IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.02.2010 CORAM: THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN Crl.A.Nos.1440 and 1441/2002 M/s.K.G.Denim Limited (Garments Business Division) Coimbatore by its Law Officer R.Srinivasan Appellant in both Appeals [Complainant] Vs M/s.J.P.Knito Impex, Tiruppur by its Partner Vijayakumar Respondent in both Appeals Accused Prayer:- These Criminal Appeals 1440 and 1441 of 2002 are filed against the order dated 13.8.2002 passed in STC.Nos.535 and 536/1999 respectively by the learned Judicial Magistrate III, Coimbatore, acquitting the Respondent. For Appellant : Mr.G.Saravanan for Mr.D.Saravanan For Respondent : Mr.G.M.Ramasubramaniam, SC for M/s. Ram and Ram JUDGEMENT These Criminal Appeals are filed against the order dated 13.8.2002 passed in STC.Nos.535 and 536/1999 by the learned Judicial Magistrate III, Coimbatore, acquitting the Respondent. 2. The Appellant Company had placed a purchase order for the supply of banian materials on 17.9.1997 with Respondent Company and in respect the same, the Appellant paid a sum of Rs.20,000/- by way of a cheque dated 29.9.1997 and further a sum of Rs.1,85,000/- by way of a cheque dated 4.11.1997, in all totaling Rs.2,05,000/- as advance. However, the Respondent supplied the materials only for the value of Rs.39,600/- and as the Respondent was not able to supply the materials further, the Respondent returned the balance sum of Rs.1,65,400/- by way of two cheques dated 10.7.1998 for Rs.80,000/- and dated 20.7.1998 for Rs.85,400/- and the said two cheques were sent by the Respondent Company with a covering letter dated 29.6.1998 signed by its one of the Partners D.Vijay Kumar. When the Appellant had presented the said two cheques for encashment with their bankers, the said cheques were dishonoured on 12.8.1998 for the reason "Exceeds Arrangement". https://hcservices.ecourts.gov.in/hcservices/ Immediately on 21.8.1998, the Appellant issued a statutory notice calling upon the Respondent to pay the sum due under the said cheques and on 10.9.1998, the Respondent Company sent a reply, admitting their liability, but expressed their inability to clear the same and the said letter was also signed by the said D.Vijay Kumar in the capacity of the partner of the Respondent Company. Hence, the Appellant had filed the complaints against the Respondent for the offence under Section 138 of the Negotiable Instruments Act. 3. The cases were taken on file in STC.Nos.535 and 536/1999 by the learned Judicial Magistrate III, Coimbatore and necessary charges were framed. In order to substantiate the charges levelled against the accused, the Appellant examined as many as three witnesses (PW.1 to PW.3} and also relied on Exs.P1 to P6. 4. On completion of the evidence, the accused was questioned under Section 313 Cr.PC as to the incriminating circumstances found in the evidence of prosecution witnesses and the accused denied the same as totally false. 5. The court below, after hearing the arguments advanced on either side and looking into the materials available on record, found the accused/Respondent not guilty and acquitted the Respondent, which is challenged in this Criminal Appeal. 6. This court heard the submissions of the learned counsel on either side and also perused the material records placed. 7. Mr.G.Saravanan, the learned senior counsel for the Appellant contended that one Vijayakumar always represented the Respondent firm and has issued reply acknowledging the fact of dishonour of the cheques expressing inability of the Company to honour the commitment and in such a factual matrix, since the cheques were given towards the liability incurred by the accused partnership firm, the said Vijayakumar representing the accused firm as partner would be liable for the dishonour of the cheques. He would submit that though the accused has not signed the cheque and notice has not been issued to him personally, the said partner is vicariously liable and there is no contemplation of notice to be issued in respect of a partner whose liability is based on Section 141 of the Negotiable Instruments Act. 8. The learned counsel for the Appellant relied on the decision of the Kerala High Court rendered in the case of M/s.Target Overseas Exports Pvt Limited and others Vs. A.M.Iqbal and another [2005-Crl.LJ- 1931] in support of his contention that the language of Section 141 of the Negotiable Instruments Act does not indicate that such persons who face indictment under Section 141 of the said Act are entitled to notice under proviso (b) to Section 138 of the said Act. The learned counsel also placed reliance on the decision of the Gujarat High Court rendered in the case of M.S.Raghunathan Vs. Rajesh Shah and Co. and another [2005-Cr.LJ-2077] and submitted that notice served on the accused Company by the complainant is sufficient and the individual notice to the partner of the firm is not stipulated under Section 141 https://hcservices.ecourts.gov.in/hcservices/ of the said Act. 9. On the other hand, Mr.G.M.Ramasubramaniam, the learned senior counsel for the Respondent relied on the decision of the Division Bench of this court rendered in the case of B.Raman and others Vs. M/s.Shasun Chemicals and Drugs Limited [2006-Cr.LJ-4552] wherein it is held that the meaning of the word 'drawer' as contemplated under Section 138 of the said Act has to be interpreted in the case of a Company as well as the persons, who are responsible for the commission of offence and if such is the interpretation, then the complainant has to send notice to the drawer, which means the Company and its directors and officers responsible for the business of the Company and for the commission of the offence. In the said decision, it is also observed that there must be a specific averment in the complaint against the accused persons to the effect that they are in charge and responsible for the conduct of the business. 