Andhra Pradesh High Court - Amravati
Praoddaturi Shibha Rani Shobha Rani, ... vs S.H.O., Dharmavaram Town P.S., ... on 24 January, 2020
Author: U. Durga Prasad Rao
Bench: U. Durga Prasad Rao
HON'BLE SRI JUSTICE U. DURGA PRASAD RAO
Criminal Petition No.11822 of 2014
ORDER:
In this petition filed under Section 482 of Cr.P.C, petitioners/A2 and A5 implore to quash the proceedings against them in C.C.No.44 of 2013 on the file of Judicial First Class Magistrate, Dharmavaram, Ananthapuram District, which was taken cognizance for the offences under Sections 403, 406, 409, 420 r/w.Sec.34 of IPC.
2. The private complaint filed by the 2nd respondent/complainant, was forwarded by the learned Judicial First Class Magistrate, Dharmavaram to the Police of Dharmavaram Town Police Station and it was registered as case in Crime No.97/2010 against A1 to A5 and investigated into. The allegations in the complaint are that the complainant is a Silk Saree Merchant at Dharmavaram, doing business under the name and style "Sree Kullaya Swamy Silk Kendra". All the accused are family members and they are partners in M/s.P. Neelakantam and Sons Cloth Merchants, Karimnagar. It is alleged that the accused used to purchase silk sarees on credit basis. On 27.10.2006, 16.02.2007 & 03.08.2008 A1 visited Dharmavaram and purchased silk sarees under Invoice Nos.66, 98 & 42 for Rs.3,96,750/-, Rs.1,89,950/- & Rs.1,30,000/- respectively on behalf of the partners and took the sarees promising that the bill amount would be paid within one month and thus induced the complainant for delivery of the goods. However, the accused failed to repay the UDPR,J Crl.P.No.11822 of 2014 2 amount as promised. The complainant personally went to Karimnagar on number of times and requested them for the repayment of the amount, but accused have postponed the payment on one pretext or other. The complainant recently came to know that the accused were trying to winding up their shop and they have transported stock in the shop to a different place. On knowing the said fact, the complainant immediately rushed to Karimnagar and requested the accused for payment of the amount but the accused failed to pay the amount. Thus the accused have, with a dishonest intention and by playing fraud upon the complainant, cheated him. The Police after investigation, laid charge sheet and learned Magistrate had taken cognizance of the same for the offences under Sections 403, 406, 409, 420 r/w.Sec.34 of IPC against A1 to A5.
Hence, the instant petition.
3. Though, notice was served on respondent No.2/complainant there is no representation. Heard learned counsel for petitioners.
4. Severely fulminating the trial Court's taking cognizance of the case, learned counsel for petitioners, would firstly argue that the trial Court committed a serious blunder in taking cognizance of the offences against the petitioners/A2 and A5 as they have absolutely nothing to do with the business conducted by A1. On the other hand, A1 alone was conducting the business and in fact even as per the complaint allegations it was A1 alone went to Dharmavaram and UDPR,J Crl.P.No.11822 of 2014 3 allegedly received sarees on credit basis from the complainant. The complainant has not filed any record showing that the petitioners are partners in M/s.P. Neelakantam and Sons Cloth Merchants, Karimnagar and that they were the incharge and responsible to the Firm for conduct of the business of the firm during the relevant period of offence. Learned counsel would submit that it is trite law that without establishing that the petitioners are active partners in the accused Firm the complainant cannot maintain criminal proceedings against them. On this principle, he place reliance on Katta Sujatha vs. Fertilizers and Chemicals Travencore Limited and another1
5. Secondly, learned counsel would argue that even assuming for argument sake that the petitioners are active partners in the partnership firm of the accused, nevertheless, the criminal complaint is not maintainable against the individual partners i.e., A1 to A5 without arraying partnership firm as one of the accused. In-expatiation he would submit, as per complaint averments, A1 took sarees on credit on behalf of their partnership firm viz., M/s.P. Neelakantam and Sons. In that view, if at all any offence is committed, that should be attributable at the first instance to the partnership firm and then only to the individual partners who are in active participation of the firm's business. Learned counsel strenuously argued that there can be no vicarious liability under criminal law. Therefore, leaving firm, the complainant cannot file 1 (2002) 7 SCC 655 UDPR,J Crl.P.No.11822 of 2014 4 criminal case against the individual partners even assuming that they have, in the course of the firm's business committed the offence. He would thus argue that the criminal case is not legally maintainable against the partners without showing the firm as party/accused. On this legal point, he relied upon Aneeta Hada vs. Godfather Travels and Tours (P) Limited2, N. Elangovan vs. C. Ganesan3 and Rangabashyam vs. Ramesh4.
