Section 138 of NI Act: Can there be piecemeal
settlement with one accused director/partner?
The
section 138 -147 of Negotiable Instruments Act 1881 (as amended and up to date)
is a code in itself, in a sense, that myriads of issues are raised, while the
process of trial begins and in the touchstone of law, the issues are
deliberated and settled and judgments are passed. The discussion herein ,
however, shall be in narrow compass. What shall be the situation, if, in case
of an accused company, there are two
directors representing the accused company and are arrayed as a party, for their defining roles in issuing
cheques and it is dishonoured for “insufficient funds”? Whether, the complaint
can be settled in piecemeal manner with a Director/accused by receiving part of
the cheque amount from one accused/director and whether, in such circumstances,
the complaint against the other director could continue? In other words, if only
part of the cheque amount could be paid by one of the director and the said
director persuades the complainant, that he, having paid the dues towards his
liability, the disputes could be compounded qua him and the complainant for
remaining claim could pursue the complaint, against the other directors.
Similarly, as a corollary, in case of an accused being a partnership firm, one
of the partners pays part of the cheque amount, ostensibly part of his
liability, while impressing upon the complainant to pursue the case against the
other partner, allegedly, qua his share. Whether such a settlement, so to say,
a piecemeal settlement u/s 138 of Negotiable Instruments Act, shall pass
muster, and if it does, whether such complaints could be compounded against
such partner/director and qua the alleged shares of other director/partner
whether the proceedings could continue has been a moot point to deliberate
herein.
Most
recently, the Delhi High Court had dealt with such a situation in a matter
reported as CRL.M.C. 2928/2021 & Crl.M.A. 18466/2021 SATISH KUMAR
PAWA Vs STATE OF NCT OF DELHI
FACTS AS A PRELUDE TO THE
PETITION
(i)
A petition was preferred by the
accused partner under Section 482 of the Code of Criminal Procedure, 1973 against
the Order dated 02.07.2019 of the learned ACMM, whereby Complaint under Section
138 of the Negotiable Instruments Act, 1988 filed by the Complainant in
respect of dishonor of cheque of Rs.50 Lacs against the partners/Partnership
Firm, was compounded qua one of the Partner, on receiving of Rs.25 Lacs
from him, but continued against the second Partner/ Petitioner. The petitioner
had challenged the order of partial compounding, on the premise that the
liability of the two accused/ partners of the Partnership Firm (unregistered)
was joint and several and thus, compounding in piecemeal manner, should not
have been permitted. The petitioner had therefore, preferred the quashing of
the Complaint against himself in terms of compounding of the offence. being the
Partner of the Firm.
(ii) To
elucidate further, the complaint was filed under Section 138 read with Section 141
of the Negotiable Instruments Act, 1881 against Petitioner and
Respondents No.3 & 4 i.e other partners. The ld Metropolitan Magistrate took cognizance of the
Complaint and issued summons to all the accused persons, namely, Petitioner,
Respondent No.3/M/s Jagat Overseas and Respondent No.4/Mr. Sant Lal
Aggarwal, on 19.11.2015, in response to which, Petitioner and Respondent No.4
appeared before the learned MM. The learned MM vide Order dated
07.03.2018 observed that “as unregistered partnership firm is only a
compendious name under which the activity of the firm carried out and it is not
a legal entity with respect to an unregistered partnership firm with respect to
any act or omission attributable act the partners would be liable”.
(iii) The
notice under Section 251 Cr.P.C for the offence under Section 138 of the Negotiable
Instruments Act, was framed against Satish Kumar Pawa and Sant Lal
Aggarwal, the two Partners and not against the Firm, to which they pleaded
not guilty. However, at the stage of Complainant’s evidence, the
parties entered into settlement and eventually settlement was arrived at
between the complainant and Respondent No.4/Sant Lal Agarwal. As per the
settlement Rs 25,00,000/- was payable by the said accused and a sum of Rs.25,00,000/-, out of
which Rs.20,00,000/- stood already paid and balance Rs.5,00,000/- was paid
before the learned MM. The Complainant thus, compounded the offence under
Section 138 N.I. Act qua Respondent No.4/Sant Lal Agarwal, who was
acquitted of the offence. However, the Complaint was continued against the
Petitioner Satish Kumar Pawa, the second Partner, even after compounding of the
offence.
Aggrieved, the
petitioner had filed Petition seeking quashing of the Complaint under Section
138 read with Section 141 Negotiable Instruments Act, 1881 asserting
that in view of Orders dated 07.03.2018 and 02.07.2019, the Complaint does not
survive on account of compounding on behalf of the Partnership Firm.
TERMS OF SETTLEMENT
It is of pertinence
to refer to terms of settlement before going further. The relevant part of
Settlement Agreement reads as under:
“1. It is agreed between the
parties that respondent no.2/Santlal Agarwal being an equal partner of
respondent no. 1 firm, shall pay a sum of Rs. 25,00,000(Rupees
Twenty-Five Lakh only) which is half of the total dishonoured cheque amount,
to the complainant, towards full and final settlement of all disputes/claims
arising out of instant complaint case against him.
