V. Ramkumar, J.
1. The common petitioner in all these criminal miscellaneous cases is the common 3rd accused in 8 private complaints filed before the Judicial Magistrate of First Class-1, Ernakulam. The common 2nd respondent in all these Crl.M.Cs. is the common complainant in all the private complaints referred to above. The said complainant is a proprietary concern by name "International Trade Links", Ernakulam. As per the said private complaints produced as Annexure A1 in each of these cases, the 2nd respondent herein has sought to prosecute a partnership firm by name "M/s. Star Trading", Kochi, which is the 1st accused. One Ali and his wife, who is the petitioner herein, are the Managing Partner and Partner respectively of the said firm and they are arrayed as accused Nos. 2 and 3 respectively. The offence alleged is one punishable under Section 138 of the Negotiable Instruments Act, 1881 ("the Act" for short).
2. In each of the said private complaints, the complainant has inter alia alleged that the 2nd and 3rd accused who are the Managing Partner and Partner respectively of the 1st accused firm are collectively looking after the affairs of the firm, that they are jointly and severally responsible for the business transactions of the said firm and that they are jointly liable for the consequences arising from the dishonour of the 8 cheques in question.
3. On receipt of summons from the court below, the petitioner herein entered appearance before court and filed applications requesting the Magistrate to drop the proceedings so far as they relate to the petitioner herein contending that she is not a signatory to the cheques in question and that she has no direct involvement in the business of the 1st accused firm. There is no dispute that when the above applications were filed by the petitioner, the decision of the Hon'ble Supreme Court in K.M. Mathew v. State of Kerala -
entitling the Magistrate to drop the proceedings if the complaint on the face of it does not disclose any offence against the accused notwithstanding the issue of process against the accused, was holding the field. As per separate but identical orders dt. 2.9.2004, the learned Magistrate dismissed the applications holding inter alia that the issues cannot be adjudicated until adducing evidence, but reserving the right of the petitioner to urge her objection at a later stage. The relevant portion of the Order of the Magistrate reads as follows:
"The point: -- Heard. In fact 1st accused firm is a partnership firm wherein 3rd accused is a partner. According to partnership laws, a partner is the agent of other partner and the firm. Therefore, issuing cheque by a partner on behalf of firm binds other partners as well though not a signatory thereon. Section 27 of N.I. Act contemplated that issuing negotiable instrument by an agent binds the principal as well.
4. Moreover sleeping partners is a matter of fact. It requires evidence. Therefore the issues could not be adjudicated until adducing evidence.
5. In the aforesaid reasons, this petition is disposed of reserving the right of 3rd accused to urge this objection at later stage."
4. K.M. Mathew's case (supra) has since been overruled by a Bench of three Judges of the Supreme Court in Adalat Prasad v. Rooplal Jindal, 2004 (3) KLT 382 (SC) : 2004 AIR SCW 5174, wherein it was held that once cognizance of an offence has been taken and summons issued, the Magistrate has no power to recall the summons and drop the proceedings and that to do so would amount to review of the earlier order which course is not contemplated by the Code of Criminal Procedure. It was further held that the remedy of the accused in such a case would be to invoke Section 482 Cr.RC. The said decision has been approved by another Bench of three Judges of the Supreme Court in Subramanium Sethuraman v. State of Maharashtra - 2004 AIR SCW 5326 in which a request to reconsider Adalat Prasad's case was turned down. With these verdicts of the Apex Court, the view taken by a learned Single Judge (Padmanabhan, J.) of this Court way back in the year 1988 in Ram Kumar v. K.M. Mathew - 1988 (1) KLT 579 to the effect that after the issue of process in a summons case, the Magistrate has no power at any intermediate stage thereafter to drop the proceedings for the reason that the complaint on the face of it does not disclose any offence against the accused, stands restored. It was presumably realising this hurdle that the petitioner has not challenged the orders passed by the Magistrate refusing to drop the proceedings. Instead, in these Crl.M.Cs. filed under Section 482 Cr.P.C., the petitioner seeks to quash Annexure A1 complaint in each case alleging that the complaint on the face of it does not disclose an offence as against the petitioner