{"id":176286,"date":"2011-04-13T00:00:00","date_gmt":"2011-04-12T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/rallis-india-ltd-vs-poduru-vidya-bhusan-ors-on-13-april-2011"},"modified":"2016-05-26T00:46:55","modified_gmt":"2016-05-25T19:16:55","slug":"rallis-india-ltd-vs-poduru-vidya-bhusan-ors-on-13-april-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/rallis-india-ltd-vs-poduru-vidya-bhusan-ors-on-13-april-2011","title":{"rendered":"Rallis India Ltd vs Poduru Vidya Bhusan & Ors on 13 April, 2011"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Rallis India Ltd vs Poduru Vidya Bhusan & Ors on 13 April, 2011<\/div>\n
Author: D Verma<\/div>\n
Bench: Dalveer Bhandari, Deepak Verma<\/div>\n
                                                                                                     REPORTABLE\n\n\n\n\n                                 IN THE SUPREME COURT OF INDIA\n\n\n                                 CRIMINAL APPELLATE JURISDICTION\n\n\n                                CRIMINAL APPEAL NO. 924 of 2011\n\n                                [Arising out of SLP(Crl.) No. 1874 of 2008]\n\n\n\n\n\nRallis India Ltd.                                                            .............Appellant\n\n\n\n                                                      Versus\n\n\n\nPoduru Vidya Bhusan & Ors.                                                   .............Respondents\n\n\n\n                                                             W I T H\n\n\n\n                                           Criminal Appeal No.925 of 2011\n\n                                  [Arising out of S.L.P. (Crl.) No. 3064 of 2008];\n\n\n\n                                                               and\n\n\n\n                                          Criminal Appeal No.926 of 2011 \n\n                                    [Arising out of SLP (Crl.) No. 3339 of 2008]\n\n\n\n\n\n                                                 J U D G M E N T \n<\/pre>\n
Deepak Verma, J.\n<\/p>\n
1.    Leave granted.\n<\/p>\n
2.    This and the connected matters arise out of the order dated 27.07.2007 in exercise of <\/p>\n
      the   jurisdiction   conferred   under   Section   482   of   the   Code   of   Criminal   Procedure   [for <\/p>\n
      short,   ‘Cr.P.C.’],   passed   by   learned   Single   Judge   of   the   High   Court   of   Judicature   of <\/p>\n
      Andhra Pradesh at Hyderabad in Criminal Petitions No.   3085 of 2007, 3082 of 2007 <\/p>\n
              and 3084 of 2007   all   titled   Poduru   Vidya   Bhushan   and   Others   Vs.   Rallis   India <\/p>\n
              Ltd. and Another, <\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                         – 2 –\n<\/p>\n
        whereby and whereunder Accused No. 4, 6 and 7 (arraigned as Respondents Nos. 1, 2 and <\/p>\n
        3 herein) have been discharged of the offences contained under Sections 138 and 141 of <\/p>\n
        the Negotiable Instruments Act, 1881 (hereinafter shall be referred to as ‘Act’).\n<\/p>\n
        3.    For the sake of convenience, facts mentioned in SLP (Crl.) No. 1874 of 2008 are taken <\/p>\n
              into consideration.\n<\/p>\n
        4.    Appellant   as   Complainant   filed   a   criminal   complaint   before   the   Chief   Judicial <\/p>\n
              Magistrate,   Gautam  Budh   Nagar,  Noida   (U.P.)  on  23.7.2004,  under  Sections  138  and <\/p>\n
              141 of the Act.   It was alleged in the said complaint that cheques bearing nos.382874 <\/p>\n
              and 382875 dated 31.03.2004 for Rs.15,00,000\/- each drawn on Union Bank of India, <\/p>\n
              Vijaywada Main Branch were issued by the accused persons.   The said cheques, when <\/p>\n
              presented to their banker, were returned as unpaid vide Cheques Return Advices dated <\/p>\n
              29.05.2004, with the remarks, ‘Payment stopped by Drawer’.  In the said complaint, the <\/p>\n
              following specific plea is raised by the Appellant:\n<\/p>\n
                          “That the Accused No. 1 is a partnership firm and Accused No. 2 to <\/p>\n
                  7   are   partners   thereof   and   Accused   No.   3   is   signatory   of   the   impugned <\/p>\n
                  cheques and all partners are looking after day to day affairs of the accused <\/p>\n
                  firm and thus the liability as raised by them is joint and several.”<\/p>\n<\/blockquote>\n
        5.    It   may   be   pertinent   to   mention   here   that   the   Appellant   herein   had   filed   substantially <\/p>\n
              similar complaints before the Criminal Courts of competent Jurisdiction at Chandigarh, <\/p>\n
              Vijayawada   and   Jammu   &   Kashmir   as   well.   The   partnership   firm   M\/s   Sri   Lakshmi <\/p>\n
              Agency was  therefore,  constrained  to  file  T.P.  (Crl.)  Nos. 161-171  of  2005,  which <\/p>\n
