Case: G. Ramesh Vs. Kanike Harish Kumar Ujwal and Ors

3. The Appellant is the complainant. The first Accused is a partnership firm by the name of Vainqueur Corporate Services.The third Accused is the managing partner. The first Respondent, who is arrayed as the second accused, is a partner of the firm. The complaint alleges that the partnership firm was dealing in data entry work. After obtaining contracts for data entry, sub-contracts were entered into by the firm for the completion of the assignments. Paragraphs 1 to 7 of the complaint are material to the controversy in the present case and are extractedThat the Accused No. 3 is the Managing Director and Accused No. 2 is one of the partners of M/s. Vainqueur Corporate Services situated at Hyderabad and dealing in data entry work. They used to take contracts of data entry and give sub contracts to others to complete said assignment.The Accused persons have given sub contract of data entry to the complainant in the month of August 2010 by taking a caution deposit of Rs. 1,00,000 which has paid through two cheques which were credited into their account No. 304011014832 at ING Vysya Bank on 30.08.2010. Thereafter, they have assigned the job of data entry to the complainant from the month of September 2010 to December 2010.The complainant did the data entry work for said four months worth of Rs. 8,50,000 as per rates of understanding. They have issued cheque bearing No. 929605 dated 01.11.2010 drawn on Axis Bank, Hyderabad for Rs. 2,00,000 towards work of September 2010 and cheque bearing No. 929620 dated 18.12.2010 drawn on Axis Bank, Hyderabad for Rs. 2,50,000 towards work of October 2010.The complainant presented said two cheques for collection through his bank i.e., HDFC, Mahabubnagar but said cheques were returned unpaid due to insufficient balance in their bank account. The said fact of return of cheques was informed to the Accused with a request to pay the dishonoured cheque amount along with subsequent months i.e., for the month of November and December 2010 amounts.On that Accused No. 2 transferred Rs. 1,00,000 from his account No. 10141560000576 to the account No. 10141070007111 of complainant at HDFC Bank, Mahabubnagar on 08.02.2011 and 10.02.2011. They also assured the complainant to pay the balance amount within short time. As the Accused No. 2 is son of brother in law of complainant, he believed them and kept quite for some time. As they have committed default in payment of amounts, the complainant could not continue said work from the month of January 2011, as he had no money to pay the salaries of his employees.After repeated demands for the payment of balance amount of Rs. 7,50,000 towards completed work and Rs. 1,00,000 given towards caution deposit, the Accused No. 3 issued two more cheques bearing No. 929675 and 929676 dated 30.05.2011 and 19.07.2011 respectively each for Rs. 2,00,000 drawn on Axis Bank Ltd., Hyderabad towards part payment of due amount and assured to pay the balance amount within short time.The complainant presented said cheque bearing No. 929675 but the same was returned unpaid due to insufficient funds in their bank account on 30.05.2011. The complainant informed the Accused about the return of cheque and they assured to honour both cheques on re-presentation in the month of July 2011. As per their request, the complainant presented cheques bearing No. 929675 and 929676 in the month of July 2011 but both cheques again returned unpaid on 14.07.2011 and 20.07.2011 respectively for insufficient funds in their bank account. Since then the complainant is tried to contact the Accused to inform and for the payment of cheques amount along with entire due amount but they have avoided theparagraph 8 of the complaint, there is an averment that a notice of demand was issued within 30 days of the dishonour of the cheque on 1 August 2011 in spite of which payment was not made.The complaint was instituted on 19 September 2011 before the Special Judicial Magistrate First Class, Mahabubnagar. Non-bailable warrants were issued against the first Respondent as he failed to appear in the proceedings. The warrants were recalled. The first Respondent instituted proceedings Under Section 482 of the Code of Criminal Procedure. The High Court quashed the proceedings by its impugned judgment and order.The High Court held that the averments contained in paragraph 5 of the complaint were not sufficient to implicate criminal liability upon the first Respondent for an offence punishable Under Section 138. It is this view of the High Court which falls for consideration in the present appeal.

Court's reasoning:
11. In determining as to whether the requirements of the above provision have been fulfilled, it is necessary to bear in mind the principle of law that a partnership is a compendious expression to denote the partners who comprise of the firm. By the deeming fiction in Explanation (a) the expression company is defined to include athe averments in the complaint, the case of the complainant is that the partnership firm of which the first Respondent is a partner had obtained contracts for data entry, which were being sub-contracted to the complainant. The Accused an alleged to have obtained a caution deposit of Rs. 1,00,000 and to have assigned the job of data entry to the complainant. After completing the job of data entry, the Accused issued two cheques dated 1 November 2010 and 18 December 2010 for the amount of Rs. 2,00,000 and Rs. 2,50,000 respectively. On presentation, the cheques were returned due to insufficiency of funds. It was thereafter that the first Respondent is alleges to have transferred an amount of Rs. 1,00,000 from his account on 8 February 2011 and 10 February 2011. The complaint contains the statement that the parties are related. Thereafter, two further cheques were issued by the managing partner on 30 May 2011 and 19 July 2011 each in the amount of Rs. 2,00,000. After the cheques were returned unpaid due to insufficiency of funds, the complainant is alleges to have informed the Accused and who are stated to have assured him that both the cheques would be honoured on re-presentation in the month of July 2011.The submission is that the above averments are adequate to meet the requirements of Section 141 having regard to the fact that the first Accused is a partnership firm.In the present case, it is evident from the relevant paragraphs of the complaint which have been extracted above that the complaint contains a sufficient description of (i) the nature of the partnership; (ii) the business which was being carried on; (iii) the role of each of the Accused in the conduct of the business and, specifically, in relation to the transactions which took place with the complainant. At every place in the averments, the Accused have been referred to in the plural sense. Besides this, the specific role of each of them in relation to the transactions arising out of the contract in question, which ultimately led to the dishonour of the cheques, has been elucidated.The complaint contains a recital of the fact that the first set of cheques were returned for insufficiency of funds. It is alleged that the first Respondent transferred an amount of Rs. 1,00,000 on 8 February 2011 and 10 February 2011. The complaint also contains an averment that after the second set of cheques were dishonoured, the Accused assured the complainant that they will be honoured on re-presentation in the month of July 2011. The averments are sufficient to meet the requirement of Section 141(1).The High Court proceeded on the basis that the first Accused was a company in which the other two Accused were directors. Section 141 undoubtedly uses the expression "company" so as to include a firm or association of persons. The fact that the first accused, in the present case, is a partnership firm of which the remaining two Accused are partners has been missed by the High Court.Be that as it may, for the reasons adduced above, we have come to the conclusion that the High Court was in error in quashing the criminal case against the first Respondent.