6. Thirdly, he would argue, having regard to the nature of the allegations levelled in the complaint as well as in the charge sheet, the offences under Sections 403, 406 and 409 of IPC are not maintainable. Even the offence under Section 420 of IPC is also not sustainable because there is no allegation to the effect that since the inception, the accused had deceptive intention to evade payment of the price of the sarees taken on credit. On the other hand, the complaint allegations would show, it was a practice that the firm of the accused used to take sarees on credit basis from the complainant and such purchase on credit basis is not the first of its kind now. Hence, mere non-payment of amount cannot be termed as cheating. He, thus prayed to quash the proceedings.
7. The points for consideration are:
2
(2012) 5 SCC 661 3 2014(3) MWN (Cr.)DCC 177 (Mad.,) = (MANU/TN/2074/2014 = 2014(4) MLJ (Crl.) 517) 4 MANU/TN/4672/2019 UDPR,J Crl.P.No.11822 of 2014 5 (1) Whether criminal liability is attributable to juridical persons like companies, corporations and partnership firms etc., for the offences committed by their employees, and if so, whether criminal proceedings are maintainable against such employees without arraigning the legal entities as accused?
(2) Whether petitioners/A2 and A5 are the partners in the accused firm namely M/s. P. Neelakantam and Sons Cloth Merthants, Karimnagar and were in charge of and responsible for the conduct of the business of the said Firm during relevant period of offence and if not, whether criminal proceedings are maintainable against them?
(3) Whether the charge sheet mentioned offences under Sections 403, 406, 409 and 420 r/w.Sec.34 of IPC are legally sustainable even if the complaint allegations are un-controverted?
8. Point No.1:- The concept of corporate criminal liability traces its origin to the doctrine "Respondent superior" which was widely propagated by the American Courts whereby an agent's conduct was imputed to the Corporation. Respondent Superior means "let the master answer". In United States, this doctrine was also called as "Master-Servant Rule" recognized in both common law and civil law jurisdictions. In a broader scope, respondent superior is based upon the concept of vicarious liability. Thus, historically this doctrine was applied in Master-Servant and Employer-Employee relationships. When employee or a servant committed a civil wrong against the third party, the employer or master could be held liable when those acts were committed within the scope of the employment. This theory was also employed to Principal and Agent relationship. This was how the above principle was applied to Common law and Civil law cases.
UDPR,J Crl.P.No.11822 of 2014 6
9. Coming to the application of this doctrine to criminal offences, there arose some interdict. Criminal liability encompasses two elements - actus reus (guilty act) and mens rea (guilty mind). Though there was no difference of opinion that a company or other corporate body is liable to be prosecuted for criminal offences, however, the difficulty arose in the context of imposing sentence while holding the company guilty. A company being an artificial juristic person, cannot have the requisite mens rea. Hence, in the yore, it was opined that such juristic person cannot be prosecuted for the offence for which mandatory sentence was imprisonment and held that the mens rea of the alter ego of the company (the persons who guide the business of the company) cannot be attributable to the company.
