2023 (10) TMI 487 - SC - Indian Laws

Appeal Granted: Complaint Quashed Against Accused No. 4 Due to Insufficient Details Under NI Act Section 141(1).

Siby Thomas Versus M/s. Somany Ceramics Ltd.

The SC allowed the appeal, setting aside the impugned order and quashing the criminal complaint against the appellant, accused No. 4, in the matter ... Dishonour of Cheque - retirement from the partnership firm prior to the issuance of the cheque in question - vicarious liability under Section 141 (1) of the N.I. Act - HELD THAT:- In the light of the dictum laid down in Ashok Shewakramani’s case [2023 (8) TMI 599 - SUPREME COURT], it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. A bare perusal of Section 141(1) of the NI Act, would reveal that only that 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 alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. The averments in the complaint filed by the respondent are not sufficient to satisfy the mandatory requirements under Section 141(1) of the NI Act. Since the averments in the complaint are insufficient to attract the provisions under Section 141(1) of the NI Act, to create vicarious liability upon the appellant, he is entitled to succeed in this appeal. The appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482 of Cr.PC. Appeal allowed. Issues Involved:1. Whether the complaint against the appellant under Section 138 read with Section 141 of the NI Act is maintainable given his resignation from the partnership firm before the issuance of the cheque.2. Whether the complaint contains the mandatory averments required under Section 141(1) of the NI Act to prosecute the appellant.Issue 1: Resignation from Partnership FirmThe appellant contended that he had resigned from the partnership firm on 28.05.2013, whereas the cheque in question was issued on 21.08.2015. The High Court held that the appellant's retirement from the partnership firm prior to the issuance of the cheque is a matter of evidence, which the appellant would have to prove. Therefore, the complaint could not be quashed at the initial stage under Section 482 Cr.PC.Issue 2: Mandatory Averments under Section 141(1) of the NI ActThe appellant argued that the complaint lacked the mandatory averments required under Section 141(1) of the NI Act, which specify his role in the day-to-day affairs of the partnership firm. The complaint merely stated that the accused Nos. 2 to 6, being partners, are responsible for the day-to-day conduct and business of the firm, without specifying the appellant's role. The Supreme Court noted that these averments are insufficient to prosecute the appellant under Section 138 of the NI Act.The Court referred to the decisions in *Anita Malhotra v. Apparel Export Promotion Council & Anr.* and *Ashok Shewakramani & Ors. v. State of Andhra Pradesh & Anr.*, which emphasize that specific averments regarding the accused's role in the conduct of the business are necessary. The Court also noted that the respondent misread the decision in *S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan*, which requires specific averments to make the accused vicariously liable.The Court concluded that the complaint did not contain sufficient averments to satisfy the mandatory requirements under Section 141(1) of the NI Act. Therefore, the appellant is entitled to succeed in the appeal, and the criminal complaint against him is quashed.Conclusion:The Supreme Court allowed the appeal, set aside the impugned order, and quashed the criminal complaint against the appellant, who is accused No. 4, in the matter pending before Ld. CJ (JD) JMIC, Bahadurgarh. There will be no order as to costs.