Monaben Ketanbhai Shah &
Anr Vs. State of Gujarat & Ors  Insc 439 (10 August 2004)
Y.K. Sabharwal & D.M.
Dharmadhikari. (Arising out of Slp (Crl.) No.1269 of 2004) Y.K. Sabharwal, J.
The second respondent has filed a complaint against five accused under
Section 138 of the Negotiable Instruments Act, 1881 (for short, "the
Act") alleging dishonour of a cheque, the accused having stopped payment
thereof. Out of five, three accused are ladies. On an application filed by the
said accused, inter alia, alleging that the complaint does not fulfill the
ingredients of Section 141 of the Act, the Magistrate directed their discharge
holding that there are no allegations in the complaint, making out an offence
against them. The order of the Magistrate was, however, set aside by the
Sessions Judge. The learned Sessions Judge held that 'no doubt, it is not
specifically mentioned in the complaint that all the accused were in-charge of
the business but merely non-mentioning of specific words does not mean that
they were not in-charge of the business' and in this view came to the
conclusion that it was for the accused to establish that they had no knowledge
about the transaction or had exercised due diligence. The High Court, by the
impugned judgment, has upheld the order of the Sessions Judge insofar as it
concerns the appellants. The order of the Sessions Judge insofar as original
accused No.5 is concerned, has been reversed by the High Court and that of the
Magistrate restored since the High Court came to the conclusion that accused
No.5 was a student up to 1998 studying at Ahmedabad, and thereafter she got
married and went to USA and in these circumstances her case stood on different
The remaining two sisters are in appeal on grant of special leave.
Section 138 of the Act makes dishonour of the cheque an offence punishable
with imprisonment or fine or both. Section 141 relates to offences by the
company. It provides that 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.
Thus, vicarious liability has been fastened on those who are in-charge of
and responsible to the company for the conduct of its business. For the purpose
of Section 141, a firm comes within the ambit of a company.
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 fulfill 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 hyper-technical 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 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. All the same, it is
also to be remembered that it is the duty of the Court to discharge the accused
if taking everything stated in the complaint as correct and construing the
allegations made therein liberally in favour of the complainant, the
ingredients of the offence are altogether lacking. The present case falls in
this category as would be evident from the facts noticed hereinafter.
The High Court in the impugned judgment has held that "on its perusal,
it is clear that the respondent No.2 original complainant has made specific
allegations against the accused persons including the present petitioners in
the complaint that the petitioners are partners of the partnership firm and the
petitioners have taken active interest in the business". The aforesaid
finding is not supported by the complaint. There are no averments in the
complaint that the appellants have taken active interest in the business. There
are two material paragraphs in the complaint and rest of the complaint sets out
the names of the witnesses to be examined by the complainant besides the prayer
clause. The two paragraphs read as under :
"(1) The accused in this matter, for the development of their business
had taken amount of Rs.60,000/- through Agent on 8.1.1998 which was paid by us
vide cheque No.7432109 drawn on Canara Bank for Rs.60,000/- which are received
by the accused, therefore, the receipt was also issued on 8.1.1998.
(2) The said amount was for 2.5 months.
Therefore, the accused had issued us a cheque No.3358762 dated 23.3.1998
drawn on State Bank of Saurashtra, Kalanala Branch, Bhavnagar for a sum of
Rs.62,250/-. On presentation of the said cheque in our account the accused had
stopped payment on the said cheque so it was returned. The Canara Bank was
given intimation in this regard by letter dated 17.9.1998 S.B.S. Kalanala, Bhavnagar.
And, therefore, on 19.9.1998 the Canara Bank informed us, so the notice
through Advocate dated 28.9.1998 was issued to the accused. And although all of
them are served but no amount is paid." The material part of the title of
the complaint reads thus :
"Karta of Himanshu Jayantilal, H.U.F.
Himmanshu Jayantilal Thakkar ..
Complainant Versus Partners of Sona Fibres (1) Shah Madhumati Harshadraj (2)
Harshadrai V. Shah (H.U.F.) (3) Monaben Ketanbhai Shah (4) Sonaben R. Shah (5) Rupaben
Harshabhai Shah .
Accused" From the above, it is evident that in the complaint there are
no averments against the appellants except stating in the title that they are
partners of the firm.
Learned counsel for the respondents/complainant contended that a copy of the
partnership deed was also filed which would show that the appellants were
active in the business. No such document was filed with the complaint or made
part thereof. The filing of the partnership deed later is of no consequence for
determining the point in issue. Section 141 does not make all partners liable
for the offence. The criminal liability has been fastened on those who, at the
time of the commission of the offence, was in charge of and was responsible to
the firm for the conduct of the business of the firm. These may be sleeping
partners who are not required to take any part in the business of the firm;
they may be ladies and others who may not know anything about the business of
the firm. 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 K.P.G. Nair v. Jindal Menthol India Ltd. [(2001) 10 SCC 218], this Court
held that the substance of allegations read as a whole should answer and
fulfill the requirements of the ingredients of Section 141. The criminal
complaint was quashed in Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore
& Anr. [(2002) 7 SCC 655], since in the complaint it was not stated that
the accused was in charge of the business and was responsible for the conduct
of the business of the firm nor was their any other allegation that she had
connived with any other partner in the matter of issue of cheque.
Under the aforesaid circumstances, we set aside the impugned judgment of the
High Court and restore the order of the Magistrate discharging the appellants.
The appeal is allowed accordingly.