herein. We give hereunder a tabular statement showing the corresponding number of the proceedings before this Court and the lower court, the date of cheque and the amount involved in each transaction: ---------------------------------------------------------------------------- Sl. High Court JFCM-I Date of Amount No. Ernakulam cheque in rupees ---------------------------------------------------------------------------- 1 Crl.M.C.3240/04 C.C.986/04 1.3.2004 5,00,000 2 Crl.M.C.3253/04 C.C.987/04 1.3.2004 5,00,000 3 Crl.M.C.3239/04 C.C.988/04 1.3.2004 3,00,000 4 Crl.M.C.3235/04 C.C.989/04 1.3.2004 5,00,000 5 Crl.M.C.3237/04 C.C.1070/04 1.3.2004 10,00,000 6 Crl.M.C.3242/04 C.C.1071/04 23.2.2004 2,00,000 7 Crl.M.C.3243/04 C.C.1072/04 25.2.2004 1,35,000 8 Crl.M.C.3241/04 C.C.1073/04 20.2.2004 1,50,000 -------------------------------------------------------------------------- Total 32,85,000
5. When these CM.M.Cs, came up for hearing before one of us (Padmanabhan Nair, J.) sitting single, the learned Judge, after hearing both sides, was of the view that there is an apparent conflict in the views taken by two learned Judges in Bindu David George v. Malanad Development Society (2003 (1) KLT SN 20 = 2003 (1) KLJ 8) and Biju Jacob v. Annie Mathew - 2004 (2) KLT 634 in the matter of proceeding against a person who is not a signatory to the cheque in a prosecution under Section 138 of the Act. That is how the matter has come up before this Division Bench.
6. We heard Adv. Sri. Philip T. Varghese, the learned Counsel appearing for the common petitioner, and Adv. Sri Nagaraj Narayanan, the learned Counsel for the 2nd respondent/complainant.
7. Buttressing his arguments in support of the Crl.M.Cs. Adv. Sri Philip T. Varghese made the following submissions before us:
The averments in the complaints that accused Nos. 2 and 3 who are the managing partner and partner respectively of the 1st accused firm are collectively looking after the affairs of the firm and they are jointly and severally responsible for the business transactions of the firm and that they are jointly liable for the consequences arising from the dishonour of the cheques in question, do not constitute the ingredients of Section 141(1) of the Act. What is required to be alleged is that the 3rd accused was in charge of and responsible for the conduct of the business. Similarly, the averment in one set of complaints to the effect that the 2nd accused issued the cheques for and on behalf of the 1st accused firm with the aid and advice of the other accused also does not amount to a conduct falling under Section 141(2) of the Act. In Sham Sunder v. State of Haryana - the question arose as to whether all the remaining partners other than the 3rd accused of a firm was liable to be prosecuted for an offence punishable under Section 7 of the Essential Commodities Act, 1955. Section 10 of the Essential Commodities Act is in pari materia with Section 141 of the Act. Paragraphs 6 to 9 of the said decision read as follows:
"6. From explanation to Section 10 it will be seen that the company includes a firm and other association of persons. Section 10 provides that the person shall be deemed to be guilty of contravention of an order made under Section 3 if he was in charge of and was responsible to the firm for the conduct of the business of the firm. What is of importance to note is, that the person who was entrusted with the business of the firm and was responsible to the firm for the conduct of the business, could alone be prosecuted for the offence complained of.
7. Counsel for the State, however, relied upon the legal liability of partners and he argued that it would be for the accused partners to prove that the offence was committed without their knowledge or in spite of exercising due diligence on their part. He relied upon the proviso to Sub-section (1) of Section 10. It is true that under the Indian Partnership Act, 1932 a 'firm' or 'partnership' is not a legal entity but is 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 partners. Each of the partners is an agent as well as a principal. He is an agent in so far as he can bind the other partners by his acts within the scope of the partnership agreement. He is a principal to the extent that he is bound by acts of other partners. In fact every partner is liable for an act of the firm. Section 2(a) of the Partnership Act defines an "act of a firm" 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.
8. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not.
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 and ask them to prove under the proviso to Sub-section (1) that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in Sub-section (1) is established.The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State."
