Case: Rallis India Ltd Vs. Poduru Vidya Bhusan

Appellant as Complainant filed a criminal complaint before the Chief Judicial Magistrate, Gautam Budh Nagar, Noida (U.P.) on 23.7.2004, under Sections 138 and 141 of the Act. It was alleged in the said complaint that cheques bearing nos.382874 and 382875 dated 31.03.2004 for Rs.15,00,000/- each drawn on Union Bank of India, Vijaywada Main Branch were issued by the accused persons. The said cheques, when presented to their banker, were returned as unpaid vide Cheques Return Advices dated 29.05.2004, with the remarks, Payment stopped by Drawer. In the said complaint, the following specific plea is raised by thethe Accused No. 1 is a partnership firm and Accused No. 2 to 7 are partners thereof and Accused No. 3 is signatory of the impugned cheques and all partners are looking after day to day affairs of the accused firm and thus the liability as raised by them is joint and several.It may be pertinent to mention here that the Appellant herein had filed substantially similar complaints before the Criminal Courts of competent Jurisdiction at Chandigarh, Vijayawada and Jammu & Kashmir as well. The partnership firm M/s Sri Lakshmi Agency was therefore, constrained to file T.P. (Crl.) Nos. 161-171 of 2005, which came to be disposed of by this Court on 03.03.2006 and all criminal cases (excluding those pending in the State of Jammu & Kashmir) filed by Appellant against Respondents were directed to be tried by Competent Criminal Court at Hyderabad as a series of composite criminal complaints. Consequently all the complaints are now pending before XIV Additional Chief Metropolitan Magistrate, Nampally, Hyderabad, for disposal in accordance with law. The Respondents herein arrayed as Accused Nos. 4, 6 and 7 in the said complaints thereafter filed applications in the High Court of Judicature of Andhra Pradesh at Hyderabad under Section 482 of the Cr.P.C. for their discharge.6. It was, inter alia, contended by the Respondents before the High Court asthe aforesaid complaint depicted the applicants as the partners of M/s Sri Lakshmi Agencies. That the aforesaid averments is a false one. Particularly when the complainant M/s Rallis India Ltd. was fully aware that the applicants had severed their connections with M/s Lakshmi agencies much prior to the execution of the Memorandum of Understanding dated 31.03.2004 and also the issuance of the dishonoured cheques onlearned Single Judge of the High Court after perusal of the record and hearing the parties found it fit and proper to discharge the Respondents. Hence this Appeal.

Court's reasoning:
14. Before concluding the present discussion, we also take this opportunity to strike a cautionary note with regard to the manner in which High Courts ought to exercise their power to quash criminal proceedings when such proceeding is related to offences committed by companies. The world of commercial transactions contains numerous unique intricacies, many of which are yet to be statutorily regulated. More particularly, the principle laid down in Section 141 of the Act (which is pari materia with identical sections in other Acts like the Food Safety and Standards Act, the erstwhile Prevention of Food Adulteration Act etc. etc.) is susceptible to abuse by unscrupulous companies to the detriment of unsuspecting third parties. In the present case, there are several disputed facts involved - for instance, the date when the partnership came into being, who were the initial partners, if and when the Respondents had actually retired from the partnership firm etc.15. Strictly speaking, the ratio of the SMS Pharmaceuticals (supra) can be followed only, after the factum that accused were the Directors or Partners of a Company or Firm respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counter-allegations between the parties regarding the very composition of the firm, the above rule of `specific averment must be broadly construed. Indeed, it would be nothing short of a travesty of justice if the Directors of a Company of Partners of a Firm, who, having duped a third-party by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the Company/Firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint - such a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding with respect to an offence under Section 141 of the Act, must be exercised keeping this advisory note and caveat in mind.16. On account of foregoing discussion, we are of the considered opinion that the impugned judgment and order passed by learned Single Judge exercising the jurisdiction conferred on him under Section 482 of the Cr.P.C. cannot be sustained in law. The same are hereby set aside and quashed. The trial court is directed to dispose of the Criminal complaints filed by Appellant at an early date, after giving opportunity of hearing to both sides, in accordance with law. However, the Trial Court would not be influenced by any of the observations made hereinabove and would decide the matters in accordance with law.