A Silent Partner will also be held liable for an offence of cheque bounce by a company: Karnataka High Court

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF JANUARY 2021 THE HON BLE MR. JUSTICE H.P. SANDESH CRIMINAL PETITION No.4071 2019 … PETITIONER BY SRI. ABHILESH J. ADVOCATE) BETWEEN: SRI. PARVEEN KUMAR S O. SRI. OMPRAKASH C O. OM SWEETS AGED ABOUT MAJOR RESIDING AT PURANI SABZI MANDI SOHNA GURUGRAM DISTRICT HARYANA STATE 122 103. SRI. DEVKI NANDAN JAIN DWARKA NATH S O. SRI AMARNATH AGED MAJOR ADOPTED SON OF SRI. YAD RAM RESIDENT OF SOHNA TEHSIL SOHNA GURUGRAM DISTRICT HARYANA STATE 122 103. PRESENTLY RESIDING AT C O MANOJ KUMAR JAIN B 3 305 VICEROY BOULEVARD APARTMENT TULASI THEATRE ROAD MARATHAHALLI BENGALURU 560 037. BY SRI. P. PRASANNA KUMAR ADVOCATE) … RESPONDENT THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C. PRAYING TO QUASH THE ORDER OF THE LEARNED 22ND A.C.M.M. TAKING COGNIZANCE AND ISSUING SUMMONS TO THE PETITIONER DATED 08.09.2017 AND ENTIRE PROCEEDINGS IN C.C.NO.22717 2017 FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT PRODUCED AS ANNEXURE A. THIS CRIMINAL PETITION COMING ON FOR ADMISSION THIS DAY THE COURT MADE THE FOLLOWING: O R D E R Though the matter is listed for admission with consent of the parties taken up for final disposal. Heard the learned counsel for the parties. This petition is filed under Section 482 of Cr.P.C. praying this Court to quash the order of taking cognizance dated 08.09.2017 and entire proceedings in C.C.No.22717 2017 on the file of XXII Additional Chief Metropolitan Magistrate at Bengaluru. The factual matrix of the case is that respondent invoked Section 200 of Cr.P.C. against this petitioner and also other accused persons for the offence punishable under Section 138 of Negotiable Instruments Act 1881 9 SCC 481 and in the case of DCM Financial Services Limited v. J.N. Sareen and Another reported in8 SCC 1. Referring to these two judgments learned counsel would submit that if the petitioner is not incharge of the affairs of the Company and there is no averment under Section 141 of the N.I. Act the proceedings are liable to be quashed. There is no dispute with regard to the principles laid down in the judgments referred supra and the Court has to take note of the fact as to whether any averment has been made in the complaint. Having perused the averments made complaint in para Nos.4 and 5 the specific averment is made in the complaint that this petitioner is also a partner along with others in the partnership firm of accused No.1. The specific averment is made in para No.5 that accused Nos.2 to 5 have borrowed the loan from the complainant on various occasions and listed out the details of borrowing the loan in para No.5. Hence the very contention of the learned counsel for the petitioner that he was not incharge of the affairs of the Company of accused No.1 cannot be accepted at this stage when specific averment is made in para Nos.4 and 5 that he is one of the partners of the firm and borrowed the loan. The principles laid down in the judgments referred supra are not applicable to the case on hand when the petitioner is one of the partners of the firm and as well he has borrowed the loan along with other partners i.e. accused Nos.2 to 4. Learned counsel would submit that he is not the signatory. The fact that whether he has signed or involved in availing the loan as a partner along with others has to be decided in trial. The petitioner is having liberty to raise those defence before the Trial Court. The powers under Section 482 of Cr.P.C. has to be exercised sparingly and in this petition the defence of the petitioner cannot be considered. Hence there is no merit in the petition. In view of the discussions made above I pass the following: The petition is dismissed. In view of the dismissal of the main petition I.A.No.1 2020 does not survive for consideration and the same is dispose of. Sd PYR 

Summary: Any person who is a designated partner cannot take the defense that he was not in charge of the affairs of the company when the company has been accused of a cheque bounce. This was held by the High Court of Karnataka in the case Parveen Kumar and Ors. v Devki Nandan Jain [Criminal Petition No 4071/2019 &amp; Criminal Petition No. 22717/2017]  by the single bench of Hon’ble Justice H.P Sandesh. The facts of the case are that the respondent here was the complainant of the original criminal petition filed at trial court in the year 2017. He had filed petition against all partners of the company for default in payment by dishonoring the cheque given. After invoking Section 200 of Cr.P.C for offences punishable under Section 138 of the Negotiable Instruments Act, 1881, the court examined the facts and documentary evidences of the case. Finally the accused was held liable and so this petition was filed to reverse the order. The counsel for the petitioner in this case has argued that there is no ground for holding the accused liable because he is not in charge of the affairs of the company. Under Section 141 of the aforementioned Act, only those people in connection to a company can be punished if they were responsible for the functioning of that entity. Some amount of responsibility has to be associated to the accused in ordinary affairs of the company for him to be held liable if the company has dishonored a cheque. To support this contention the counsel referred to two Supreme Court cases of N.K Wahi v. Shekhar Singh and Ors.[(2007) 9 SCC 481] and DCM Financial Services Ltd. v. J.N. Sareen and Another [(2008) 8 SCC 1]. Another defense used by the counsel was that of fact where he stated that the petitioner was not a signatory in the availing of the loan. The court referred to the averments made in the complaint. It was noticed that there have been instances in the past where the petitioner has borrowed loan from the complainant in the various occasions. Another paragraph of the complaint specifies that as a partner of the firm he too should be held liable as he is representative of the interests of the company. Relying on this, the court believed that borrowing of loans along with the others accused was a sufficient reason to believe that he was in charge of the affairs of the company.