Kerala High Court
Kalarikkandy Areef vs Dipin Thazha Kottentavida on 9 June, 2023
Author: Mary Joseph
Bench: Mary Joseph
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE MARY JOSEPH
FRIDAY, THE 9TH DAY OF JUNE 2023 / 19TH JYAISHTA, 1945
CRL.MC NO. 3393 OF 2021
AGAINST STC 1559/2020 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I,
VADAKARA
PETITIONERS/ACCUSED 12 & 13
1 KALARIKKANDY AREEF,
AGED 39 YEARS,
S/O.KUNHIMOOSSAN, BUSINESS, A1 JASEERA MANZIL,
MATHAMANGALAM P.O., KANNUR, PIN -670306.
2 KAKKANTAVIDA FAJARAH,
AGED 39 YEARS,
W/O.KALARIKKANDY AREEF,
RESIDING AT FAJ MAHAL,
KANNOTHUMCHAL, THANA, KANNUR-670012.
BY ADVS.SRI.ABDUL RAOOF PALLIPATH
SRI.K.R.AVINASH (KUNNATH)
SRI.M.K.SUMOD
SRI.PRAJIT RATNAKARAN
RESPONDENTS/DEFACTO COMPLAINANT & STATE
1 DIPIN THAZHA KOTTENTAVIDA,
AGED 33 YEARS,
S/O.CHANDRAN T.K., DEEPAM HOUSE, NUT STREET (PO),
VADAKARA, KOZHIKODE-673104.
2 THE STATE OF KERALA,
REPRESENTED BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, ERNAKULAM-682031.
R1 BY ADVS.SRI.U.K.DEVIDAS
SRI.K.K.ANILRAJ
R2 BY PUBLIC PROSECUTOR SRI.V.S.SREEJITH
THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 27.06.2022,
THE COURT ON 09.06.2023 PASSED THE FOLLOWING:
Crl.M.C. No. 3393 of 2021
-:2:-
MARY JOSEPH, J.
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Crl.M.C. No.3393 of 2021
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Dated this the 9th day of June, 2023
ORDER
The petition on hand is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'the Cr.P.C.') seeking to quash STC No.1559/2020 and all further proceedings initiated pursuant to that by Judicial First Class Magistrate Court-I, Vadakara (for short 'the court below') against the petitioners.
The averments in the petition are to the following effect:
2. Petitioners are accused numbers 12 and 13 in the above case and the offence alleged against them is one punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'the N.I.Act'). The allegation in the complaint was that 1st accused is a partnership firm represented by the 2 nd and 12th accused. The petitioner was made to believe that he will be inducted as a partner in the firm and thereby he had given to the 2nd accused a sum of Rs.1 Crore for the need and purpose of the Crl.M.C. No. 3393 of 2021 -:3:- 1st accused firm. The 1 st accused firm had given share of profits periodically through the 2nd accused but later failed to pay the same. Subsequently the firm was closed and on repeated demands, the 2nd accused for and on behalf of the firm and all other accused, acknowledged the debt and issued two post dated cheques dated 03.06.2020 and 08.06.2020 each for a sum of Rs.50,00,000/-. The above cheques were presented through the account of the petitioner but was dishonoured on 09.06.2020 for the reason "refer to drawer and not arranged for the account".
Thereupon the complaint was laid by the 1 st respondent against the firm and 12 other persons alleging that they are partners of the firm and are liable to be prosecuted under Section 138 N.I.Act. True copy of the complaint is produced alongwith the petition on hand as Annexure-1.
3. It is submitted by the petitioners that they have no connection with the disputed cheques allegedly issued by the 2 nd accused representing the 1st accused firm. According to him the cheque was not signed by any of the petitioners but only by the Crl.M.C. No. 3393 of 2021 -:4:- 2nd accused. True copy of the disputed cheque dated 08.06.2020 is produced alongwith the petition on hand as Annexure-2.
