2021 (2) TMI 1305 - HC - Indian Laws

Dishonor of Cheque - Partnership Firm was dissolved during February 2017 and the subject cheque is said to have been issued by A-2 on 05.05.2017 after the dissolution of the Partnership Firm - allegations made in the complaint does not satisfy the requirements of Section 141 of the Negotiable Instruments Act - HELD THAT - The issue regarding the dissolution of Partnership firm cannot be gone into by this Court and it is a factual issue which can be decided only in the course of trial. Requirements of Section 141 of the Negotiable Instruments Act - HELD THAT - In the present case A-1 is the Partnership Firm and A-2 who is the partner is the signatory of the cheque. The petitioner A-3 has been roped in as an accused since she is a partner of A-1 Firm. The complaint can be prosecuted as against the petitioner only if the allegations made in the complaint satisfies the requirements of Section 141 of the Negotiable Instruments Act. In the present case the respondent has merely repeated the words used under Section 141 of the Negotiable Instruments Act and there is absolutely no allegation as to how and in what manner the petitioner is incharge and responsible for the conduct of the business. In the absence of such an allegation the complaint is not maintainable as against the petitioner. The law on this issue is well settled. The proceedings is hereby quashed insofar as the petitioner is concerned - the Court below is directed to complete the proceedings against the other accused persons within a period of three months from the date of receipt of a copy of this order. Petition allowed.

Summary

Issues: Quashing of proceedings under Section 138 of the Negotiable Instruments Act based on dissolution of partnership firm and failure to meet requirements of Section 141.

Analysis:

1. Dissolution of Partnership Firm: The petitioner sought to quash the proceedings citing the dissolution of the Partnership Firm before the issuance of the subject cheque. The Court held that this issue is factual and should be determined during trial, indicating that it cannot be decided at the quash petition stage.

2. Compliance with Section 141 of the NI Act: The crux of the matter revolved around whether the complaint satisfied the requirements of Section 141 of the Negotiable Instruments Act. The complaint alleged that the accused partners were in charge of the day-to-day business affairs of the Partnership Firm, which had outstanding dues. However, the Court noted that the complaint lacked specific allegations regarding the petitioner's responsibility and involvement in the business operations. It emphasized that for a complaint to be maintainable against a partner under Section 141, it must clearly establish the partner's role in the firm's affairs.

3. Legal Precedent: The judgment highlighted that the complaint merely restated the language of Section 141 without providing substantive details on how the petitioner was in charge and responsible for the business conduct. The Court emphasized that without such specific allegations, the complaint against the petitioner could not be sustained, emphasizing the well-settled legal principle in this regard.

4. Decision and Directions: Ultimately, the Court quashed the proceedings against the petitioner in STC No.583 of 2017, directing the lower court to proceed with the case against the other accused individuals. A timeline of three months was set for the completion of proceedings against the remaining accused, underscoring the resolution of the petitioner's involvement in the case.

5. Conclusion: The criminal original petition was allowed, leading to the closure of connected miscellaneous petitions. The judgment, delivered by the Honorable Mr. Justice N. Anand Venkatesh, provided a detailed analysis of the issues raised, emphasizing the importance of meeting the statutory requirements under the Negotiable Instruments Act for complaints against partners in a firm.