LexMONABEN KETANBHAI SHAH AND ANR. versus STATE OF GUJARAT AND ORS.
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MO NAB EN KET ANBHAI SHAH AND ANR.
A
v.
ST ATE OF GUJARAT AND ORS.
AUGUST 10, 2004
[Y.K. SABHARWAL AND D.M. DHARMADHIKARI, JJ.]
B
Negotiable Instruments Act, 1881-Sections 138 and 141-Dishon-
our of cheque--{;omplaint against partners of firm-Absence of requisite
averments in the complaint that they took active interest in the business-
Fastening of criminal liability-Held: Under section f4 I' criminal liability C
is fastened on those who are in-charge of and responsible to the firm for
the conduct of its business-The substance of allegations made in the
complaint do not fulfil ingredients of Section-Hence accused discharged.
Respondent No. 2 filed complaint under Section 138 of the D
Negotiable Instruments Act, 1881 against five accused-partners of a
firm alleging dishonour of a cheque. Out of five accused three were
ladies. They filed an application alleging that it was not specifically
mentioned in the complaint that all the accused were incharge of the
business, and as such the complaint did not fulfil the ingredients of
Section 141 of the Act. Magistrate discharged the accused' since there E
were no allegations in the complaint making out a case against them.
However, Sessions Judge set aside the order on the ground that non-
mentioning of specific words that 'all accused were in-charge of
business' does not mean that they were not incharge of the business
and it was for the accused to establish that they had no knowledge F
about the transaction or had exercised due diligence. High Court
upheld the order of Sessions Judge with regard to accused Nos. 3 and
4 but set aside the order with regard to accused No. 5. Hence the
present appeal.
Allowing the appeal, the Court
HELD : 1.1. Section 141 of the Negotiable Instrument Act, 1881
does not make all partners liable for the offence. The criminal liability
G
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 H
411
412
SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.
A 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 compliant so as to make the accused vicariously liable.
B For fastening the criminal liability, there is no presumption that every
partner knows about the transaction. [415-G-H; 416-A-Bf
1.2. In the instant case, it is evident that in the complaint there
is total absence of requisite against the appellants that they have taken
active interest in the business except stating in the title that they are
C partners of the firm. The obligation of the appellants to prove that at
the time the offence was committed they were not incharge of and were
not responsible to the firm for the conduct of the business of the firm,
would arise only when the complainant makes necessary averments in
the complaint and establishes that fact. Therefore the order of High
D Court is set aside and the order of the Magistrate discharging the
appellants is upheld. [415-F; 416-B-C; 416-EI
K.P.G. Nair v. Jindal Menthol India Ltd., [20011 IO SCC 218 and
Smt. Kalla Sujatha v. Fertilizers and Chemicals Travancore Ltd. and Anr.,
E 120021 7 sec 655, referred to.
CIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 850
of 2004.
From the Judgment and Order dated I 9. I 2.2003 of the Gujarat High
F Court in Crl. Misc. Application No. 1042 of 2002.
Uday U. Lalit, Gautam Joshi, Rajesh Dave, Prashant Kumar, Abhijat
P. Medh and Rohan Thavani for the Appellants
R.P. Bhatt, C.M. Shroff, Girish M.S. and M.N. Shroff, for the
G Respondents No. 2.
Mrs. Hemantika Wahi for the Respondent No. I.
The Judgment of the Court was delivered by
H
Y.K. SABHARWAL, J. : Leave granted.
M.K. SHAH v. STATE OF GUJARAT [SABHARWAL, J.]
413
The second respondent has filed a complaint against five accused A
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 B
discharge holding that there are no allegations Excerpt shown. Read the full judgment & AI analysis in Lexace.