4. Prior to the filing of the prosecution on hand a lawyer notice was issued by the counsel for the 1 st respondent to the petitioners. True copy of which notice is produced alongwith the petition on hand as Annexure-3. A detailed reply has been issued to the said notice by the petitioners as well as the other accused, true copy of which is produced alongwith the petition on hand as Annexure-4.
5. The firm was started originally by one Ashraf Neroth and accused Nos.3 to 10 as well as the wife of the said Ashraf, in the name and style "Grand Perk". The business run into loss and then Mr.Ashraf approached the 1st petitioner and requested for an investment. The 1st petitioner paid a sum of Rs.18,50,000/- to the said Ashraf and others and accordingly a deed of reconstituted partnership was executed by which all other partners except Ashraf were retired. The petitioner herein and the wife of Mr.Ashraf, namely Smt. Jaseela Ashraf were inducted as partners, true copy of the reconstituted partnership deed is Crl.M.C. No. 3393 of 2021 -:5:- produced alongwith the petition on hand as Annexure-5. Nothing had happened after the execution of Annexure-5. Business was not resumed thereafter and thus Mr.Ashraf and his wife have allegedly cheated the petitioners.
6. After the reconstitution of the firm bank account was not started by the firm in its name and therefore cheque was also not issued in favour of the reconstituted firm. Petitioners have not signed any cheques for and on behalf of the firm. The 1 st respondent is a stooge of Mr.Ahraf and cases have been filed against the petitioners under his instructions. No amount has been received by the petitioners and they have no liability to be discharged to the 1st respondent since the disputed cheque was not signed by any of them. Therefore, the prosecution initiated under section 138 NI Act will not lie against them, is their contention. In the above circumstances that the petition on hand is moved invoking jurisdiction under Section 482 Cr.P.C. to quash the complaint and ST No.1559/2020 registered on its basis and pending before the court below and all proceedings initiated pursuant thereto.
Crl.M.C. No. 3393 of 2021-:6:-
7. The Contention of Sri.Abdul Raoof P., the learned counsel for the petitioners was that petitioners are accused Nos. 12 and 13 and they are alleged as partners of the firm. According to him the petitioners have no connection or business transaction whatsoever with the 1st respondent/complainant. The disputed cheque was not signed by any of them. As per the allegation in the complaint the disputed cheque was signed by the 2nd accused who is the Managing Partner of the firm that stands constituted originally. The petitioners were induced to invest in the business when it runs in loss and the 2 nd accused had siphoned off the money invested and cheated them. Business was not commenced in the name of the reconstituted firm and a bank account was not opened in its name. The petitioners being not responsible for the issuance of the disputed cheque, cannot be prosecuted under Section 138 N.I.Act.
8. The liability under Section 138 N.I.Act can only be fastened on a person who has signed the disputed cheque. The petitioners are not signatory to the disputed cheque and having been implicated in the case unnecessarily or under the instigation Crl.M.C. No. 3393 of 2021 -:7:- of the 2nd accused who actually had received the money, cannot be prosecuted alleging commission of an offence under Section 138 N.I.Act.
9. An averment that the petitioners herein were in charge of and responsible to the firm for the conduct of its business was not found incorporated in the complaint filed to launch the prosecution under Section 138 NI Act. Therefore they cannot be deemed to be guilty for an offence under Section 138 N.I Act with the aid of Section 141 N.I.Act. Material facts have been suppressed in Annexure-1 complaint. The disputed cheque was not issued towards discharge of a legally enforceable debt or consideration from any of the petitioners. Therefore the prosecution if let to proceed with the available materials proposed as evidence, is unlikely to result in or culminate successfully in a judgment finding the petitioners guilty and convicting and sentencing them. In the above circumstances that the application on hand is filed seeking to quash Annexure - 1 complaint, based on which ST No1559/2020 was registered Crl.M.C. No. 3393 of 2021 -:8:- and all further proceedings initiated by the court below pursuant to that.
