Maliyakkal Roller Flour Mills Pvt. Ltd. v. Riyas

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE HARUN-UL-RASHID TUESDAY, THE 16TH DAY OF JULY 2013/25TH ASHADHA, 1935 CRL.A.No. 2628 of 2008 ( ) --------------------------- AGAINST THE ORDER/JUDGMENT IN Crl.L.P. 1314/2008 of HIGH COURT OF KERALA DATED 27-08-2008 AGAINST THE ORDER/JUDGMENT IN ST 3321/2004 of JUDICIAL FIRST CLASS MAGISTRATE COURT-I,PALAKKAD DATED 09-10-2006 APPELLANT(S)/PETITIONER/PETITIONER: ------------------------------------ MALIYAKKAL ROLLER FLOUR MILLS PVT. LTD., HAVING ITS REGISTERED OFFICE AT NIDA, MENONPARA KANJIKODE, PALAKKAD DISTRICT-678 621 REP. BY ITS CHAIRMAN SRI. M.AHAMMAD KUTTY HAJI. BY ADVS.SRI.T.SETHUMADHAVAN SRI.PUSHPARAJAN KODOTH SRI.K.JAYESH MOHANKUMAR RESPONDENT(S)/RESPONDENTS: -------------------------- 1. RIYAS, S/O. P.K.ABOO, PARTNER, P.K.ABU & SONS, BISMI STORES THANGAL NAGAR, PALLURUTHY, KOCHI-6. 2. RAFIQ, S/O. P.K.ABOO, PARTNER, P.K.ABU & SONS, ROYAL TRADERS KACHERIPPADY, PALLURUTHY, KOCHI-6. 3. M/S. P.K.ABOO & SONS, MATTANCHERRY BAZAR ROAD, KOCHI. 4. STATE OF KERALA, REP. BY THE DIRECTOR OF PUBLIC PROSECUTION HIGH COURT OF KERALA, ERNAKULAM. R1TO R3 BY ADV. SRI.C.A.CHACKO R4 BY PUBLIC PROSECUTOR SMT.SAREENA GEORGE THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 16-072013, ALONG WITH CRA. 1161/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AL/- ## **HARUN-UL-RASHID, J. --------------------------Crl.Appeal No.2628 of 2008 -------------------------Dated this the 16[th] day of July 2013.** ## **JUDGMENT** The complainant in S.T.No. 3321/2004 of the Judicial First Class Magistrate Court-I, Palakkad is the appellant herein. The appeal is directed against the order dated 9.10.2006. The complaint is lodged alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act. The court below relying on the judgment reported in **S.M.S** **Pharmaceuticals Limited v Neeta Bhalla (2005 (4) KLT** **209 SC** held that there is no specific averments in the complaint that at the time of commission of offence the accused was in charge of, and responsible for the conduct of the business of the company. Following the apex court decision, the court below held that the complaint is not maintainable for want of pleadings. The court below also held that the complaint was instituted in accordance with the statute. The accused was not found guilty under Section 138 Crl.Appeal No.2628/2008 : 2 : of the Negotiable Instruments Act. In the facts and circumstance the only question to be examined in this case is as to whether the court below is justified in acquitting the accused for the reason of want of pleadings, and that the requirement of Section 141 cannot be said to be satisfied. 2. The complainant is a company running a flour mill engaged in the production of Atta, Maida and other wheat products. The 3[rd] accused is a partnership firm doing wholesale business. First and second Accused are the partners of the said firm. The accused used to purchase products of the complainant company on credit basis. According to the complainant, three cheques were issued by the third accused firm towards part discharge of the liability of purchase price. All the three cheques were presented but returned bounced due to insufficient funds. The complainant issued legal notice individually to all the accused. The firm refused to accept the notice and therefore, it was returned to the sender. All the accused did not respond to the notice and failed to send a reply. Crl.Appeal No.2628/2008 : 3 : 3. The Apex Court in **S.M.S Pharmaceutical'** s case cited (supra) held that it is necessary to specifically aver in the complaint under Section 141 that at the time the offence was committed, the accused was in charge of, and responsible for the conduct of business of company. This averment is an essential requirement of Section 141 and has to be made in a complaint. The Apex Court therefore, held that without this averment being made in a complaint, the requirement of Section 141 cannot be said to be satisfied. The court below followed the said decision and held that there is no averment in the complaint that A1 and A2 were in charge and responsible for the conduct of the business of A3 partnership firm at the time of issuance of Exts.P1 to P3 cheques and therefore, the defacto complainant failed to comply with the requirement of Section 141 of the Negotiable Instruments Act. Finding of the court below that the complaint is not maintainable for want of specific pleadings is under challenge in this appeal. 4. I have examined the facts of the case and perused the Crl.Appeal No.2628/2008 : 4 : complaint. In this case the third respondent/accused is not a company. It is a partnership firm. There are only two partners. The cheques were signed by the two partners alleged to have been issued to discharge the liability of the firm. The relevant averment in paragraph (1) reads as follows: _“That the complainant company is a company registered under Indian Companies Act and is the manufacturer of Atta, Maida and other wheat products. The third accused is a firm which is doing whole sale business and managed by first and second accused. The third accused firm used to buy wheat products on credit basis and issued 3 cheques worth Rs. 42,501, Rs.40,000/and Rs. 40,000/- dated 12.2.2004, 17.2.2004 and 21.2.2004 respectively to discharge the debt which arose out of transaction. The aforesaid cheques have been signed by first and second accused as the partners of the firm. The aforesaid cheques were sent for collection but it returned with an endorsement