10. However, as the time passed by, the corporate immunity gave way to corporate criminal liability. In 1909, the United States Supreme Court strongly propounded the criminal liability of a company in the case of New York Central and Hudson River Railroad Co. vs. United States (53 LED 613). It was held thus;
In this case we are to consider the criminal responsibility of a corporation for an act done while an authorized agent of the company is exercising the authority conferred upon him. It was admitted by the defendant at the trial that, at the time mentioned in the indictment, the general freight traffic manager and the assistant freight traffic manager were authorized to establish rates at which freight should be carried over the line of the New York Central & Hudson River Company, and were authorized to unite with other companies in the establishing, filing, and publishing of through rates, including the through rate or rates between New York and UDPR,J Crl.P.No.11822 of 2014 7 Detroit referred to in the indictment. xxxxxxxx.. Applying the principle governing civil liability, we go only a step farther in holding that the act of the agent, while exercising the authority delegated to him to make rates for transportation, may be controlled, in the interest of public policy, by imputing his act to his employer and imposing penalties upon the corporation for which he is acting in the premises. (emphasis supplied).
xxxxxx It is true that there are some crimes which, in their nature, cannot be committed by corporations. But there is a large class of offenses, of which rebating under the Federal statutes is one, wherein the crime consists in purposely doing the things prohibited by statute. In that class of crimes we see no good reason why corporations may not be held responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them. 2 Morawetz, Priv. Corp. 733; Green's Brice, Ultra Vires, 366. If it were not so, many offenses might go unpunished and acts be committed in violation of law where, as in the present case, the statute requires all persons, corporate or private, to refrain from certain practices, forbidden in the interest of public policy.
xxxxxx We see no valid objection in law, and every reason in public policy, why the corporation, which profits by the transaction, and can only act through its agents and officers, shall be held punishable by fine because of the knowledge and intent of its agents to whom it has intrusted authority to act in the subject-matter of making and fixing rates of transportation, and whose knowledge and purposes may well be attributed to the corporation for which the agents act. While the law should have regard to the rights of all, and to those of corporations no less than to those of individuals, it cannot shut its eyes to the fact that the great majority of business transactions in modern times are conducted through these bodies, and particularly that interstate commerce is almost entirely in their hands, and to give them immunity from all punishment because of the old and exploded doctrine that a corporation cannot commit a crime would virtually take away the only means of effectually controlling the subject-matter and correcting the abuses aimed at.
That is how Corporate Criminal liability was interpreted, introduced and executed.
UDPR,J Crl.P.No.11822 of 2014 8
11. In Indian context, the aspect of corporate criminal liability was dealt with by a three Judges bench of apex Court in Assistant Commissioner, Assessment-II, Bangalore and others vs. Velliappa Textiles Limited and others5. The bench was engaged with two prominent questions.
(i) Whether a company can be attributed with mens rea on the basis that those who work or are working for it have committed a crime and can be convicted in a criminal case?
(ii) Whether a company is liable for punishment of fine if the provision of law contemplates punishment by way of imprisonment only or a minimum period of punishment by imprisonment plus fine whether fine alone can be imposed? All the three judges have unanimously agreed on the first question that as per the current judicial thinking, the mens rea of the person in charge of the corporation i.e., the alter ego is liable to be extrapolated to the corporation, enabling even an artificial person to be prosecuted for such an offence. However, the bench differed in their opinion with regard to the second question stated supra. The majority of the judges have held that the 1st respondent company cannot be prosecuted for the offences with which it was charged since each of those offences required the imposition of a mandatory term of imprisonment coupled with a fine and leaves no choice to the Court to impose only fine. Since a juristic person cannot be sentenced with imprisonment, the majority view was that the company cannot be prosecuted. However, the minority view was that leaving the 5 (2003) 11 SCC 405 = MANU/SC/0721/2003 UDPR,J Crl.P.No.11822 of 2014 9 company from prosecution merely on the ground that it being juristic person cannot be sent to jail to undergo sentence would be shirking the judicial responsibility.
