Section 141 liability and mandatory Section 202 inquiry shape process against partner-accused in cheque dishonour proceedings

For liability of non-signatory partners under Section 141 of the Negotiable Instruments Act, the complaint must contain factual averments showing that they were in charge of and responsible for the conduct of business at the relevant time; no special formula is required, but a bare reference to partnership is insufficient. Reading the complaint as a whole, the averments that the partners were handling day-to-day business and were responsible for each business conduct were treated as adequate to proceed. Where accused persons reside outside the Magistrate's territorial jurisdiction, an inquiry under Section 202 of the Code of Criminal Procedure is mandatory before issuing process; as that inquiry was not undertaken, the process order was set aside and the matter remanded for fresh inquiry.

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Issues: (i) Whether the complaint contained sufficient averments to arraign non-signatory partners as accused under Section 141 of the Negotiable Instruments Act, 1881; (ii) Whether an inquiry under Section 202 of the Code of Criminal Procedure, 1973 was mandatory before issuing process against accused persons residing beyond the territorial jurisdiction of the Magistrate.

Issue (i): Whether the complaint contained sufficient averments to arraign non-signatory partners as accused under Section 141 of the Negotiable Instruments Act, 1881.

Analysis: Liability under Section 141 does not arise merely because a person is a partner or director. The complaint must disclose facts showing that the person was in charge of and responsible for the conduct of the business at the relevant time, though no particular formula or magic words are required. Reading the complaint as a whole, the averment that all accused partners were looking after the day-to-day business affairs and were responsible for each business conduct at the relevant time was treated as an adequate factual assertion for proceeding against the petitioners.

Conclusion: The averments were sufficient to proceed against the petitioners under Section 141 of the Negotiable Instruments Act, 1881.

Issue (ii): Whether an inquiry under Section 202 of the Code of Criminal Procedure, 1973 was mandatory before issuing process against accused persons residing beyond the territorial jurisdiction of the Magistrate.

Analysis: Where the accused resides outside the territorial jurisdiction of the Magistrate, an inquiry under Section 202 is required before process is issued. Such inquiry may be conducted by taking evidence on affidavit or, in suitable cases, by examining documents, but the Magistrate must still undertake the inquiry and decide whether sufficient grounds exist to proceed. As no such inquiry was undertaken, the issuance of process could not be sustained.

Conclusion: The process order was set aside and the matter was remanded for fresh consideration from the stage of inquiry under Section 202 of the Code of Criminal Procedure, 1973.

Final Conclusion: The complaint was not quashed, but the earlier process order was annulled and the matter was sent back for a fresh inquiry before the trial court.

Ratio Decidendi: For proceedings under Section 141 of the Negotiable Instruments Act, 1881, the complaint must contain factual averments showing that the accused was in charge of and responsible for the conduct of business, and where the accused resides outside jurisdiction, an inquiry under Section 202 of the Code of Criminal Procedure, 1973 is mandatory before process is issued.

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