Case Note & Summary
The petitioners, accused No.1 (M/s. Conserve Ready Mix Concrete, a partnership firm) and accused No.2 and 3 (partners of the firm), filed a petition under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) seeking quashing of the order of cognizance dated 01.02.2021 passed by the XXXIII Additional Chief Metropolitan Magistrate, Mayohall Unit, Bengaluru in C.C.No.50579/2021 for the alleged offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The respondent/complainant, M/s. R.K.M.Sand Aggregates, had filed a complaint alleging that a cheque issued by the petitioner firm towards payment for supply of sand was dishonoured. The Magistrate took cognizance against all three accused. The petitioners contended that the complaint did not contain specific averments as required under Section 141 of the N.I. Act to make the partners vicariously liable for the offence committed by the firm. The court examined the complaint and found that while it alleged that accused No.2 and 3 were partners of the firm, it did not state that they were in charge of and responsible for the conduct of the business of the firm at the time of the offence. The court held that the requirements of Section 141 are mandatory and in their absence, the proceedings against the partners cannot continue. However, the court declined to quash proceedings against the firm (accused No.1) as it is the drawer of the cheque. The petition was partly allowed, quashing proceedings against accused No.2 and 3 only.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 read with Section 141 - Vicarious Liability of Partners - Complaint must contain specific averments that the partner was in charge of and responsible for the conduct of business of the firm at the time of the offence - In the absence of such averments, proceedings against partners are liable to be quashed - Held that the complaint against petitioner No.2 and 3 (partners) does not satisfy the requirements of Section 141 and is quashed (Paras 5-8). B) Criminal Procedure Code - Inherent Powers - Section 482 - Quashing of Proceedings - When complaint does not disclose essential ingredients of offence, High Court can exercise inherent powers to prevent abuse of process - Held that proceedings against petitioner No.1 (firm) are not quashed as the firm is the drawer of the cheque (Para 9).
Issue of Consideration
Whether the order of cognizance and proceedings in C.C.No.50579/2021 for offence under Section 138 of N.I. Act against the petitioners (accused No.1 to 3) can be quashed on the ground that the complaint does not contain specific averments as required under Section 141 of N.I. Act to make the partners vicariously liable?
Final Decision
The petition is partly allowed. The proceedings against accused No.2 (Sri M.Rameshwara Reddy) and accused No.3 (Smt. Umeshwari) in C.C.No.50579/2021 are quashed. The proceedings against accused No.1 (M/s. Conserve Ready Mix Concrete) shall continue.
Law Points
- Vicarious liability under Section 141 of Negotiable Instruments Act
- 1881 requires specific averments that the partner was in charge of and responsible for the conduct of business of the firm at the time of the offence
- Quashing under Section 482 Cr.P.C. is permissible if complaint does not disclose essential ingredients of offence