10. The copy of the complaint is produced alongwith the petition on hand as Annexure-1. Relevant part of paragraphs 2, 4, 5, 7 and 9 are extracted hereunder :
" 2. The 1st accused is a partnership firm functioned at the address shown in the cause title above. The said firm is represented by its joint managing partners, the 2nd and 12th accused herein. Remaining accused are partners of the 1st accused firm."
4. The first accused is a partnership firm constituted to carry on business of readymade garments, cosmetics, hand bags and churidhar materials for ladies and kids at its address shown in the cause title. The business of the accused persons have commenced and carried on at Kannur Mall situated near Muneeswaran Kovil, Kannur based on the deed of partnership dated 07.05.2012. Thereafter the 1 st accused firm was re constituted as per deed of partnership dated 22-04-2016 by inducting accused number 11 to 13 as new partners and since then the 1st accused firm had continued Crl.M.C. No. 3393 of 2021 -:9:- business at that place based on the new reconstituted deed of partnership in which the accused 2 to 13 are partners."
5. xxxxxxxx the money stated above was accepted by the above stated accused persons from the complainant on behalf of the firm and its other partners who are arrayed as accused in this complaint. The first accused for and on behalf of the firm has given receipts for the money received and he has given an agreement to the complainant stating that the first accused firm is owing altogether an amount of rupees 1,00,00,000/- one Crore to the complainant.
7. It is submitted that the second and 12th accused are acting as the managing partners of the 1st accused firm as authorized by other partners who are arrayed as remaining accused in this complaint, with their knowledge consent and concurrence. As such the managing partners have done and carried out all the acts including the borrowing of money for the firm and execution and issuance of cheque on behalf of the first accused firm with the knowledge consent and concurrence of other partners. All the accused have knowledge, information and intimation about the money transaction between the complainant and the first accused carried Crl.M.C. No. 3393 of 2021 -:10:- out by the partners mentioned above. The above mentioned partners have borrowed the money mentioned above for and on behalf of the firm and other partners of the first accused firm, thus all the accused persons are jointly and severally liable to pay the money owed by the first accused firm to the complainant.
9. The second accused as the managing partner and as the person dealing with the day today affairs and the business of the 1st accused firm has executed and issued the cheques mentioned above to the complainant for and on behalf of the firm and all the accused persons. It is with the full knowledge connivance and concurrence of the all accused persons the second accused has executed and issued the above stated cheques on behalf of the 1st accused firm and on behalf of other partners of the firm to discharge the above stated legally enforceable debt owed by the 1st accused to the complainant."
11. As per the allegations in the extracts above, the disputed cheques two in numbers dated 03.06.2020 and 08.06.2020 were issued for a sum of Rs.50,00,000/- each which had drawn on the account maintained by the accused firm at Crl.M.C. No. 3393 of 2021 -:11:- State Bank of India, Kannur, Town Branch on behalf of the firm and other partners, to discharge the above stated legally enforceable debt owed by them to the complainant. It is further stated that all the accused persons have knowledge about the liability owed by the firm to the complainant, execution of the two cheques referred above and the issuance of those to the complainant by the 2nd accused to discharge the debt owed by the firm. It is further averred that the cheques were executed with the knowledge, consent and concurrence of all the accused and that all accused have knowledge about the issuance of those by the 2nd accused for and on behalf of the firm.
12. Section 141 N.I.Act being relevant in the context is extracted hereunder:
"141. 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 Crl.M.C. No. 3393 of 2021 -:12:- without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (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 against 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."
