Case Note & Summary
The applicant, Ajay Rampal Sarda, filed a criminal application under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of Criminal Complaint No. 3717/2017 filed by respondent no.1, Pankaj Shah, under Section 138 of the Negotiable Instruments Act, 1881, and the order dated 3rd October 2017 passed by the learned Judicial Magistrate, First Class, Akola, issuing process against the applicant as original accused no.2. The complaint alleged that the complainant deposited Rs. 2 lakhs via cheque with a broker, and the accused executed a deposit chit on 28th July 2016 agreeing to repay the amount with interest. The cheque in question was allegedly issued by the partnership firm. The applicant argued that he was a sleeping partner, did not sign the cheque, and the partnership deed showed he was not a working partner. The court examined the complaint and found that there were no specific allegations against the applicant showing that he was in charge of or responsible for the conduct of the business. The court noted that the applicant had not signed the cheque and was merely a sleeping partner. Relying on the principle that vicarious liability under Section 138 N.I. Act requires the partner to be actively involved in the business, the court held that no prima facie case was made out against the applicant. The court quashed the complaint and the order issuing process against the applicant, allowing the application.
Headnote
A) Criminal Law - Quashing of Complaint - Sleeping Partner Liability - Section 138 Negotiable Instruments Act, 1881 - The court considered whether a sleeping partner who did not sign the cheque and was not involved in the business can be prosecuted under Section 138 N.I. Act. The court held that merely being a partner does not attract liability under Section 138 unless the partner is shown to be in charge of or responsible for the conduct of the business. Since the applicant was a sleeping partner and did not sign the cheque, no prima facie case was made out against him, and continuing the proceedings would be an abuse of process. (Paras 1-5) B) Criminal Law - Abuse of Process - Quashing under Section 482 Cr.P.C. - The court reiterated that inherent powers under Section 482 Cr.P.C. can be invoked to prevent abuse of process of court. Where the allegations in the complaint do not make out any offence against the accused, the proceedings are liable to be quashed. (Paras 4-5)
Issue of Consideration
Whether a sleeping partner who did not sign the cheque and was not involved in the day-to-day business can be prosecuted under Section 138 of the Negotiable Instruments Act, 1881, and whether the complaint against him is liable to be quashed as an abuse of process of law.
Final Decision
The court allowed the application and quashed Criminal Complaint No. 3717/2017 and the order dated 3rd October 2017 passed by the learned Judicial Magistrate, First Class, Akola, to the extent of the applicant (original accused no.2).
Law Points
- Quashing of criminal complaint
- Sleeping partner liability
- Section 138 Negotiable Instruments Act
- 1881
- Prima facie case
- Abuse of process of court