The Apex Court in the above decision had taken note of the fact that there may be sleeping partners including ladies and minors admitted to the benefit of partnership who may not be knowing anything about the business of the firm and unless the requisite conditions under Section 10 of the Essential Commodities Act are proved, such passive members of the firm cannot be prosecuted. A learned Single Judge of this Court in the decision reported in 2004 (2) KLT 634 - Biju Jacob v. Annie Mathew has observed as follows in paragraphs 2 and 3 of the decision:
"2. The prosecutions are under Section 138 of the Negotiable Instruments Act. Admittedly, the respondents/accused 3 to 5 are not signatories in the cheque. There is no contention that they are the managing partners of the firm on behalf of which the co-accused/managing partner had issued the cheque. There was of course a vague and sweeping assertion in the complaint filed that the petitioners are also in charge of and responsible for the conduct of transactions of the firm. After cognizance was taken, respondents/accused 3 to 5 came before this Court and complained about the cognizance being taken against them without sufficient materials. Those Crl.M.Cs. were disposed with the observations that it shall be open to the petitioners to claim dropping of proceedings by invoking the dictum in K.M. Mathew's case, 1992 (1) KLT 1. Accordingly, the learned Magistrate proceeded to consider the objections raised and passed the impugned orders.
3. It has often come to the notice of this Court that the provisions of Section 138 of the N.I.Act are being invoked as a measure of oppression against sleeping partners who have nothing to do with the day-to-day transactions of a firm. The whole array of partners are forced to face indictment by simply showing them also as accused persons in their capacity as partners of the firm. It is the duty of the Magistrates taking cognizance to alertly apply their mind and come to the conclusion whether sufficient circumstances are there to persuade them to entertain the threshold satisfaction. Materials must be insisted to satisfy the conscience of the Court that there are sufficient grounds to proceed against non-signatories/partners. Failure to make such insistence would necessarily reduce Section 138 of the N.I. Act to an engine of oppression in the hands of unscrupulous complainants."
The above observations are in line with the observations of the Apex Court in paragraph 9 of Sham Sundar's case (supra). In Municipal Corporation, Delhi v. Ram Kishan Rohtagi, , the
question arose as to whether the prosecution against the directors of a company under the Prevention of Food Adulteration Act, 1954 could be quashed for want of an allegation against them that they were responsible for the conduct of the business of the sample in question. While there was a specific allegation in the complaint against the 3rd accused who was the manager of the 2nd respondent company, the allegation against accused Nos. 4 to 7 who were the directors of the said company was only that as such they were in charge of and responsible for the conduct of the business of the 2nd accused company. The Apex Court upheld the judgment of the Delhi High Court quashing the proceedings as against the directors, but set aside the order of the High Court quashing the proceedings as against the manager. In Katta Sujatha v. Fertilisers and Chemicals Travancore Ltd. - , the expression "in charge" in Section 141(2) of the Act has been interpreted to mean that the person proceeded against should be in over all charge or control of the day-to-day business. Annexure A1 complaints in this case fall short of the necessary averment under Section 141 of the Act.
The Stand of the Public Prosecutor
8. Sri Sujith Mathew Jose, the learned Public Prosecutor, also addressed the Division Bench and submitted that the distinction between Sub-sections (1) and (2) of Section 141 have been dealt with by a learned Single Judge in Kumari v. Sankara Raman - 2001 (2) KLT 503. He added that failure to plead an essential fact in the complaint vis-a-vis a partner of a firm may be fatal, but omission of a non-essential matter in the complaint could be supplied by the sworn statement or other contemporaneous material as was done in Iqbal v. Uthaman - 1993 (2) KLT 237.
9. Where a cheque in discharge of a debt or liability is drawn by a person in his individual capacity, such a person alone is liable for the offence under Section 138 of the Act. In such a case, the drawer of the cheque is himself the signatory to the cheque as well. But where the offence is committed by a company, then, by virtue of the provision contained in Section 141 of the Act, besides the company, such persons as are referred to in Section 141 are also liable for the offence provided the conditions mentioned therein are satisfied. Section 141 of the Act reads as follows:
"141. Offences by companies
(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence 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 offence and shall be liable to be proceeded against and punished accordingly:
PROVIDED that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without this knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in Sub-section (1), where any offence under this Act, has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation: For the purpose of this section
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "director", in relating to a firm, means a partner in the firm."