10. In the present case, indisputably no notice has been sent to the partner Vijayakumar. He is not an accused in the complaint. Here, the partnership firm is the accused. The said partner Vijayakumar admittedly is not the drawer of the cheques. In the course of evidence, no partnership deed has been filed to show that he was an active partner. It is not the case of the complainant that the said Vijayakumar was in charge of and was responsible to the said firm. There is no averment to that effect in the complaint. 11. To fasten the liability on the partners of a firm for an offence committed by the firm under Section 138 of the said Act, it must be shown that he was at the helm of the affairs of the firm at the time when the offence was committed. At least, there should be an averment in the complaint to the effect to make him responsible. As he is not the drawer, to attract culpability there should be an averment to that effect in the complaint. Mere mention that a particular person is a partner of the firm or the Company is not sufficient to bring him under the mischief of Section 138 of Negotiable Instruments Act. 12. In the decision of the Honourable Supreme Court rendered in the case of Anil Hada Vs. Indian Acrylic Limited [AIR-2000-SC-145], it has been pointed out that the offender is the drawer of the cheque under Section 138 of the Act, but by virtue of the fiction envisaged in Section 141 of the Act, in order to rope in the partners, it should be shows that they were at the helm of the affairs of the Company. 13. In yet another decision of the Honourable Supreme Court rendered in the case of Monaben Ketanbha Shah and another Vs. State of Gujarat and others [AIR-2004-SC-4274], it is emphasised that the averments in the complaint that the accused at the relevant time was in charge and responsible to firm for the conduct of its business is necessary and in the absence of requisite averment in the complaint, the offence against the accused/partners cannot be made out. It is held thus:- "Section 141 does not make all partners liable for the https://hcservices.ecourts.gov.in/hcservices/ offence. Criminal liability has been fastened on those who, at the time of commission of offence, was in charge of and was responsible to firm for the conduct of business of firm. These may be sleeping partners. Primary responsibility is on complainant so as to make accused vicariously liable. For fastening criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the Appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for conduct of business of firm, would arise only when complainant make necessary averments in complaint and establishes that fact. The instant case is of total absence of requisite averments in complaint. Therefore, order of Magistrate directing discharge of accused persons, holding that there are no allegations in complaint making out offence against them is proper." 14. As emphasised by the Honourable Supreme Court, the primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. When the complaint contains no allegation that the said Vijayakumar was one of the partner who was in charge of or responsible to the said firm for the conduct of the business of the said firm, he cannot be made liable for the commission of the offence by the firm, merely by his reply acknowledging the fact of dishonour of the cheque. 15. The Honourable Supreme Court reiterated in the decision rendered in the case of SMS.Pharmaceuticals Limited Vs. Neeta Bhalla [20050-Crl.LJ-4140] reiterated that every person connected with the Company will not fall within the ambit of the provision and the liability would arise from being in charge of and responsible for conduct of the business of the Company at the relevant time when the offence was committed and not merely on the basis of merely holding a designation or office in a Company. Therefore, liability depends on the role one plays in the affairs of the Company and not on the designation or status. 16. In the instant case, it is merely stated that he is a partner and there is no averment or evidence that he was in charge or or responsible to the firm for the conduct of the business. The instant case is of total absence of requisite averment and therefore, the trial court was perfectly right in acquitting the accused. I do not find any irregularity or infirmity to interfere with the judgement of the Trial Court and accordingly, these Criminal Appeals are liable to be dismissed. 17. In the result, these Criminal Appeals are dismissed. Sd/ Assistant Registrar /True Copy/ Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ Srcm To: 1.The Judicial Magistrate III, Coimbatore 2.-do- Thro' The Chief Judicial Magistrate Coimbatore + 2 C.Cs. To Mr. D. Saravanan Advocate SR.NO.7280 & 7281 + 2 C.Cs. To M/s. Ram and Ram, Advocate SR.NO.7105 & 7104 Pre Delivery Judgement in Crl.A.Nos.1440 and 1441/2002 https://hcservices.ecourts.gov.in/hcservices/