2020 (9) TMI 1314 - HC - Indian Laws

Non-working partner cannot be held liable under Section 138 without specific role in cheque issuance

Ajay Rampal Sarda Versus Pankaj

Bombay HC allowed application to quash proceedings under Section 138 NI Act against non-working partner. Court held that mere partnership status ... Dishonour of Cheque - non-registered partnership-deed - vicarious liability of applicant, not a working partner - HELD THAT:- It is noticed that the complaint does not reveal specific averment against the present applicant as to how he was responsible and what particular act he has committed. Admittedly, the partnership-deed is not registered under the provisions of section 69(2) of the Partnership Act. Clause (9) of the partnership-deed makes it crystal clear that the applicant is not a working partner. In the instant case also, there are no specific averments in the complaint with regard to the fact that the applicant was a working partner. On the contrary, clause (9) of the Deed categorically indicates that the applicant was not a working partner. In the case in hand also, there are no specific averments in the complaint u/s.141 that at the time the offence was committed, the person accused was in charge of the conduct of business of the firm and responsible for issuance of the disputed cheque. Merely because the applicant was the partner in the partnership-firm is not sufficient to make him liable for offence u/s 141 of the N.I. Act, particularly when no specific role is attributed to the applicant in the complaint. The purpose of Section 141 of the NI Act appears to be that a person who merely appears to be a director of a company or partner of a partnership firm, cannot be fastened with criminal liability for an offence under section 138 of the NI Act unless it is shown that he was involved in day-today affairs of the company/partnership firm and was responsible to the company/partnership firm. So far as the issuance of process order is concerned, it is not a well reasoned order and no prima facie case is made out by the complainant against the present applicant and therefore it needs to be quashed and set aside. There are no specific and sufficient allegations against the applicant that he was looking after and responsible for day-to-day affairs of the firm. The allegations made in the complaint even if are taken at their face value and accepted in their entirety do not prima facie constitute any offence against the present applicant i.e. accused no. 2. In that view of the matter, contention of the applicant as regards continuing the case before the learned JMFC would be an abuse of the process of court, is liable to be accepted - Application allowed. Issues Involved:1. Quashing of Criminal Complaint under Section 138 of the Negotiable Instruments Act.2. Role and liability of a partner in a partnership firm under Section 141 of the NI Act.3. Specificity of allegations required in the complaint against a partner.4. Applicability of Section 482 of the CrPC for quashing proceedings.Detailed Analysis:1. Quashing of Criminal Complaint under Section 138 of the Negotiable Instruments Act:The applicant sought the quashing of a criminal complaint filed under Section 138 of the NI Act, which pertains to the dishonor of a cheque. The complaint alleged that the accused, along with other partners, failed to honor a cheque issued for Rs. 2 lakhs. The applicant contended that the complaint did not make out a prima facie case against them as they did not sign the cheque in question.2. Role and Liability of a Partner in a Partnership Firm under Section 141 of the NI Act:The applicant argued that they were merely a sleeping partner and not involved in the day-to-day affairs of the firm, as evidenced by the partnership deed. The deed indicated that the applicant was not a working partner and did not have responsibilities related to the firm's business operations. The court noted that the partnership deed was not registered, and there was no evidence to suggest the applicant was responsible for the firm's conduct at the time of the alleged offence.3. Specificity of Allegations Required in the Complaint Against a Partner:The court emphasized the necessity of specific averments in the complaint to establish the liability of a partner under Section 141 of the NI Act. The complaint failed to specify how the applicant was responsible for the firm's business or the issuance of the cheque. Citing precedents, the court reiterated that mere designation as a partner does not automatically entail liability unless it is shown that the partner was in charge of and responsible for the firm's conduct at the relevant time.4. Applicability of Section 482 of the CrPC for Quashing Proceedings:The court considered the invocation of Section 482 of the CrPC, which allows for the quashing of proceedings to prevent abuse of the process of the court. Given the absence of specific allegations against the applicant and the lack of evidence indicating their involvement in the firm's business, the court found the continuation of proceedings against the applicant to be an abuse of the court's process. Consequently, the court quashed the complaint and the order of issuance of process against the applicant.Conclusion:The application was allowed, and the criminal complaint, along with the order of issuance of process against the applicant, was quashed and set aside. The court concluded that there were no specific and sufficient allegations against the applicant to hold them liable under Section 138 read with Section 141 of the NI Act. The decision highlighted the importance of detailed and specific allegations in complaints involving partnership firms to establish the liability of individual partners.