10. Since the offence alleged in these proceedings is against a partnership firm we will confine our discussion to such a firm only. By virtue of Clause (a) of the Explanation to Section 141(2) of the Act, the expression "company" under Section 141 includes a firm. Similarly, by virtue of Clause (b) to the aforesaid Explanation, the expression "director" in Section 141 of the Act means a partner in a firm. Hence a cheque drawn by a person in charge of and responsible to the firm binds such person as well as the firm who are deemed to be guilty of the offence in view of Section 141(1). Even in a case where a partner is proceeded against upon the requisite allegation against him in the complaint as envisaged in Section 141(1) of the Act, he may still escape liability from punishment if he is able to prove any of the circumstances envisaged by the proviso to Section 141(1) of the Act. If it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any partner, manager, secretary or other officer of the firm, then such person is also deemed to be guilty of the offence in view of Section 141(2) of the Act. The words "shall also be deemed to be guilty" occurring in Sub-section (2) indicates that over and above the person referred to in Sub-section (1) some other category of persons are also sought to be roped in on the proof of certain additional facts. Thus, unlike in the case of a cheque drawn by a person in his individual capacity, in the case of a cheque drawn by a person in charge of and responsible to the firm, criminal liability is fastened not only on the de facto drawer of the cheque but also on the firm as well as any partner, manager, secretary or other officer of the firm, provided that such person is guilty of the act or omission referred to in Section 141 (2) of the Act. What then emerges is that in a case where the offence is committed by a firm, the criminal liability is not confined to the signatory of the cheque alone but also to non-signatories also provided the other conditions in that regard are satisfied. In other words, in a case of this nature it may not be permissible to draw a distinction between signatories and non-signatories qua the cheque in question. But the arraignment of the firm as such is not a condition precedent for the prosecution of its partners. The partners can be prosecuted either along with the firm or independent of the firm. However, a finding that the firm in fact committed the offence is a sine qua non for the prosecution and conviction of its partners, as in the case of a company (vide Anil Hada v. India Acrylic Ltd. .
11. One aspect worth mentioning in this connection is the difference in the language employed by Sub-sections (1) and (2) of Section 141 of the Act. While under Sub-section (1), the mere status of the person being at the helm of affairs of the firm by itself and so alleged in the complaint makes him liable for the offence, under Sub-section (2) any other person responsible to the firm will be liable only if it is proved that he is guilty of the act or omission referred to in the said sub-section. There is no question of proving the ingredients of the above provision in order to rope in another person unless the necessary foundation in the form of an averment or allegation is laid in the complaint.
12. In a case in which cognizance of the offence is taken upon receiving a complaint of facts which constitute the offence within the meaning of Clause (a) of Section 190(1) Cr.P.C., the complaint itself should contain the necessary facts constituting the offence as against the person arrayed as the accused in the complaint. To put it differently, where the facts necessary for proceeding against a person arrayed as an accused are not averred, then it is not "a complaint of facts which constitute the offence" within the meaning of Clause (a) of Section 190(1) Cr.P.C. In a case where those necessary facts constituting the offence are not pleaded in the complaint, the Magistrate may not be justified in looking for those inevitable jurisdictional facts from sources aliunde the complaint. This is not to say that the Magistrate is forbidden from looking into the sworn statement or evidence on affidavit or supporting documents produced along with the complaint when the Magistrate embarks upon the judicial scan during the process of taking cognizance. There could be situations where the jurisdictional facts could be disinterred from the sworn statement or evidence on affidavit or other documents accompanying the complaint. But such situations are few and far between. Hence, primarily it is the complaint which has to be scrutinised to see whether the facts constituting the offence have been set forth or not. Taking the wider view that a complaint and sworn statement under Section 200 Cr.P.C. supplement and complement each other, it may be possible to say that it is permissible to supply the omissions in the complaint while giving the sworn statement or while giving evidence on affidavit under Section 145 of the Act, as was done in Iqbal v. Uthaman, 1993 (2) KLT 237. But in a case where there is total lack of the necessary averment in the complaint so as to rope in a partner or an additional person, it may not ordinarily be permissible to supply the fatal omission in the complaint by means of a sworn statement or evidence on affidavit or supporting documents from which facts may have to be discerned through a process of concatenated reasoning. At any rate, experience as also precedential profusion shows that such vital omissiossns in the complaint have invariably proved fatal to the complainant. It is trite law that no amount of evidence can be adduced by a party or can be looked into by a court to support a case for which there is no foundation in the pleadings. We note here, with approval, the decisions rendered by Single Judges of this Court insisting on the requisite allegation in the complaint for roping in directors of companies or partners of firms (vide Kumari v. Sankara Raman - 2001 (2) KLT 503, Sheeba v. State of Kerala, 2005 (3) KLT (SN) 13).