12. The above majority view however was overruled by a majority judgment in Standard Chartered Bank and others vs. Directorate of Enforcement and others6. In this judgment, on the criminal liability of a company, the majority view was expressed thus;
6. There is no dispute that a company is liable to be prosecuted and punished for criminal offences. Although there are earlier authorities to the effect that corporations cannot commit a crime, the generally accepted modern rule is that except for such crimes as a corporation is held incapable of committing by reason of the fact that they involve personal malicious intent, a corporation may be subject to indictment or other criminal process, although the criminal act is committed through its agents.
xxxxxxx
8. Therefore, as regards corporate criminal liability, there is no doubt that a corporation or company could be prosecuted for any offence punishable under law, whether it is coming under the strict liability or under absolute liability. Then, with regard to the question whether a company could be prosecuted for an offence for which mandatory sentence of imprisonment is provided, the majority view was expressed after referring various judgments of apex Court and several High Courts and by following the principle lex non cogit ad impossibilia means (the law compels no impossibility) as follows:
35. As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment 6 (2005) 4 SCC 530 = MANU/SC/0380/2005 UDPR,J Crl.P.No.11822 of 2014 10 and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company.
Such a discretion is to be read into the Section so far as the juristic person is concerned. Of course, the court cannot exercise the same discretion as regards a natural person. Then the court would not be passing the sentence in accordance with law. As regards company, the court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company. This appears to be the intention of the legislature and we find no difficulty in construing the statute in such a way. We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake series of activities that affect the life, liberty and property of the citizens. Large scale financial irregularities are done by various corporations. The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to a criminal law is essential to have a peaceful society with stable economy.
36. We hold that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which the punishment prescribed is mandatory imprisonment. We overrule the views expressed by the majority in Velliappa Textiles on this point and answer the reference accordingly. Various other contentions have been urged in all appeals, including this appeal, they be posted for hearing before appropriate bench.
13. Thus, the majority view is that if an offence is punishable exclusively with imprisonment, a company being a juristic person, the Court cannot impose that punishment. However, in other cases where an offence is punishable with imprisonment and fine/imprisonment or fine/with fine only, the Court can impose the punishment of fine against the company by following the doctrine of impossibility of performance (lex non cogit ad impossibilia).
UDPR,J Crl.P.No.11822 of 2014 11
14. The above judgment was followed in Iridium India Telecom Limited vs. Motorola Incorporated and others7 . On the criminal liability of corporations it was observed thus;
38. From the above it becomes evident that a corporation is virtually in the same position as any individual and may be convicted of common law as well as statutory offences including those requiring mens rea. The criminal liability of a corporation would arise when an offence is committed in relation to the business of the corporation by a person or body of persons in control of its affairs. In such circumstances, it would be necessary to ascertain that the degree and control of the person or body of persons is so intense that a corporation may be said to think and act through the person or the body of persons. The position of law on this issue in Canada is almost the same. Mens rea is attributed to corporations on the principle of `alter ego' of the company.
Xxxxx
40. These observations leave no manner of doubt that a company / corporation cannot escape liability for a criminal offence, merely because the punishment prescribed is that of imprisonment and fine. We are of the considered opinion that in view of the aforesaid Judgment of this Court, the conclusion reached by the High Court that the respondent could not have the necessary mens rea is clearly erroneous.
15. The above jurisprudential jurimetrics can be summed up thus;
The juridical or juristic persons like companies, corporations and partnership firms can be imputed with criminal liability even in respect of the offences involving mens rea, if their alter ego i.e., the employees or other persons in charge of the conduct and business of such juristic person commit such offences during the course of discharging their function and for the benefit of the company. Except where the punishment is mandatory imprisonment, in other cases 7 AIR 2011 SC 20 = MANU/SC/0928/2010 UDPR,J Crl.P.No.11822 of 2014 12 where the punishment is imprisonment and fine/imprisonment or fine/with fine only, the juristic person can be imposed fine by following the lex non cogit ad impossibilia.