              came to be<\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                            – 3 –\n<\/p>\n
        disposed of by this Court on 03.03.2006 and all criminal cases (excluding those pending in <\/p>\n
        the State of Jammu & Kashmir) filed by Appellant against Respondents were directed to be <\/p>\n
        tried   by   Competent   Criminal   Court   at   Hyderabad   as   a   series   of   composite   criminal <\/p>\n
        complaints. Consequently all the complaints are now pending before XIV Additional Chief <\/p>\n
        Metropolitan   Magistrate,  Nampally,  Hyderabad,  for  disposal  in  accordance  with   law.  The <\/p>\n
        Respondents herein arrayed as Accused Nos. 4, 6 and 7 in the said complaints thereafter <\/p>\n
        filed applications in the High Court of Judicature of Andhra Pradesh at Hyderabad under <\/p>\n
        Section 482 of the Cr.P.C. for their discharge.\n<\/p>\n
        6.    It was, inter alia, contended by the Respondents before the High Court as under :\n<\/p>\n
                           “That the aforesaid complaint depicted the applicants as the partners <\/p>\n
                  of M\/s Sri Lakshmi Agencies.\n<\/p><\/blockquote>\n
\n<\/blockquote>\n
                             That   the   aforesaid   averments   is   a   false   one.   Particularly   when   the <\/p>\n
                  complainant   M\/s   Rallis   India   Ltd.   was   fully   aware   that   the   applicants   had <\/p>\n
                  severed   their   connections   with   M\/s   Lakshmi   agencies   much   prior   to   the <\/p>\n
                  execution of the Memorandum of Understanding dated 31.03.2004 and also <\/p>\n
                  the issuance of the dishonoured cheques on 31.03.2004.”<\/p>\n<\/blockquote>\n
        The   learned   Single   Judge   of   the   High   Court   after   perusal   of   the   record   and   hearing   the <\/p>\n
        parties found it fit and proper to discharge the Respondents. Hence this Appeal.\n<\/p>\n
        7.    We   have, accordingly,   heard learned  counsel,  Mr.  Ajay  Dahiya  for  Appellant  and  Mr. <\/p>\n
              G.V.R. Choudary, for Respondents at length and perused the record.\n<\/p>\n
        8.    At the outset, learned counsel appearing for Appellant contended that in the light of the <\/p>\n
              aforesaid averments having been made categorically in the original complaints, no case <\/p>\n
              was     made     out     for     discharge   of   the   Respondents.   It   was   also   contended   that <\/p>\n
              Respondents<\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                            – 4 –\n<\/p>\n
        have denied their vicarious liability for the offences under Section 138\/141 of the Act, on <\/p>\n
        the ground that they had retired from the partnership firm in 2001\/2002, i.e., much prior to <\/p>\n
        the   issuance   of   the   cheques   in   question   in   2004.     It   is   further   contended   by   the   learned <\/p>\n
        counsel for the Appellant that the said denial cannot be accepted as it would be a matter of <\/p>\n
        evidence to be considered by the Trial Court. Even the question whether or not they would <\/p>\n
        be responsible for the impugned liabilities would be required to be answered only after the <\/p>\n
        parties go to trial as it is disputed question as to when the Respondents had actually retired <\/p>\n
        from the partnership firm, before the issuance of dishonoured cheques.\n<\/p>\n
        9.    On the other hand, learned Counsel appearing for Respondents strenuously contended <\/p>\n
              that   the   Appellant   had   failed   to   impute   criminal   liability   upon   the   Respondents <\/p>\n
              specifically, which is a matter of record and therefore, at the very threshold, High Court <\/p>\n
              was   justified   in   discharging   them   rather   than   directing   them   to   face   the   Criminal <\/p>\n
              prosecution   unnecessarily.     According   to   them,   in   this   view   of   the   matter,   no <\/p>\n
             interference   is   called   for   against   the   impugned   order   and   Appeals   deserve   to   be <\/p>\n
             dismissed.\n<\/p>\n
        10. To analyze the case before us in proper perspective, it is necessary to scrutinize all the <\/p>\n
             Criminal   Complaints   one   by   one.   On   perusal   of   the   complaints,   we   observe   that   the <\/p>\n
             specific averment of vicarious criminal liability as mandated by the three Judge Bench of <\/p>\n
             this   Court     in   the   case   of    S.M.S.   Pharmaceuticals   Limited  Vs.  Neeta   Bhalla   and <\/p>\n
