : (2023) 10 SCC 685 and Monaben Ketanbhai Shah v. State of Gujarat : (2004) 7 SCC 15, wherein the Hon'ble Court observed that a complaint under Section 138 read with Section 141 of the NI Act, is required to be read as a whole and emphasized that Courts should refrain from taking a hyper-technical approach to quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company at the time of the commission of the offence, can be held vicariously liable for an offence under Section 138 of the NI Act. Section 141 of the NI Act reads as under: "141. Offences by companies.-(1) If the person committing an offence under Section 138 is a company, 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: Provided that nothing contained in this sub-section shall render 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, if the partner keeps quiet and does not say anything in reply to the same, then the complainant has all the reasons to believe that what he has stated in the notice has been accepted by the noticee. In such circumstances what more is expected of the complainant to say in the complaint. 57. 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. He must make out a case that making him stand the trial would be an abuse of process of Court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal. 58.4. If any Director 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/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court." (emphasis supplied) 23. The Hon'ble Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of entering into the Distributorship Agreement dated 20.01.2016. 28. Concededly, the petitioner, at the time of the issuance of the security cheque, was a partner in the accused firm. The subject cheque is claimed to be given in exchange of the cheque which was issued at the time when the petitioner being partner was the person responsible for the conduct of the accused firm. Whether the petitioner can be held liable for dishonor of the replaced cheque, even if it is to be presumed that he had retired by that time, is a mixed question of facts and law which cannot be decided at this stage, without the evidence being led by the parties. Moreover, the retirement of the petitioner from the accused firm is also disputed and is subject matter of other litigations initiated by other partners. The said fact, thus, is not of such sterling nature to be considered while exercising power under Section 482 of the CrPC. 29. Therefore, from the totality of facts, it cannot be said at this stage that the petitioner was not the person responsible at the time of commission of offence committed by the accused partnership firm. To quash the proceedings by petition filed under Section 482 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be placed on the High Court's powers Under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director. (emphasis supplied) 31. In such circumstances, at this stage, considering the material on record, the documents adduced by the petitioner cannot be said to be of such sterling and unimpeachable quality that it merits the quashing of the summons and consequential proceedings thereof. This Court can exercise its jurisdiction only upon unimpeachable and uncontroverted evidence being placed on record, however, in the absence of such evidence, the fact whether the accused person is responsible for the affairs of the accused company becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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