ORDER
K.C. Bhanu, J.
1. This petition is filed under Section 482 of the Code of Criminal Procedure to quash the proceedings in C.C. No. 181/1997 on the file of the learned IV Additional Munsif Magistrate, Guntur.
2. 1st respondent filed a private complaint against petitioners-A2 and A3, and one another under Sections 138 and 142 of the Negotiable Instruments Act, hereinafter to be referred to as ‘the Act’ alleging that it supplied cotton lints to the accused on credit basis for the discharge of which A1 issued two cheques bearing Nos. B A/1 837667 and B A/1 837669, dated 27.11.1996 and 12.12.1996 for Rs. 2,50,000/- and Rs. 2,55,816/- respectively, drawn on Allahabad Bank, Kanpur. The cheques were returned unpaid with an endorsement, ‘insufficient funds’. 1st respondent after issuing statutory notice calling upon the accused to pay the amount covered by the bounced cheques, lodged the complaint, when the accused failed to pay the amount, which was registered as C.C. No. 181/1997 on the file of the learned IV Additional Munsif Magistrate, Guntur. A2 and A3 filed the present petition to quash the proceedings therein on the ground that the complaint is not in accordance with the provisions of Sections 138 and 141 of the Act and that though the 2nd petitioner did not sign the cheques he was made a party mechanically.
3. Learned Counsel for the petitioners contended that 2nd petitioner-A3 did not sign the cheques and there was no allegation in the complaint to show that he was in charge of and was responsible to the A1-firm for the conduct of its business, and hence the proceedings are liable to be quashed against the petitioners. On the other hand, learned Counsel for the 1st respondent contended that the allegations in the complaint would go to show that the 2nd petitioner-A3 was a partner of A1-firm and if the allegations in the complaint are read as a whole they reveal that the 2nd petitioner-A3 was responsible to and in charge of the A1 -firm for its day-to-day affairs, and so the proceedings cannot be quashed.
4. Under Section 138 of the Negotiable Instruments Act, in order to make a person liable, three conditions have to be satisfied, as per the proviso to that Section. They are: (1) the cheque is presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier, (2) the payee or the holder-in-due course of the cheque, as the case may be, makes a demand for payment of the amount of money by giving notice in writing to the drawer of the cheque within 15 days of receipt of the intimation by him from the bank regarding the return of the cheque as unpaid, and (3) the drawer of such cheque fails to make payment of the amount of money to the payee or, as the case may be, to the holder in due course of the cheque within 15 days of receipt of the said notice. However, the Explanation to that section says that the debt or other liability for the purpose of the section means legally enforceable debt or other liability.
5. It is clearly alleged in the complaint that the accused approached the 1st respondent for supply of cotton with a promise to pay the amount after receiving of cotton by them and believing that representation, the 1st respondent supplied cotton to the accused. For the discharge of the said debt, the accused issued two cheques, which were returned for insufficiency of funds. After issuing a statutory demand notice, as the accused failed to pay the amount of the bounced cheques, 1st respondent lodged the complaint. It is further alleged that A1 is the firm, A2 is its authorised signatory/partner and A3 is another partner of the firm.
6. To make partners of a firm liable under Section 142 of the Act, it must be shown that at the time of the offence they were in charge of and were responsible to the firm for the conduct of its business. As per the Explanation to that section, the company includes a partnership firm. Therefore, the contention of the learned Counsel for the 1st respondent that Section 141 of the Act has no application to a partnership firm since that section deals with only companies, cannot be accepted in view of the Explanation in Section 142 of the Act.
7. Learned Counsel for the petitioners relied upon a decision in K.P.G. Nair v. Jindal Menthol India Ltd., VII (2000) SLT 189=IV (2000) CCR 100 (SC)=I (2000) BC 243 (SC)=2001(2) Supreme 311, in which it is held as under:
“It is true, as submitted by Mr. Arora that the words of Section 141(1) need not be incorporated in a complaint as magic words but it cannot also be disputed that substance of the allegations read as a whole, should answer and fulfil the requirements of the ingredients of the said provision (for being proceeded against for an offence which he is alleged to have committed). On the above premise, it is clear that the allegations made in the complaint do not, either in express words or with reference to the allegations contained there, make out a case that at the time of commission of the offence, the appellant was in charge of and was responsible to the Company for the conduct of its business.”