as insufficiency of funds. Thereafter caused to issue lawyer notice as against the accused. But accused did not repay amount so far”._ 5. It is specifically pleaded in the complaint that the third respondent/accused is a firm doing whole sale business and is managed by first and second accused who are partners. In this case, it is pleaded that the three cheques Crl.Appeal No.2628/2008 : 5 : were issued and signed by the two partners which constitute the third accused firm, it cannot be said that they were not responsible for the conduct of the business. As only partners of the firm first and second accused signed the cheque and they were operating the account of the firm is sufficient enough to conclude that the partners/ first and second accused are responsible for the conduct of the business of the third respondent/accused firm which had the alleged liability with the complainant. 6. The pleadings noticed above would show that the first and second accused are in charge and responsible for the conduct of the business of the company. The essential requirement of Section 141 has been complied with. The learned Magistrate without appreciating the facts of the case blindly stick on to the words expressed by the Apex Court to the effect that there should be pleadings to the effect that the accused are in charge of and responsible for the conduct of the business of the company. The court found that there is no specific pleadings stating that the accused were in charge Crl.Appeal No.2628/2008 : 6 : and responsible for the conduct of the business of the company. The finding is erroneous. There is pleadings in the complaint. 7. This Court in the decision in **Green Sea Marine v** **Anty (2008 (3) KLT 290)** considered the case of partnership firm consisting of two partners alone. The question is whether specific pleadings in respect of partners, as contemplated under Section 141 of the Negotiable Instruments Act, is still necessary when the partnership consists of only two partners. This Court held that : _“Therefore, in the light of Section 4 of the I.P.Act and having in mind the manner in which the mutual rights and duties are determined qua the liability of every partner to attend diligently to his duties in the conduct of the business, it has to be that in so far as third party rights and liabilities arising out of transactions with third parties, are concerned, the responsibility to conduct the business of the firm which consists only of two partners is with both the partners of that firm. Any further contractual device by which such responsibility is confined only to one among the two partners, has to be treated as exclusively within the knowledge of the partners_ '. ## 8. In the decision reported in **Viswalal V. and another** Crl.Appeal No.2628/2008 : 7 : ## **v. E.S.I.Corporation and another ILR ( 2012 (4) Kerala** ## **509)** this Court considered similar question and held that: _“once the cheque was signed by one of the partner and issued to discharge the liability of the firm, the parties who signed the cheque cannot turn round and say that he was not responsible for the conduct of the business. The fact that the revision petitioner as partner of the firm signed the cheque and he was operating the account of the firm itself is sufficient enough to conclude that the revision petitioner was a partner responsible for the conduct of the business of the 2[nd] revision petitioner firm which had statutory liability with 1[st] respondent. Partner of a firm, whether managing partner or not, who is operating the accounts of the firm cannot escape prosecution under section 138 of the NI Act basing upon a cheque issued by the firm signed by the partner in discharge of the liability of the firm with a plea that he was not the managing partner or that he is not responsible for the conduct of the_ ” _business firm_ . 9. In the above said facts and circumstance of the case, this Court is of the view that the finding recorded by the court below holding that the requirement of Section 141 of the Negotiable Instruments Act is not satisfied is illegal. The Crl.Appeal No.2628/2008 : 8 : court below is directed to consider the case on merits and dispose of the same in accordance with law. In the result, the appeal is allowed. The judgment passed by the court below in S.T. No.3321/04 is set aside. The court below shall dispose of the case afresh in accordance with law within a period of six months from the date of appearance of the parties. The parties shall appear before the court below on **12[th] August 2013** . The counsel shall inform the parties. **HARUN-UL-RASHID, Judge.** al/- Crl.Appeal No.2628/2008 : 9 : _“That the complainant is the company which manufacturing atta, maida and other wheat products. The 3[rd] accused is the firm which doing whole sale business and it is being managed by first and second accused. The accused used to purchase commodities on credit basis. Accused herein issued cheque worth Rs. 42,281, Rs. 40,000/- and Rs. 40,000/- dated 31.1.04, 5.2.04 and 8.2.04 respectively to discharge the debt due to the company. But the aforesaid cheques were returned with an endorsement as insufficiency of funds when it sent for collection. Thereafter caused to issue lawyer notice in the correct address. But the accused did not accept the same with malafide intention. Accused did not replay the amount so far. The cheque were issued without keeping sufficient funds in the account which is an offence punishable under_ Crl.Appeal No.2628/2008 : 10 : _section 138 of the Negotiable Instruments Act.”_