13. The approach of the Apex Court also has been no way different. Emphasis has always been on the averments in the complaint to find out whether an offence has been made out qua the person arrayed as the accused person. In Municipal Corporation of Delhi v. Purushotam Doss Jhunjunwala and Ors. - the Apex Court made the
"5. In the instant case, a clear averment has been made regarding the active role played by the respondents and the extent of their liability. In this view of the matter, it cannot be said that para 5 of the complaint is vague and does not implicate respondents 1 to
11. As to what would be the evidence against the respondents is not a matter to be considered at this stage and would have to be proved at the trial. We have already held that for the purpose of quashing the proceedings only the allegations set forth in the complaint have to be seen and nothing further."
In K.P.G. Nair v. Jindal Menthol India Ltd. - it was observed thus:
"7. From a perusal of the excerpts of the complaint it is seen that nowhere is it stated that on the date when the offence is alleged to have been committed, the appellant was in charge of or was responsible to the accused Company for the conduct of its business. xxx xxx xxx
9. It is true, as submitted by Mr. Arora, that the words of Section 141(1) need not be incorporated in a complaint as magic words but it cannot also be disputed that substance of the allegations read as a whole should answer and fulfil the requirements of the ingredients of the said provision (for being proceeded against for an offence which he is alleged to have committed). On the above premise, it is clear that the allegations made in the complaint do not either in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence the appellant was in charge of and was responsible to the Company for the conduct of its business."
In Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd. and Anr. - , the Supreme Court observed as follows:
"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."
In Monaben Ketanbhai Shah and Anr. v. State of Gujarat and Ors., , it was observed:
"4. It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed and is required to be tried with. It is also true that in construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed.
xxx xxx xxx
There are no averments in the complaint that the appellants have taken active interest in the business.
xxx xxx xxx
The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the 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 the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint."
In Raj Lakshmi Mills v. Shakti Bhakoo - , the
following observations are apposite:
"Against the summoning order passed by the Magistrate, the respondent filed a petition under Section 482 Cr.P.C. after the respondent's application for discharge was unsuccessful.
3. The High Court invoked the provisions of Section 141 of the Negotiable Instruments Act and came to the conclusion that as the respondent was not in charge or responsible for the conduct of the business, therefore the order summoning her was bad in law.
4. We are of the opinion that at the stage of summoning when evidence was yet to be led by the parties, the High Court could not on an assumption of facts come to a finding of fact that the respondent was not responsible for the conduct of the business. On this ground alone, these appeals are allowed and the impugned decision of the High Court is set aside."
In S.V. Muzumdar and Ors. v. Gujarat State Fertilizer Co. Ltd. and Anr. - there were altogether 14 accused persons who
included the directors, the company itself and some of its employees. That was also a case instituted on a private complaint alleging offences Under Section 138 of the Act and Sections 420 and 114 IPC. The refusal by the High Court to quash the proceedings was upheld by the Supreme Court. The following observations of the Apex Court are very relevant:
"The challenge before the High Court was primarily on the ground that there was no material to show that the accused persons at the time of offence as allegedly committed were in charge and/or responsible to the Company for the conduct of the business as required under Section 141(1) of the Act. It was also submitted that the deeming provision under Sub-section (2) of Section 141 which covers persons with whose consent or connivance or any attributable negligence for commission of the offence by the company was also not applicable. The High Court did not accept the pleas and held that the controversy was to be adjudicated at the trial. It considered the petition to be unacceptable attempt to stall the criminal proceedings at the threshold.
xxx xxx xxx
... by application of Section 141 it is deemed that every person who is in charge of and responsible to the company for conduct of the business of the company as well as the company are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of the proviso to Sub-section (1). The burden in this regard has to be discharged by the accused.
10. The three categories of persons covered by Section 141 are as follows:
(1) The company who committed the offence.
(2) Everyone who was in charge of and was responsible for the business of the company.
(3) Any other person who is a Director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence.
11. Whether or not the evidence to be led would establish the accusations is a matter for trial. It needs no reiteration that proviso to Sub-section (1) of Section 141 enables the accused to prove his innocence by discharging the burden which lies on him."
