Dismissed

N Srinivasulu v. The State of Andhra Pradesh

Andhra Pradesh HC6 May 2024CRLP/219/2020

Case brief

AI extract

What is this about?

The High Court dismissed a petition under Section 482 Cr.P.C seeking quashment of a prosecution for cheque dishonour. It held that a partner with significant shareholding and joint account authority is vicariously liable under Section 141 NI Act and mere assertion of ignorance without evidence is insufficient.

What did the court decide?

The criminal petition seeking quashment of proceedings in C.C.No.154/2018 was dismissed without prejudice to available defenses.

N Srinivasulu Vs The State of Andhra Pradesh — Cheque Dishonour | Andhra Pradesh HC (2024)

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IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI

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TUESDAY, THE SEVENTH DAY OF MAY TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SMT JUSTICE VENKATA JYOTHIRMAI PRATAPA CRIMINAL PETITION NO: 219 OF 2020

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Between:

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N Srinivasulu, S/o. Subbaiah, R/ o. Flat No. 204, Lakshmi Plaza, Somajiguda, Hyderabad.

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...PETITIONER/ACCUSEDS- 4

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AND

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The Public Prosecutor, State of Andhra Pradesh, High Court of Andhra Pradesh, Amaravathi.

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M. Nithin Kumar, S/o. M. Rajendra Prasad, Hindu, Aged 34 years, R/o. D.No.24-07-227, 9*'^ Cross Road, Magunta Layout, Near Rainbow School, Nellore City.

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...RESPONDENT/COMPLAINANTS

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court to quash the C.C.No. 154/2018 on the file of II Judicial Magistrate of first class, Nellore,

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I.A. NO: 2 OF 2020

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition,the High Court may be pleased pleased to grant stay of all further proceedings in Compliant in C.C. No. 154/2018 on the file of II Judicial Magistrate of First Class, Nellore, including the arrest^{ofthePetitioner/A4} herein, pending disposal of the above criminal petition

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This Petition coming on for hearing, upon perusing^{theMemorandum} of Grounds of Criminal Petition and upon hearing the arguments of

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Sri Malireddy Gowtham, Advocate for the Petitioner and the Public Prosecutor on behalf of the Respondent No.1 and of Sri Sivaprasad Reddy Venati Advocate for the Respondent^No.2

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The Court made the following order:

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APHC010012302020

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction)

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[3396]

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TUESDAY ,THE SEVENTH DAY OF MAY

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TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA CRIMINAL PETITION NO: 219/2020

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Between:

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N Srinivasulu ...PETITIONER/ACCUSED

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AND

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The State Of Andhra Pradesh and ...RESPONDENT/COMPLAINANT(S) Others Counsel for the Petitioner/accused:

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1.MALIREDDY GOWTHAM

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Counsel for the Respondent/complainant(S):

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1.SIVAPRASAD REDDY VENATI

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PUBLIC PROSECUTOR (AP)

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The Court made the following:

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ORDER:

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The instant petition under Section 482 of Code of Criminal^Procedure, 1973^ has been filed by the Petitioner/Accused No.4, seeking to quash the proceedings against him in C.C.No.154 of 2018 on the^{fileoftheCourtof} II

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1 for short 'Cr.P.C

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Additional Judicial Magistrate of First Class Nellore, which was registered for the offence punishable under Section 138 of the.Negotiable Instruments Act^. 2. The facts which led to the filing of the present petition are; a. Accused Nos.2 to 5 have been running a Registered Partnership firm i.e., A.I-firm in the name and style of M/s. S.V.Medicals. Respondent No.2/Complainant is the son-in-law of Accused No.5. b. At the request of Accused Nos.2 to 4 complainant lent and made online transfer of an amount of Rs.7,30,000/ - to A.1-firm on 03.12.2015, Rs.4,00,000/and Rs.1,00,000/on 05.01.2016 and Rs.3,50,000/on 01.08.2016, in total to a tune of Rs.15,80,000/-. Thereafter on the demand made by the Complainant, Accused No.5 along with'Accused No.3 executed a demand promissory note on 01.08.2018 on behalf of A.I-firm in his favour, for an amount of Rs.15,80,000/- agreeing to repay the same with interest @24% per annum. Subsequently, on the demand of the Complainant on 09.11.2017 Accused Nos.2 and 5 have issued a cheque bearing No.001748 on behalf of A.I-firm for an amount of Rs.12,30,000/ drawn on Karur Vysya Bank, Tirupati Branch.