             Another, reported in 2005 (8) SCC 89,  is contained in them in the form mentioned in <\/p>\n
             Para 4 hereinabove.\n<\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                          – 5 –\n<\/p>\n
        11. Thus, in the light of the aforesaid averments as found by us in the Criminal Complaint, <\/p>\n
             we are of the considered opinion that sufficient averments have been made against the <\/p>\n
             Respondents that they were the partners of the firm, at the relevant point of time and <\/p>\n
             were  looking after day to  day affairs  of the partnership firm. This averment has been <\/p>\n
             specifically   mentioned   by   the   Appellant   in   the   complaint   even   though   denied   by   the <\/p>\n
             Respondents but the burden of proof that at the relevant point of time they were not <\/p>\n
             the partners,   lies specifically on them. This onus is required to be discharged by them <\/p>\n
             by leading evidence and unless it is so proved, in accordance with law, in our opinion, <\/p>\n
             they   cannot   be   discharged   of   their   liability.   Consequently,   High   Court   committed   an <\/p>\n
             error   in   discharging   them.   Also,   at   the   cost   of   repetition,   by   virtue   of   their   own <\/p>\n
             submissions before the High Court (reproduced in Para 6 above), the Respondents have <\/p>\n
             admitted the fact that the Appellant had referred to them in their capacity as partners <\/p>\n
             who were incharge of the affairs of the firm in the initial complaints. The question as to <\/p>\n
             whether or not they were partners in the firm as on 31.03.2004, is one of fact, which has <\/p>\n
             to be established in trial. The initial burden by way of averment in the complaint has <\/p>\n
             been made by the Appellant.\n<\/p>\n
        12. The   primary   responsibility   of   the   complainant   is   to   make   specific   averments     in   the <\/p>\n
             complaint   so   as   to   make   the   accused   vicariously   liable.   For   fastening   the   criminal <\/p>\n
             liability,   there   is   no   legal   requirement   for   the   complainant   to   show   that   the   accused <\/p>\n
             partner of the firm was aware about each and every transaction.     On the other hand, <\/p>\n
             proviso to Section 141 of the Act clearly lays down that if the accused is able to prove <\/p>\n
             to the satisfaction of the<\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                           – 6 –\n<\/p>\n
        Court   that   the   offence   was   committed   without   his   knowledge   or   he   had   exercised   due <\/p>\n
        diligence to prevent the commission of such offence, he will not be liable of punishment.\n<\/p>\n
        Needless   to   say,   final   judgment   and   order   would     depend   on   the   evidence   adduced.\n<\/p>\n
        Criminal liability is attracted only on those, who at the time of commission of the offence, <\/p>\n
        were  in charge of and were responsible  for the  conduct of  the business  of the firm. But <\/p>\n
        vicarious   criminal   liability   can   be   inferred   against   the   partners   of   a   firm   when   it   is <\/p>\n
        specifically averred in the complaint about the status of the partners “qua” the firm. This <\/p>\n
        would   make   them   liable   to   face   the   prosecution   but   it   does   not   lead   to   automatic <\/p>\n
        conviction.  Hence, they are not adversely prejudiced – if they are eventually  found to  be <\/p>\n
        not guilty, as a necessary consequence thereof would be acquitted.\n<\/p>\n
        13. At the threshold, the High Court should not have interfered with the cognizance of the <\/p>\n
               complaints   having   been   taken   by   the   trial   court.   The   High   Court   could   not   have <\/p>\n
               discharged the respondents of the said liability at the threshold. Unless parties are given <\/p>\n
               opportunity to lead evidence, it is not possible to come to definite conclusion as to what <\/p>\n
               was   the   date   when   the   earlier   partnership   was   dissolved   and   since   what   date   the <\/p>\n
               Respondents ceased to be the partners of the firm.\n<\/p>\n
        14. Before   concluding   the   present   discussion,   we   also   take   this   opportunity   to   strike   a <\/p>\n
               cautionary note with regard to the manner in which High Courts ought to exercise their <\/p>\n
               power   to   quash   criminal   proceedings   when   such   proceeding   is   related   to   offences <\/p>\n