14. Now coming to the decisions cited by the learned Counsel for the petitioner, in Sham Sunder's case (supra), it was a case charge-sheeted by the police for an offence punishable under Section 7 of the Essential Commodities Act, 1955, of which Section 10 is identical to Section 141 of the present Act. Apart from the 3rd accused who was in charge of and responsible to the firm, all the partners of the firm were arrayed as accused without any allegation or proof against them. The case was considered after trial and the Apex Court held that except the 3rd accused, there was no proof to indicate that the other partners were in charge of and responsible for the Conduct of the business of the firm. Moreover, the question of 'signatory' or 'non-signatory' is one unique in the case of a prosecution under the Negotiable Instruments Act.
15. In Ram Kishan Rohtagi's case - , after alleging that the 1st accused manager was in charge of and responsible for the conduct of the business of the 2nd accused company, the complaint proceeded to state that accused Nos. 2 to 4 who were directors of the company were as such in charge of and responsible for the conduct of the business of the company. The said averment virtually admitted that accused Nos. 2 to 4 were really not in charge of and responsible to the conduct of the business of the company, but the complainant wanted to proceed against them by their mere status as the directors of the company. That was why the Supreme Court quashed the prosecution so far as those directors were concerned. In fact, the very same Judges who rendered the aforesaid decision rendered another decision on the same day in the case of the very same complainant viz. Municipal Corporation of Delhi distinguishing the ratio in Ram Kishan Rohtagi and Ors. and held that having regard to the fact that there was clear averment made in the complaint against all the 11 accused persons the High Court exceeded its discretion under Section 482 Cr.P.C. in quashing the proceeding against the 11 accused persons (vide Municipal Corporation of Delhi v. Purushotam Dass Jhunjunwala - .
16. This is not a case of total lack of allegation in the complaint as against the 3rd accused. A perusal of annexure A1 complaints in all the 8 cases will show that on the basis of the averments in the complaints, they can be categorised into two. While the complaints in C.C.Nos. 986/04 to 989/04 are identical forming one category, the complaints in C.C.Nos. 1070/04 to 1073/04 are slightly different but identical forming the second category of complaints. The allegations in the first category which are relevant so far as the petitioner is concerned are the following:
"The 1st accused firm is represented by its Managing Partner, the 2nd accused is Managing Partner and 3rd accused is partner respectively. Both the accused are collectively looking after the affairs of the firm and they are jointly and severally responsible for the business transaction of 1st accused firm." (paragraph 1) "Towards the discharge of the said liability, the 2nd accused issued a cheque bearing No. ... dt. ... for the said amount drawn on State Bank of Saurashtra, Ernakulam, Kochi-31, to the complainant for and on behalf of the 1st accused firm with the aid and advice of other accused." (paragraph 2) (Number and date of cheque omitted). "Accused Nos. 2 & 3 being the Managing Partner and Partner respectively of the 1st accused firm, they are jointly and severally liable for the penal consequences." (paragraph 4)
The relevant allegations in the second category of complaints are the following:
"The 1st accused is partnership firm represented by its managing partner having its office at the address mentioned above and the 2nd and 3rd accused persons are the managing partner and the partner of the aforesaid firm. All the accused are collectively looking after the affairs of the firm and they are jointly and severally responsible for the business transaction of the 1st accused firm." (paragraph 1)
"All the accused persons are involved in the day to day affairs and business of the 1st accused firm and are jointly liable to pay the amount to the complainant." (paragraph 2)
"All the accused had done the above act with the intention of causing wrongful loss to the complainant and got wrongful gain for himself." (paragraph 4)
17. There is thus a common averment in both the categories of complaints that all the accused persons are collectively looking after the affairs of the firm and they are jointly and severally responsible for the business transaction of the 1st accused firm. What is to be made out under Section 141(1) is that the person arrayed as an accused was in charge of and was responsible to the firm for the conduct of the business of the firm. It is now well settled that a verbatim reproduction of the language of Section 141 of the Act is not necessary and that what is to be considered is to read the complaint as a whole to ascertain what the complainant has meant by his averments (vide paragraph 4 of Monaben Ketanbhai Shah v. State of Gujarat, , and paragraph 9 of K.P.G. Nair v. Jindal Menthol India Ltd. - . When the common allegation in both the categories of complaints is that accused Nos. 2 and 3 are collectively looking after the affairs of the firm and that they are jointly and severally responsible for the business transaction of the firm, the argument that there is no averment in the complaint that they were in charge of the affairs of the firm is too hypertechnical. The person looking after the affairs of an establishment can be said to be in charge of the affairs of the establishment. Regarding the second ingredient viz. the 3rd accused is responsible for the business of the firm, even the counsel for the petitioner has no case that the said ingredient is absent in the complaint. In the first category of complaints there is a further averment that the 2nd accused issued the cheques for and on behalf of the firm with the aid and advice of the 3rd accused. This would amount to a conduct falling under Sub-section (2) of Section 141.