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c. On 15.11.2017, when the Complainant presented the said cheque for encashment before his banker i. e.. State Bank of India, Achari Street, Nellore, the same was returned unpaid with an endorsement “Funds Insufficient” vide memo dated 17.11.2017. Though the Complainant informed the same to all the Accused over phone, all the Accused failed to make payment due to him.

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^ for short ‘the Act'

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«■

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Later, on 11.12.2017, the Complainant got issued a^{noticetoalltheAccused} demanding to repay the amount due under the cheque. Having received the said notice, the Accused neither gaye any reply nor paid any amount. Hence, the Complainant lodged a private complaint against^{alltheAccusedwhichwas} numbered as C.C.No.154 of 2018 on the file of the Court of II Additional Judicial Magistrate of First Class, Nellore.

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Being aggrieved by the filing of the said case. Petitioner/ Accused No.4 filed the present petition seeking quashment of the same on the following grounds:

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a. The liability to discharge the debt is only on the Managing Partner of the Firm, who is responsible for the conduct of the business and the Petitioner is no way concerned with the conduct, of business and is ignorant of the transaction.

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b. There was no liability established on the part of^the Petitioner for discharge of the debt due to the Complainant. c. The signature on the dishonoured cheque does not belong to the Petitioner.

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d. The Complainant did not make any specific averments^thatmakethe Petitioner liable. Therefore, continuation of proceedings against the Petitioner is an abuse of process of law.

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Arguments Advanced at the Bar <

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Heard Sri Malireddy Gowtham, learned counsel for the Petitioner Ms.D.Prasanna Lakshmi, learned Assistant Public Prosecutor representing

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the State/Respondent No.1 and Sri Siva Prasad Reddy Venati learned counsel for Respondent No.2.

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Learned counsel for the Petitioner in elaboration to what was stated in the Petition, would submit that the Petitioner, who is one of the partners of A. 1-Firm is arrayed as Accused No.4. Learned counsel further submits that the Petitioner is not a signatory and no allegations were made against him that he is responsible for the day-to-day affairs of the firm. Petitioner was incharge and was responsible to the Company for the conduct of the business. As such, no case is made out against the Petitioner. To buttress his contention, learned counsel has placed reliance on the judgment of the Hon’ble Apex Court in Ashok ShewakramanI and Others v. State of Andhra Pradesh & Another^ and S.M.S. Pharmaceuticals Limited V. Neeta Bhalla and another'*.

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Contrasting the same, learned counsel for Respondent No.2 would submit that Petitioner i IS a Managing Partner of A. 1-Firm having a lion’s share of 55% in the said firm and he is also an active partner. Learned counsel further submits that, at the threshold, the complaint against the Petitioner cannot be quashed. In support of his contention learned counsel has relied on the judgment of the Hon’ble Apex Court i in S.P.Mani and Mohan Dairy v. Dr.Snehalatha Elangovan^ Learned Assistant Public Prosecutor conceded to the arguments advanced by the learned counsel for Respondent No.2.

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^ 2023 LiveLaw (SC) 622 (2005) 8 see 89 (2023) 10 sec 685

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In reply, learned counsel for the Petitioner would^{submitthatthefactsof} the case in S.P.Mani’s case {supra), are not applicable to the present case. It is also stated that no prejudice would be caused to the case of the Complainant if the case against the Petitioner is quashed, because, the case will still be pending against A.1-Firm and the other^Partners.