Object 1
13. Section 141 contemplates that when the company or firm is the principal offender as per a complaint, every person who at the time when the offence was allegedly 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 Crl.M.C. No. 3393 of 2021 -:13:- deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
14. Admittedly of the complainant the 2nd accused has accepted the money as the Managing Partner of the firm and has issued the disputed cheque towards the liability that exits to the complainant for and on behalf of the firm and all other partners. It appears that accused other than the 2nd accused was sought to be imposed with culpability on the basis of principles of vicarious liability as envisaged under Section 141 N.I.Act. If that be the intention of the complainant, the averment which ought to have been incorporated in the complaint was that the petitioners were in charge of and were responsible to the company for the conduct of the business of the company. Nowhere in the complaint, such an averment is found incorporated in the meaning and spirit contemplated under Section 141 N.I. Act. True that in certain paragraphs it is stated that the petitioners are responsible for the day to day affairs of the firm. But the averment in the complaint was that the business run by the partnership originally constituted was closed due to running of Crl.M.C. No. 3393 of 2021 -:14:- the business into loss and thereafter it was reconstituted with the petitioners herein as the partner and the Managing Partner respectively. Ist petitioner being the 12th accused was stated in the complaint as acting Managing Partner alongwith 2 nd accused. Accused No.13 is alleged as a partner indebted to the company as per the reconstituted partnership deed. It is alleged that the partnership firm was reconstituted on 22.04.2016 and the disputed cheques were issued in the year 2020, seeking repayment of Rs.50,00,000/- deposited by the complainant in the firm in the year 2016, the petitioners as the Managing Partner and the partner of the firm can be made liable. But as per the averment stand incorporated in the complaint, the firm was reconstituted and it did not commence the business after accepting the money from the complainant. As already stated, Annexure-1 does not incorporate an averment that the petitioners were in charge of and responsible to the firm for the conduct of its business. When the specific case of the complainant himself was that after reconstitution of the firm, it had not entered into any transaction as part of its business, the Crl.M.C. No. 3393 of 2021 -:15:- petitioners cannot be made liable, since at the relevant time of the llaeged commission of offence, they were not pleaded as in charge of and responsible for the business run by the firm.
15. One thing cannot be lost sight of on a reading of the complaint that it incorporates an allegation that the disputed cheques have been issued by the 2nd accused for and on behalf of the firm and petitioners as well as other partners. Since it was also not averred in the complaint that the offence has been committed by the firm and the 2 nd accused with the consent or connivance of or any neglect on the part of any Director, Manager or other officer of the company, they cannot also be deemed to be guilty of the offence under Section 138 N I Act as well as under Sub-Section (2) of Section 141 N I Act.
16. In view of the discussion hereinabove made, even if the petitioners are let to face the proposed trial in the prosecution on hand, in the total absence of the relevant pleadings discussed above in the complaint, whatever evidence be adduced, the prosecution could not culminate in their Crl.M.C. No. 3393 of 2021 -:16:- conviction. Therefore, interest of justice demands the prosecution on hand to be quashed.
In the result, Crl.M.C is allowed. Annexure 1 complaint, pending on the files of Judicial First Class Magistrate Court-I, Vadakara as ST No. 1559/2020 and further actions taken pursuant to its registration there stand quashed forthwith.
Sd/-
MARY JOSEPH JUDGE MJL Crl.M.C. No. 3393 of 2021 -:17:- APPENDIX OF CRL.MC 3393/2021 PETITIONERS' ANNEXURES:
ANNEXURE 1 TRUE COPY OF THE COMPLAINT IN ST NO.1559/2020 FILED BEFORE THE JFCM COURT-I, VADAKARA DATED 10.8.2020.
ANNEXURE 2 TRUE COPY OF THE CHEQUE DATED 8.6.2020. ANNEXURE 3 TRUE COPY OF THE LAWYER NOTICE DATED 18.6.2020 ANNEXURE 4 TRUE COPY OF THE REPLY LAWYER NOTICE DATED 7.7.2020.
ANNEXURE 5 TRUE COPY OF THE RECONSTITUTED PARTNERSHIP DEED DATED 22.04.2016.
RESPONDENTS' ANNEXURES: NIL
/TRUE COPY/
PA TO JUDGE