Case Law Details
S.P. Mani And Mohan Dairy Vs Dr. Snehalatha Elangovan (Supreme Court of India)
Conclusion: Vicarious liability can be fastened on those who were in-charge of and responsible to the company or firm for the conduct of its business. Supreme Court observed that a High Court can quash a cheque case only if it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques.
Held: Appellant herein (original complainant) was engaged in the business of milk and milk products. The respondent was one of the partners of a Partnership Firm running in the name of Sira Marketing Services. The firm used to purchase milk and milk products from the appellant/complainant on credit basis. Despite service of notice to the firm as well as the two partners (accused persons) the amount was not paid to the appellant and therefore, the appellant was left with no other option but to file the complaint in the Judicial Magistrate Fast Track Court No. II, Erode for the offence punishable under Section 138 r/w 141 of the NI Act which came to registered. Respondent herein (original accused No. 03/partner) preferred an application under 482 of the Code in the High Court and prayed that the criminal proceedings instituted against her may be quashed as she had no liability under the law. High Court quashed the proceedings against the respondent herein mainly on the ground that there was nothing to indicate as to how and in what manner the respondent at the relevant point of time was incharge and responsible for the conduct of the business of the firm. The High Court took the view that the complaint could be prosecuted as against the respondent herein only if the allegations made in the complaint fulfilled the requirements of Section 141 of the NI Act. The High Court took the view that merely by reciting the words used under Section 141 of the NI Act in the complaint no vicarious liability can be fastened on the partner of the firm. In such circumstances above, the High Court allowed the application filed by respondent herein and terminated the proceedings as far as the respondent was concerned. It was held that Criminal liability iwas attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability could be inferred against the partners of a firm when it was specifically averred in the complaint about the status of the partners ‘qua’ the firm. This would make them liable to face the prosecution but it did not lead to automatic conviction. Hence, they were not adversely prejudiced if they were eventually found to be not guilty, as a necessary consequence thereof would be acquittal. If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment was made in the complaint and that he/she was really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
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