18. In these cases we are concerned only with the sufficiency or otherwise of the requisite allegation and not with a total absence of allegation. Where the allegations in the complaint are found to satisfy the requirement of Section 141 of the Act, it may not be necessary to insist on any further material at the threshold stage of taking cognizance of the complaint. Where the complaint does contain the necessary averment falling either under Sub-section (1) or under Sub-section (2) of Section 141, we are of the view that it may not be necessary to insist on any further material at the threshold stage by drawing a distinction between "signatory" and "non-signatory" to the cheque in respect of which the prosecution is launched.
19. What now survives for consideration is the jurisdiction of this Court under Section 482 Cr.P.C., in the matter of quashing a complaint. In State of Bihar v. Murad Ali Khan and Ors. - , the Apex Court observed as follows:
15."... In exercising that jurisdiction the High Court should not embark upon an enquiry whether the allegations in the complaint are likely to be established by evidence or not. That is the function of the trial Magistrate when the evidence comes before him. Though it is neither possible nor advisable to lay down any inflexible rules to regulate that jurisdiction, one thing, however, appears clear and it is that when the High Court is called upon to exercise this jurisdiction to quash a proceeding at the stage of the Magistrate taking cognizance of an offence the High Court is guided by the allegations, whether those allegations set out in the complaint or the charge-sheet, do not in law constitute or spell out any offence and that resort to criminal proceedings would, in the circumstances, amount to an abuse of the process of the court or not. xxx xxx xxx
17. In Municipal Corporation of Delhi v. P.D. Jhunjunwala, it was further made clear: (SCC p.10: SCC (Cri) p. 124, para 5)
As to what would be the evidence against the respondents is not a matter to be considered at this stage and would have to be proved at the trial. We have already held that for the purpose of quashing the proceedings only the allegations set forth in the complaint have to be seen and nothing further."
20. As observed in Monaben Ketanbhai Shah's case (supra), the court has to bear in mind the laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions sought to be achieved by the Act. If, reading the complaint as a whole, the substance of the averments make out the ingredients of Section 141 of the Act, though not in the same language that is employed by the statute, the question of quashing the complaint does not arise. What then would survive for consideration will be the question as to the proof of those allegations the stage for which is the trial. If, after trial, there is no proof forthcoming to substantiate the allegations, the accused persons proceeded against would be entitled to an acquittal. If those allegations are proved in the trial, conviction is the logical corollary. But where the averments in the complaint or the accompanying papers are, on the face of it, deficient to make out the ingredients of Section 141 of the Act so as to justify the prosecution against the partner or the director, as the case may be, it may be a fit case to invoke the power under Section 482 Cr.P.C. to prevent the process of the court being abused. In a case where the Complaint does contain the requisite averments satisfying the requirements of Section 141 of the Act, there is no warrant for insisting on any further material at the threshold stage before taking cognizance on the basis of an unnecessary distinction between 'signatory' and 'non signatory' to the cheque. The observations in paragraph 3 of Biju Jacob's case really constitute a well deserved caution to Magistrates while taking cognizance of the offence on a complaint which falls short of the necessary averment in terms of Section 141 of the Act, But paragraph 2 of that decision indicates there was in fact an averment in the complaint in terms of Section 141 of the Act. Hence on the facts of that case, the observations in paragraph 3 were not warranted. With a view to steer clear of any confusion which those observations may create, we make it clear that the observations in paragraph 3 of Biju Jacob's case will apply only in those cases where the complaint on the face of it does not contain an averment in terms of Section 141 of the Act.
21. After an anxious consideration of the averments in the complaints in these cases, we are not persuaded to agree with the submissions on behalf of the petitioner that the petitioner is not liable to be proceeded against for the offence punishable under Section 138 of the Act. Hence we dismiss these Crl.M.Cs. leaving it to the petitioner to raise all the defences available to her before the court below during trial.