TaxTMI 
TaxTMI 
2024 (3) TMI 398
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....pondent no. 2, i.e., M/s Sesame Foods Pvt. Ltd., are as under: i. The complaint in the present case was filed against four accused persons, i.e., M/s Shree Ram Developers (accused no. 1), Mr. Ashok Agarwal (accused no. 2), Mr. Shankar Lal Gupta (accused no. 3) and the petitioner (accused no. 4). Accused no. 1 firm was stated to be a partnership concern involved in the business of construction and development and the accused persons were stated to be partners in the said firm. ii. The accused firm and the respondent no. 2 entered into a 'Development Agreement' dated 16.03.2018. Business between the two companies was conducted as per the agreed upon terms and thereafter, the accused firm was supposed to clear the total dues of Rs. 3,02,00,000/- (Rupees Three Crore and Two Lakh). iii. Towards discharge of the aforesaid liability, the accused firm issued various cheques in favour of the respondent no. 2, including cheque no. 051067 dated 27.07.2018 for a sum of Rs. 39,21,652/- and cheque no. 051102 dated 05.08.2018 for a sum of Rs. 34,90,696/-. iv. The said cheques were presented at State Bank of India, Connaught Place and was returned unpaid on the ....
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....itioner. 6. Learned counsel for the petitioner placed reliance on the following judgments: i. Siby Thomas v. Somany Ceramics Ltd., (2024) 1 SCC 348 ii. Sunita Palita and Others v. Panchami Stone Quarry, (2022) 10 SCC 152 7. Per contra, learned counsel for respondent no. 2, i.e., M/s Sesame Foods Pvt. Ltd. submitted that petitioner's plea to the Court under Section 482 of the CrPC is liable to be rejected as the petition raises disputed questions of facts which cannot be adjudicated without leading evidence in the trial. It is further submitted that the petitioner does not dispute the fact that she was a partner of the firm at the relevant time when the transaction took place and as per provisions of Section 141 of the NI Act, an accused can be summoned for vicarious liability of the principal entity, 8. Learned counsel for respondent no. 2, has placed on record, alongwith the reply to the present petition, copies of Income Tax Returns of the year 2015-2016 filed by the accused partnership firm, i.e., M/s Shreeram Developers to demonstrate that the same were filed under signatures of the petitioner, in her capacity as a partner. It is submitted that the pe....
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....t" dated 16.03.2018 to develop the land owned by the Complainant. The said "Development Agreement" was executed through Sh. Ashok Aggarwal, Partner and all the terms and conditions were incorporated in the said agreement." 13. It is an admitted fact that respondent no. 2 had previously also filed a complaint, i.e., CC No. 12459/2018 against the accused partnership firm, and other two partners, without arraying the present petitioner as an accused. The relevant paras of the said complaint are as under: "2. That the Accused No. 1, M/s Shree Ram Developers is a Partnership concerned and is into the business of construction and development having its registered office at: 1, Dayal Nagar, Gopalpura Byepass, Jaipur. The Accused Nos. rand 3 are the Partners in the Accused No. 1 Partnership concerned and are responsible for the day to day affairs of the Accused No. 1 and are incharge and in control and management of the Accused No. 1. 3. That the Accused approached the Complainant and entered into a "Development Agreement" dated 16.03.2018 to develop the land owned by the Complainant. The said "Development Agreement" was executed through Sh. Ashok Aggarwal, Partner and....
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....had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactic, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed. 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circ....
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....ey were not in charge of the affairs of the company or the firm. 58.3. Needless to say, the final judgment and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal. 58.4. If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. ....
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....not signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the abovementioned cases that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. This is a basic requirement. There is no deemed liability of such Directors. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against the Director. That is why this Court in SMS Pharma (1) [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri) 1975] observed that the question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Sections 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 of the Code which recognise the Magistrate's discretion to reject the complaint at the threshold if he finds that there is no sufficient ground for procee....
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.... rule that a Director of a company is in charge of its everyday affairs. What follows from this is that it cannot be concluded from SMS Pharma (1) [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri) 1975] that the basic requirement stated therein is sufficient in all cases and whenever such an averment is there, the High Court must dismiss the petition filed praying for quashing the process. It must be remembered that the core of a criminal case are its facts and in factual matters there are no fixed formulae required to be followed by a court unless it is dealing with an entirely procedural matter. We do not want to discuss "the doctrine of indoor management" on which submissions have been advanced. Suffice it to say, that just as the complainant is entitled to presume in view of provisions of the Companies Act that the Director was concerned with the issuance of the cheque, the Director is entitled to contend that he was not concerned with the issuance of cheque for a variety of reasons. It is for the High Court to consider these submissions. The High Court may in a given case on an overall reading of a complaint and having come across some unimpeachabl....
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....vant time. In the circumstances, we are of the opinion that the matter deserves to be remitted to the High Court for fresh hearing. However, we are inclined to confirm the order passed by the High Court quashing the process as against Shobha Mehta. Shobha Mehta is stated to be an old lady who is over 70 years of age. Considering this fact and on an overall reading of the complaint in the peculiar facts and circumstances of the case, we feel that making her stand the trial would be an abuse of process of court. It is however, necessary for the High Court to consider the cases of other Directors in light of the decisions considered by us and the conclusions drawn by us in this judgment." (emphasis supplied) 17. In the present case as noted hereinabove, the allegation with respect to the present petitioner is to the extent that she alongwith with other accused in the said complaint were partners of the partnership firm and "are responsible for the day to day affairs of the Accused No. 1 and are incharge and in control and management of the Accused No. 1". A further reading of the complaint reflects that the subject matter of the same was a Development Agreement dated 16.03....
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....there is no privity of contract between the petitioner & the respondent No. 2/complainant qua the alleged agreement dated 16.08.2013, the genesis of the complaint. In response to the aforesaid contentions, in the reply filed on behalf of respondent no. 2, it is stated as under: "4. The contents of Para No. 4 of the Petition are a matter of record and needs no reply. **** **** *** C. The contents of Para No. C of the Petition are wrong and hence vehemently denied. It is submitted that the Petitioner cannot be selective with the roles and responsibilities which come with the position of 'partner' in the partnership firm and upon ascending to that position the petitioner has to honor it. It is further denied that the answering Respondent is impleading the Petitioner wrongfully and just to create undue pressure on the petitioner and her family. It is submitted in this regard that the issue with the name of the Petitioner is merely a typographical error which is same as the Petitioner mentioning in the present petition-' ..... still knowing the fact the Respondent No. 2 wrongly impleaded the petitioner as accused no. 4 in the case, just to creat....