1998 ALL MR (Cri) JOURNAL 9
IN THE HIGH COURT OF JUDICATURE AT PUNJAB AND HARYANA
V.S. AGGARWAL, J.
Raj Kumar Mangla Vs. Indo-Lowenbrau Breweries Ltd.
Cri. Misc. No.19581-M of 1995
27th May, 1997
Petitioner Counsel: A.K. MITTAL, and G.S. SANDHAWALIA
Respondent Counsel: MAHESH GROVER
Negotiable Instruments Act (1881) S.141 - Offence committed by company - In the absence of an allegation that the petitioner was responsible to the company or that he was in-charge of the company, he cannot be prosecuted.
JUDGMENT :- M/s.Indo Lowenbrau Breweries Ltd. (hereinafter described as 'the respondent') filed a complaint against the petitioner and others with respect to the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'the Act'). It was contended that M/s.Rohtas Wine Traders is a partnership concern, Petitioner Raj Kumar Mangla and Kishna Dev are its partners. In the year 1991-92, the partnership concern had business dealing with the respondent. On 31-3-1992 a sum of Rs.1,19,650/- was standing debted in the account of the partnership concern. Action on behalf of other partners and the firm Kishna Dev issued a cheque for the said amount drawn on the Bank of India, Goregaon Branch. The cheque was presented with the banker i.e. State Bank of India for collection of the amount. It was dishonored due to insufficiency of funds. The petitioner and the others were informed to withhold the cheque for sometime. At the instructions of the accused, the respondent again presented the cheque but was dishonoured. The cheque was presented again on 28-9-1992 but because of insufficiency of funds, it was dishonoured. After due notice and alleging that the cheque was dishonoured because of the act of the petitioner and others, the criminal complaint referred to above was filed.
Petitioner Raj Kumar Mangla by virtue of the present petition seeks quashing of the complaint and the order summoning him as accused. It is contended that the petitioner had put in appearance before the learned Judicial Magistrate. He submitted an application for recalling of the order but the said application was dismissed.
3. The ground taken up by the petitioner for quashing the complaint and the order summoning him as accused is that there is no specific allegation against him that petitioner was responsible to the firm and in terms of Section 141 of the Negotiable Instruments Act, he was liable for act of the other partners.
4. Notice had been issued to the respondent. In the reply filed, the averments of the petitioner have been controverted. It is pointed that in the complaint it has specifically been mentioned that firm M/s. Rohtas Wine Traders was having financial business dealing with the respondent. The amount as such was due. The partner is bound by acts and omission of the other partners. The petitioner has not come forward to settle the account. Keeping in view that the petitioner is a partner of the firm, he is liable and there is no ground to quash the proceedings.
5. As already noted above, the submissions made were confined to the scope of Section 141 of the Negotiable Instruments Act. It was contended that there is no averment that the petitioner was in-charge and responsible to the firm for the conduct of the business of the firm or that the offence was committed because of his negligence. In the absence of any such averment in the complaint, the petitioner cannot be held liable. On the contrary, the respondent's learned counsel alleged vehemently that the petitioner must face a trial and respondent can prove that the offence was committed with the consent and connivance of the petitioner. He further urged that being the partner, in any case the petitioner was responsible and was rightly summoned by the trial Court.
6. Under Chapter XVII of the Negotiable Instruments Act, by virtue of Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, a new offence in the form of Section 138 had been added. If a cheque is dishonoured for insufficiency of funds and it had been issued for payment of any amount of money, it shall be deemed that an offence under Section 138 of the Negotiable Instruments Act had been committed subject to other conditions of Section 138 being satisfied. Section 141 of the Act refers to offences by companies. It reads :-
"Offence 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 the diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and his proved that the offence has been committed with the consent or connivance of or is attribute able to, any neglect on the part of, any director manger, secretary of other officer of the company, such director, manager, secretary or other officer 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 individuals and
(b) "director", in relation to a firm, means a partner in the firm."
The explanation to Section 141 reveals that for purposes of Section 141, a firm would be taken to be a company and in relation to firm, the partner will be taken to mean a director.
7. Sub-section (1) of Section 141 of the Act clearly provides that every person who was in charge of and was responsible to the company for conduct of the business of the company as well as the company, shall be deemed to be guilty of the offence mentioned above. It does not refer to each and every partner. It would only confine itself to the person "in-charge of and responsible to the company for conduct of the business" of the company. The position becomes clear from sub-section (2) of Section 141 of the Act. Those partners who may not be responsible for conduct of the business of the company, would be liable if the offence is committed with the consent or connivance of the said partner. If the intention was to make every director or partner liable, in that event, there was no necessity to include the word "director" under sub-section (2) of Section 141 of the Act. As referred to above, reading of sub-sections (1) and(2) of Section 141 makes it clear that while a partner in-charge and responsible to the company for its acts is ipso facto liable and deemed to be guilty to any other partner would only be liable and deemed to be guilty, if the offence is committed with his connivance or neglect.
8. It is true that all partners may under the civil law be liable but for purposes of offences under Section 138 of the Act, it is the individual partner who is liable. Section 141 of the Act would govern the question as to whether a partner has committed the offence or not.
9. Reverting back to the facts of the present case, it is clear that as against the petitioner, there was no avernment or allegation that he was responsible to the partnership for conduct of the business. It was not alleged that he was incharge of the partnership firm. There is not even a whisper that the offence was committed with the consent or connivance or any act which can be described as neglect on his part. In the absence of any such assertions there is really no occasion for permitting the complaint to continue. That indeed would not serve any purpose. In this regard reference with advantage may be made to two decisions which support the above finding. In the case of Harbhajan Singh Kalra v. Stat of Haryana, 1992(1) Recent Criminal Reports 169, a similar position had arisen. In paragraph 8 it was held :-
"A bare glance through the provisions of Section 141 (2) of the Act leaves no doubt that the complainant had to allege in the complaint against the company that the offence has been committed by its Directors, Managers etc. with their consent or connivance or neglect on their part. In all these three complaints, the complainant had not even raised a little finger against Harbhajan Singh accused. Thus, even if the entire allegations of the complainant contained in the complaint are to be taken to be true no case is made out under Section 138 of the Act."
Similarly, in the case of Smt.Sharda Agarwal v. Additional Chief Metropolitan Magistrate-II, Kanapur, 1992(3) Recent Criminal Reports 499 : (1992 Cri LJ 1442) the complaint did not state that Directors were in-charge and responsible to the company. It was held that they could not be held liable.
10. As it is the complaint which does not state that petitioner has committed any offence because there is no assertion that he was responsible to the company or was in-charge of the company. There is no act or negligence attributed to him. Therefore, qua the petitioner the complaint and the order summoning him as the accused deserves to be quashed.