Punjab-Haryana High Court
Raj Kumar Mangla vs Indo Lowenbrau Breweries Ltd. on 27 May, 1997
Equivalent citations: [2001]103COMPCAS787(P&H), 1998CRILJ332
Author: V. S. Aggarwal
Bench: V.S. Aggarwal
JUDGMENT V. S. Aggarwal, J.
1. Indo Lowenbrau Breweries Ltd. (hereinafter described as "the respondent") filed a complaint against the petitioner and another P-2 with respect to the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act"). It was contended that Rohtas Wine Traders is a partnership concern, the petitioner, Raj Kumar Mangla and Kishan Dev, are its partners. In the year 1991-92, the partnership concern had business dealings with the respondent. On March 31, 1992, a sum of Rs. 1,19,650 was standing debited in the account of the partnership concern. Acting on behalf of the other partner and the firm, Kishan Dev issued a cheque for the said amount drawn on the Bank of India, Gurgaon branch. The cheque was presented with the banker, i.e., State Bank of India for collection of the amount. It was dishonoured due to insufficiency of funds. The petitioner and the others were informed to withhold the cheque for some time. At the instructions of the accused, the respondent again presented the cheque but it was dishonoured. The cheque was presented again on September 28, 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.
2. The learned Judicial Magistrate at Faridabad recorded the preliminary evidence and thereupon vide order dated February 28, 1994, summoned the petitioner and others as accused.
3. The 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.
4. 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 the petitioner was responsible to the firm and in terms of Section 141 of the Negotiable Instruments Act, he was liable for the act of the other partners.
5. 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 the firm Rohtas Wine Traders was having financial business dealings with the respondent. The amount as such was due. The partner is bound by the acts and omissions 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.
6. 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 of 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 the 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.
7. Under Chapter XVII of the Negotiable Instruments Act, by virtue of the 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 :
'Offences 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 due 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 it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or 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 ag'ainst 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 the firm, the partner will be taken to mean a director.
8. Sub-section (1) of Section 141 of the Act clearly provides that every person who was in charge of and 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 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. This 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 of and responsible to the company for its acts is ipso facto liable and deemed to be guilty any other partner would only be liable and deemed to be guilty, if the offence is committed with his connivance or neglect.
9. 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.
10. Reverting back to the facts of the present case, it is clear that as against the petitioner, there was no averment or allegation that he was responsible to the partnership for conduct of the business. It was not alleged that he was in charge 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. State of Haryana [1993] 76 Comp Cas 371 (P & H) ; [1992] 1 Recent CR 169 (P & H) a similar position had arisen. In paragraph 8 it was held (page 375) :
"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."
11. Similarly, in the case of Sharda Agarwal (Smt.) v. Additional Chief Metropolitan Magistrate [1993] 78 Comp Cas 123 (All); [1993] 3 Recent CR 499 the complaint did not state that the directors were in charge of and responsible to the company. It was held that they could not be held liable.
12. As it is the complaint does not state that the 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 deserve to be quashed.
13. For these reasons, the petition is allowed qua the petitioner. The complaint and summoning order issued against the petitioner are quashed. It may continue against the other named accused.