16. Now, coming to the case on hand, in the instant case the allegations are that the accused have committed the offence on behalf of the firm i.e., M/s. P. Neelakantam and Sons. As per the above rulings, a firm though a juristic person, is liable for the offence along with its partners. However, in the instant case the firm has not been arrayed as an accused. The impact of such non inclusion of the firm is to be looked into.
17. In State of Madras vs. C.V. Parekh and others8, the apex Court observed thus:
3. Learned Counsel for the appellant, however, sought conviction of the two respondents on the basis of Section 10 of the Essential Commodities Act under which, if the person contravening an order made under Section 3 (which covers an order under the Iron and Steel Control Order, 1956) is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly.
It was urged that the two respondents were in charge of, and were responsible to, the company for the conduct of the business of the company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of Clause 5 of the Iron and Steel (Control) Order. This argument cannot be accepted, because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company Itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of Clause 5 of the Iron & Steel (Control) Order was made by the Company. In fact, the Company 8 AIR 1971 SC 447 = MANU/SC/0195/1970 UDPR,J Crl.P.No.11822 of 2014 13 was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is by the Company itself. Since, in this case, there is no evidence and no finding that the Company contravened Clause 5 of the Iron & Steel (Control) Order, the two respondents could not be held responsible.
18. In Aneeta Hada vs. Godfather Travels and Tours Private Limited9, the two Judge bench differed on the point whether a company has to be added as accused or not in a criminal case under Section 138 of N.I. Act. Hence, the matter was referred to three Judge bench. Later, the three Judge bench of apex Court in Aneeta Hada vs. Godfather Travels and Tours Private Limited10, held as follows:
43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself.
We say so on the basis of the ratio laid down in C.V. Parekh (9 supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal vs. State of Madhya Pradesh (1984 (4) SCC 352) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada vs. Indian Acrylic Limited (2000)(1) SCC 1) is overruled with the qualifier as stated in paragraph 37. The decision in U.P. Pollution Control Board vs. Modi Distillery ((1987) (3) SCC 684) has to be treated to be restricted to its own facts as has been explained by us hereinabove.
19. In N. Elangovan's case (3 supra), High Court of Madras held thus:
9
MANU/SC/2118/2008 = 2008 (13) SCC 703 10 MANU/SC/0335/2012 = 2012 (5) SCC 661 UDPR,J Crl.P.No.11822 of 2014 14
36. To put it precisely, without filing a complaint against the partnership firm, filing a complaint against the Respondent / Accused in his individual capacity is per se not maintainable in the eye of Law, as opined by this Court. Ordinarily, a complaint based on bald / vague averments can only be construed to be a case of utilising the process of Court in an otiose fashion. Also that, in the instant case, though Ex.P1 Cheque appears in the name of the Respondent / Accused as partner for 'Sri Karpaga Vinayagar Jewellery' yet the principal offender viz., Jewellery partnership firm was not arrayed as the principal Accused along with other Partners / Accused, if any. Only when the 'Sri Karpaga Vinayagar Jewellery' (Partnership Firm) was shown to have committed an offence under Section 138 of Negotiable Instruments Act, 1881, the Respondent / Accused can be roped in as an Accused in the capacity as partner of the said Jewellery Firm and then only he along with other partners, if any, can be liable for the dishonour of Ex.P1 Cheque in issue. Looking at from any angle, there are no tangible reasons advanced on behalf of the Appellant / Complainant before this Court so as to enable it to reverse the Judgment of acquittal passed by the trial Court in C.C.No. 1273 of 2003. Consequently, the Criminal Appeal fails.
20. In Rangabashyam's case (4 supra) High Court of Madras relying upon Aneeta Hada (10 supra) and Elangovan (3 supra), held as follows:
20. In view of the above discussion, this Court is not in agreement with the submissions made by the learned counsel for the respondent. In this case admittedly, the cheque was given in the name of the Partnership Firm and after the cheque was dishonored, no statutory notice was issued to the Partnership Firm, and the Partnership Firm was not made as an accused in the complaint. Only the partners have been shown as accused persons in this complaint. Such a complaint is unsustainable and not in accordance with Section 141 of the Negotiable Instruments Act and the law laid down by the Hon'ble Supreme Court.