               committed     by     companies.       The     world     of     commercial     transactions     contains <\/p>\n
               numerous<\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                          – 7 –\n<\/p>\n
        unique intricacies, many of which are yet to be statutorily regulated. More particularly, the <\/p>\n
        principle laid down in Section 141 of the  Act (which is pari materia with identical sections in <\/p>\n
        other   Acts   like   the   Food   Safety   and   Standards   Act,   the   erstwhile   Prevention   of   Food <\/p>\n
        Adulteration   Act   etc.   etc.)   is   susceptible   to   abuse   by   unscrupulous   companies   to   the <\/p>\n
        detriment of unsuspecting third parties. In the present case, there are several disputed facts <\/p>\n
        involved – for instance, the date when the partnership came into being, who were the initial <\/p>\n
        partners, if and when the Respondents had actually retired from the partnership firm etc.<\/p>\n
        15.        Strictly speaking, the ratio of the SMS Pharmaceuticals (supra) can be followed only, <\/p>\n
        after   the  factum  that   accused   were   the   Directors   or   Partners   of   a   Company   or   Firm <\/p>\n
        respectively at the relevant point of time, stands fully established. However, in cases like the <\/p>\n
        present, where there are  allegations  and counter-allegations  between the  parties regarding <\/p>\n
        the   very   composition   of   the   firm,   the   above   rule   of   `specific   averment’   must   be   broadly <\/p>\n
        construed. Indeed, it would be nothing short of a travesty of justice if the Directors of a <\/p>\n
        Company   of   Partners   of   a   Firm,   who,   having   duped   a   third-party   by   producing   false <\/p>\n
        documents (like a fake partnership deed) or making false statements (that some others were <\/p>\n
        in charge of the Company\/Firm), at a subsequent stage, seek protection from prosecution <\/p>\n
        on the ground that they were not directly indicted in the complaint – such a proposition <\/p>\n
        strikes against one of the very basic tenets of the law of natural justice, which is, that none <\/p>\n
        shall be allowed to take advantage of his own default. Of course, the above observation is <\/p>\n
        of a general nature, and has no bearing on the present case,  but  nonetheless, the power to <\/p>\n
Crl. A. @ SLP(Crl.)No.1874 of 2008 etc. …. (Contd.)<\/p>\n
                                                           – 8 –\n<\/p>\n
        quash a criminal proceeding with respect to an offence under Section 141 of the Act, must <\/p>\n
        be exercised keeping this advisory note and caveat in mind.\n<\/p>\n
        16.      On   account   of   foregoing   discussion,   we   are   of   the   considered   opinion   that   the <\/p>\n
        impugned   judgment   and   order   passed   by   learned   Single   Judge   exercising   the   jurisdiction <\/p>\n
        conferred on him under Section 482 of the Cr.P.C. cannot be sustained in law. The same <\/p>\n
        are   hereby   set   aside   and   quashed.   The   trial   court   is   directed   to   dispose   of   the   Criminal <\/p>\n
        complaints filed by Appellant at an early date, after giving opportunity of hearing to both <\/p>\n
        sides, in accordance with law.   However, the Trial Court would not be influenced by any of  <\/p>\n
the observations made hereinabove and would decide the matters in accordance with law.\n<\/p>\n
The appeals are allowed. Parties to bear their respective costs.\n<\/p>\n
                                                                    ……………………………J.\n<\/p>\n
                                                                    [Dalveer Bhandari]<\/p>\n
                                                                 ……………………………J.\n<\/p>\n
                                                                       [Deepak Verma]<\/p>\n
New Delhi<\/p>\n
April 13, 2011.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Rallis India Ltd vs Poduru Vidya Bhusan & Ors on 13 April, 2011 Author: D Verma Bench: Dalveer Bhandari, Deepak Verma REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 924 of 2011 [Arising out of SLP(Crl.) No. 1874 of 2008] Rallis India Ltd. ………….Appellant Versus Poduru […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-176286","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nRallis India Ltd vs Poduru Vidya Bhusan & Ors on 13 April, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/rallis-india-ltd-vs-poduru-vidya-bhusan-ors-on-13-april-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rallis India Ltd vs Poduru Vidya Bhusan & Ors on 13 April, 2011 - 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