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Point for determination:

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Having heard the submissions of the learned counsel representing both the parties, now the point that would emerge for determination^is:

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Whether there are any justifiable grounds for quashment^of the proceedings against the Petitioner/Accused No.⁴ in C.C.No.154 of 2018 on the file of the Court of II Additional Judicial Magistrate of First diass, Nellore?

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Determination by the Court:

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A bare perusal of Section 482 Cr.P.C makes it clear^thattheCode envisages that inherent powers of the High Court are^{notlimitedoraffectedso} as to make orders as may be necessary; (i) to give effect to any order under the Code or, (ii) to prevent abuse of the process of any Court or, otherwise (iii) to secure ends of justice. A court while sitting in Section 482 Cr.P.C jurisdiction is not functioning as a court of appeal^{oracourtofrevision.} It must exercise its powers to do real and substantial justice, depending on the facts and circumstances of the case. These powers must be invoked for compelling reasons of abuse of process of law or glaring injustice, which are against sound principles of criminal jurisprudence.

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A fair look at the complaint would reveal that the Complainant is the son-in-law of Accused No 5 and with that intimacy, Accused Nos.1 to 5 requested him to lend amount to A. 1-Firm and accordingly, he transferred the total amount of Rs. 15,80,000/- under differenfspells to the account of A.1Firm. Accused No.3 had executed a demand promissory note in favour of the Complainant and Accused Nos.2 and 5 had issued the alleged chequeⁱⁿ i discharge of the legally enforceable debt.

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Section 141 of the Act is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision, The t Vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 of the Act are satisfied. The Section provides that every person, who, at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company shall be deemed to be guilty of the offence under Section 138 of the Act. In the light of sub-section 1 of Section 141 of the Act, a perusal of the Deed of Partnership dated 27.02.2015 would clearly shows that A. 1-firm is a Partnership firm in which Accused Nos.2 to 5 are the Partners. It is further averred in the said Deed that Petitioner/Accused No,4 is holding major share of 55% in the net profit or loss of the said Firm and the accounts of the said Firm shall be operated jointly by any two out of the three parties namely Accused Nos.2, 4 and 5.

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In the instant case, it is not the case of the Petitioner that the said cheque was issued without his consent or knowledge. This is sufficient to put

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fi*

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the Petitioner/Accused No.4 to trial for the alleged^offence. The contention of the Petitioner that, at the time of issuance of the cheque, he was not responsible for the day-to-day affairs of the firm, cannot be accepted on the basis of mere bald assertion in this regard. To prove his case, the Petitioner is expected to lead unimpeachable and incontrovertible evidence. If the Petitioner wants the case to be quashed by filing this petition under Section 482 Cr.P.C on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the alleged cheque, he must either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. There are disputed questions of fact which are to be decided during trial by the trial Court. While exercising the jurisdiction under Section 482 Cr.P.C, it is not permissible to act as if it were a trial Court.

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Having regard to the facts and circumstances of the case, this Court is of the opinion that there are no valid grounds emanating from the record warranting interference of this Court by exercising the inherent powers of this Court under Section 482 Cr.P.C to quash the case against^{thePetitioner.} 14. Without prejudice to the defences available, the Criminal Petition is dismissed.

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Pending miscellaneous petitions, if any, shall stand^closed.

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SD/- P.VINOD KUMAR ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER

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To,

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The II Judicial Magistrate of first class, Nellore, SPSR Nellore District. 2. One CC to Sri Malireddy Gowtham Advocate [OPUC] 3. One CC to Sri Sivaprasad Reddy Venati Advocate [OPUC] 4. Two CC to the Public Prosecutor High Court of Andhra Paradesh [OUT] 5. Two CD Copies

ANR

ANR

HIGH COURT

DATED:07/05/2024

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