21. In view of the above case law on the issue, I am an agreement with the argument of petitioners that the criminal case is not maintainable against the accused without adding the firm as one of the accused. This point is accordingly answered.
UDPR,J Crl.P.No.11822 of 2014 15
22. POINT NO.2: The argument is that A1 namely Prodduturi Aswin Kumar was alone conducting the business and petitioners/A2 and A5 have nothing to do with the business conducted by him and even as per the contentions of the complainant, A1 alone visited Dharmavaram and obtained sarees on credit basis. It is further contended that the complainant without producing any record showing that the petitioners/A2 and A5 are the partners of the firm and in charge of and responsible for conduct of its business, cannot institute proceedings against them.
23. In the light of the above arguments when the complaint is perused, it is averred thus:
2) "The complainant submits that A1 used to come over to Dharmavaram to receive the goods from the complainant on behalf of remaining partners and take the goods. Likewise, the complainant handed over the goods to the accused as mentioned in the invoice and goods is received by the accused personally.
The complainant submits that the accused represented that they are highly reputed persons and they are having lakhs of properties and they are making huge profits. The accused have also promised to pay the entire bill amount within one month and thereby induced the complainant for the delivery of the goods."
24. Thus, from the above, it was A1 who allegedly used to go to Dharmavaram and obtain sarees from the complainant on credit basis on behalf of the firm. In the complaint, there is no whisper that the petitioners are the partners of the firm and they were actively participating in the business of the firm. Most importantly the complaint has not disclosed whether the petitioners personally approached the complainant and received the sarees on credit basis.
UDPR,J Crl.P.No.11822 of 2014 16 In the absence of such crucial facts it is legally impermissible to continue the criminal proceedings against the petitioners.
25. In similar circumstances, while quashing the proceedings against the appellant the apex Court in Katta Sujatha's case (1 supra), held thus:
However, one thing is clear that the appellant was in no way involved in any of the transactions referred to in the complaint and it was not stated that she was in charge of the business and was responsible for the conduct of the business of the firm in terms of Section 141 of the Act nor was there any other allegation made against the appellant that she had connived with any other partner in the matter of issue of cheque.
26. Speaking on the criminal liability of partners of the firm, the apex Court in Sham Sundar and others vs. State of Haryana11, observed:
9. It is, therefore, necessary to add an emphatic note of caution in this regard. More often it is common that some of the partners of a firm may not even be knowing of what is going on day to day in the firm.
There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners.
27. In Gattamaneni Prameela and others vs. Avula Hymavathi and others12, it is held thus:
6. xxxxxx Further, as regards the legal liability of the partners, it is true that under the Indian Partnership Act, "firm" or "partnership" is not a legal entity, but merely an association of persons agreed to carry on business. It is only a collective name for individuals carrying on business in partnership. The essential characteristic of a firm is, that each partner is a representative of other partner. Each of the partners is an agent as well as 11 MANU/SC/0494/1989 = 1989 CriLJ 2201 12 MANU/AP/0177/1997 = 1997(2) ALD (Cri) 1 UDPR,J Crl.P.No.11822 of 2014 17 principal. He is an agent insofar as he can bind the other partners by his acts within the scope of the partnership agreement. He is principal to the extent that he is bound by the acts of other partners. In fact, every partner is liable for an "act of the firm".
"Act of a firm" has been defined to mean "any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm." This is the civil liability of the firm and its partners. But, in the instant case, we are concerned with criminal liability under penal provisions and not civil liability of the partners. There is no vicarious liability in criminal law unless the statute takes that also within its fold. There is nothing in the Partnership Act making all the partners of a firm liable for the criminal offences whether they do business or not. At best, the partners who are incharge of the business of the firm when the alleged offence was committed, may be liable for that offence and not the other partners who are no way connected with the business of the firm.