8. In State of Haryana v. Brij Lal Mittal and Ors., I (1998) CCR 246=IV (1998) SLT 796=1998(4) Supreme 364, which the learned Counsel for the petitioners placed reliance upon, it is held as below:
“It is thus seen that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable.”
9. In Katta Sujatha v. Fertilisers and Chemicals Travancore Ltd., , yet another decision learned Counsel for the petitioners relied upon, it is held as follows:
“In short the partner of a firm is liable to be convicted for an offence committed by the firm if he was in charge of and was responsible to the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned.”
10. It is clear from the above decisions that a partner of a firm or a Director of a company is liable to be convicted for an offence committed by the firm if he was in charge of and was responsible to the firm or the company, as the case may be, for the conduct of its business. It is also clear that the allegations in the complaint must in express words make out a case to show that the accused was in charge of and was responsible to the firm/company for the conduct of its business. To this effect, this Court has held in Secunderabad Health Care Ltd. v. Secunderabad Hospitals Pvt. Ltd., , as under:
“It cannot be left to the wild imagination of the complainant. There must be specific accusation against each of the persons impleaded that such person was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed by the company.”
11. It has now to be seen whether the allegations in the complaint make out a prima facie case under Sections 138 and 141 of the Act. The relevant paragraph in the complaint reads as follows:
“The complainant is doing business in cotton in the name and style of Amara Nagarjuna Cotton Corporation, Nadikudi having its office at Guntur. The accused No. 1 is the firm, 2nd accused is the authorised signatory/partner and the 3rd accused is the partner of the firm and firm doing business in spinning mill at Kanpur. The accused is known to the complainant for the last two years and the accused is in the habit of purchasing cotton lints from the complainant. While so, the accused approached the complainant for cotton and the accused promised that he will pay the amount after receiving of the cotton stocks by them. The complainant believed the representation made by the accused and the complainant sent the cotton lints to the accused and the accused No. 1 issued two cheques dated 27.11.96 and 12.12.96 bearing Nos. BA/1837667 for Rs. 2,50,000/- and BA/1837669 for Rs. 2,55,816/-drawn on Allahabad Bank, Kanpur for the legal discharge of the debt.”
12. Learned Counsel for the petitioners contended that the 1st petitioner-A2 on behalf of A1-firm signed the cheques, but the allegations in the complaint show that both the petitioners approached the 1st respondent for supply of cotton with a promise to pay for the same after receipt of cotton and believing their representation, 1st respondent sent cotton to the accused and, therefore, the words, ‘accused’ in the complaint refer to both the petitioners which means that both the petitioners were transacting business with 1st respondent, and so the petition is liable to be quashed.
13. Insofar as the 1st petitioner-A2 is concerned, learned Counsel for the petitioners fairly conceded that 1st petitioner-A2 was the authorised signatory of A1-firm and, therefore, the case cannot be quashed against him, but as far as the 2nd petitioner-A3 is concerned, there is no allegation that he was in charge of and was responsible to the day-to-day affairs of the firm. A perusal of the above excerpts of the complaint shows that nowhere it has been alleged that the 2nd petitioner-A3 was in charge of and responsible to A1-firm for the conduct of its business or that the offence was committed with his consent or connivance or was attributable to any neglect on his part. Except a bald statement that the 2nd petilioner-A3 was partner of A1-firm there is no other allegation to indicate that he was in charge of the firm.
14. What is required for holding a partner vicariously liable for the offence committed by a firm is the actual role played by him in the management and conduct of its business. Simply because it is alleged that the ‘accused’ approached the 1 st respondent for supply of cotton lints with a promise to pay for the same after receipt of cotton and believing that representation 1st respondent supplied cotton, the word ‘accused’ in the complaint, in my considered opinion, is not sufficient to make the 2nd petitioner-A3 vicariously responsible. The vicarious liability of partners comes into question under Section 142 of the Act. The necessary ingredients of Section 142 of the Act must be alleged in the complaint to make them liable for the offence under Section 138 of the Act. Therefore, there must be clear, unambiguous and specific allegations against the persons who are impleaded as accused to show that they were responsible to the firm in the conduct of its business.
15. As seen from the complaint, there is no allegation that the 2nd petitioner-A3 was responsible for the firm or he was in charge of its day-to-day affairs. Therefore, the complaint insofar as the 2nd petitioner-A3 is concerned is liable to be quashed.
16. In the result, the petition of 2nd petitioner-A3 is allowed and the proceedings against him alone are quashed, and the petition of the 1st petitioner-A2 is dismissed,