28. In Vunna Visali vs. State of A.P and others13, the High Court of A.P was dealing with the question whether a partner who is not responsible for day to day business of a partnership firm can be prosecuted for the offences under Sections 406, 420 and 477-A of IPC alleged to have been committed by the firm. Relying upon Avula Hymavathi (12 supra) and observing that there was no whisper in the complaint and Sec.161 Cr.P.C statements and in the charge sheet about the involvement of the petitioner/A2 in the day to day business of the firm, it was held that the petitioner cannot be prosecuted for the offences under Sections 406, 420 and 477-A of IPC.
29. In view of above discussion, the criminal proceedings are not maintainable against the petitioners/A2 and A5. 13
2001(1) ALD (Crl.) 89 = MANU/AP/0979/2001 UDPR,J Crl.P.No.11822 of 2014 18
30. Point No.3: Now, coming to the charged offences, Section 403 of IPC is concerned, it is about the dishonest misappropriation of a property. Whoever dishonestly misappropriates or converts to his own use any movable property shall be liable under this section. To constitute this offence, a movable property must have come into the possession of the accused innocently in the first instance which he misappropriated or converted to his own use dishonestly. In the instant case, the allegation being non repayment of the value of sarees taken on credit basis by the accused, the question of dishonest misappropriation does not arise.
31. The offence under Section 406 of IPC relates to punishment for criminal breach of trust. Whoever being in any manner entrusted with the property or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses, or dispossess of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged or of any legal contract, express or implied or wilfully suffers any other person so to do commits criminal breach of trust.
32. It should be noted that as per the allegations in the complaint, the sarees were sold to A1 on credit basis but they were not simply entrusted nor the accused obtained dominion over the property. The apex Court in Veer Prakash Sharma vs. Anil Kumar Agarwal and UDPR,J Crl.P.No.11822 of 2014 19 others14, has held that mere non-payment or under payment of price of the goods by itself does not amount to commission of an offence of cheating or criminal breach of trust. So, this offence cannot be attributable to accused. On the same analogy, Sec.409 of IPC is also not attributable to accused because the property was not obtained in the capacity of a public servant o a banker, merchant, factor, broker, attorney or agent to commit criminal breach of trust.
33. Then the offence under Section 420 of IPC is concerned, the same is also not maintainable because except alleging that the accused having promised to pay the entire bill amount within one month and failed to do so and they had no intention to repay the amount, no specific allegation is made to the effect that since inception of the purchase, the accused had no intention to repay the amount. On the other hand, the complaint allegations would reveal that the accused generally used to telephone to the complainant that they would come to Dharmavaram for purchasing of silk sarees and accordingly they used to purchase sarees on credit basis. Hence, it would appear, purchase on credit basis was in vogue between them. In that context, it cannot be readily inferred that since beginning i.e., on 30.05.2007 itself, the accused had had a deceitful intention to cheat the complainant. Mere non-payment of the purchase amount subsequently would not constitute an offence under Section 420 of IPC. Above all, as already stated supra, there is no specific allegation 14 MANU/SC/7743/2007 = 2007 CriLJ 3735 UDPR,J Crl.P.No.11822 of 2014 20 in the complaint that petitioners/A2 and A5 are the active partners and they also went to Dharmavaram along with A1 and purchased sarees on credit basis. Hence, none of the offences are attributable to petitioners/A2 and A5.
34. In the result, in view of the above findings, this Criminal Petition is allowed and the proceedings in C.C.No.44/2013 on the file Judicial First Class of Magistrate, Dharmavaram are quashed so far as the petitioners/A2 and A5 are concerned.
As a sequel, Interlocutory Applications pending if any, shall stand closed.
_______________________ U. DURGA PRASAD RAO 24.01.2020 MS UDPR,J Crl.P.No.11822 of 2014 21