2. It is
further agreed between the parties that respondent no.2/Santlal Agarwal shall
pay the aforesaid settled amount to the complainant in five equal monthly
instalments of Rs. 5,00,000/-(Rupees Five Lakh only) each, by way of demand
draft, before the referral court on 21st day of every English calendar month.
The instalments would commence from January, 2019 itself. In case of holiday,
the payment shall be made on the next working day.
3. It is
agreed between the parties that in case of default, the respondent no.2 shall
pay a sum of Rs. 15,000/- on one default and in case of second default, the
settlement shall be revoked.
4. It is
agreed between the parties that after realization of the aforesaid settled
amount, the complainant shall be left with no claim/dues/ criminal or civil
liability whatsoever against the respondent no.2/Santlal Agarwal qua the
instant complaint case and he shall withdraw his claim against respondent no.2
accordingly. The complainant shall not recover the civil liability and criminal
liability from the respondent ·no.2 in the present case and he shall also not
file any claim against respondent ·no.2 with regard to the instant matter.
5. Both
the parties have agreed on each and every term. recorded in the settlement
agreement, after carefully reading over and fully understanding and
appreciating the contents, scope and effect thereof as also the consequences of
the breach thereof.
6. The
terms have been settled between the parties of their own free will, volition
and consent and without there being any undue pressure, coercion, influence,
misrepresentation or mistake (both of law and fact), · in any form, whatsoever,
and the settlement agreement has correctly recorded the said agreed terms.
7. Both
the parties undertake that they will abide by and be bound by the agreed
terms/stipulations of the settlement agreement.”
CONTENTIONS OF THE PETITIONER
(i) The Petitioner
had been impleaded as an accused by virtue of Section 141 of the N.I. Act,
making him vicariously liable for the offence committed by the Partnership
Firm; unless it is determined that the offence has been committed by the
Partnership Firm, he as Partner, cannot be held liable for the offence.
(ii) Consequent upon
acquittal of Respondent No.4 vide Order dated 02.07.2019, the Complaint
does not survive against the Petitioner, and the Complaint cannot be proceeded with
against the Officers, Director of the Companies and Partners of the Firm.
(iii) Admittedly, the cheque in question had been
signed by Respondent No.4 on behalf of Respondent No.3/M/s Jagat Overseas,
the Partnership Firm. Further, to secure the payment of the cheque amount,
Respondent No.4 had signed the Promissory Note in favour of the Complainant.
Since the offence has already been compounded with Respondent No.2 and he has
been acquitted, no trial can proceed against the Petitioner alone and he cannot
be held liable under Section 138 of the Act.
(iv) No loan was
advanced by the Complainant to the Partnership Firm; rather it was the amount
paid in discharge of its liability towards supply of rice/paddy. The mala
fide Act of Respondent No.4 cannot be held binding upon the Petitioner. No
letter was ever sent by the Firm to the Complainant qua admission of its
liability. Neither the Partnership Firm nor the Petitioner had received the
alleged legal Notice dated 18.04.2015 sent by the Complainant.
(v) The Respondent
No.4 has in mala fide manner acted against the interest of Partnership Firm.
The alleged Loan transaction and the issuance of Promissory Note was done by
Respondent No.4, without prior consent of the Petitioners, which is in
contravention of the terms and conditions of Clause-10 of Deed of Partnership
dated 01.01.1995. Therefore, the sole responsibility of the transaction was on
Respondent No.4, against whom the offence has already been compounded and the
Complaint does not survive against the Petitioner.
(vi) The Petitioner
and Respondent No.4 are the Partners having equal share in the ratio of 50%
each. However, he has never been engaged in the day-to-day affairs of the
Partnership Firm. Furthermore, the Petitioner at the relevant time and even as
on given dates, did not have access to the place of business. For these
illegal and mala fide acts of Respondent No.4, the Petitioner has already
preferred Arbitration proceedings, which have been stayed by the Supreme Court.
(vii) The reliance
were placed in support of a judgment reported as Dilip Hariramani Vs. Bank of Baroda, 2022
SCC OnLine SC 579.
Hence, a prayer is made for quashing of the
Complaint.
SUBMISSIONS OF THE COMPLAINANT
(i) The Petitioner is admittedly one of the
partners and the second partner Mr. Sant Lal Agarwal, have 50% share in
Respondent No.3/Firm, which has not been disputed. He admits himself to be one
of the Partnership Firm and is responsible for day-to-day affairs of the Firm;
he may have separate action against Respondent No.4 in regard to his acting
against the interest of the Firm, but the Complainant has no concern with it as
he had dealt with the Firm through its Partner/ Respondent No.4.
(ii) The assertion that since no separate Notice
under S.251 NI Act has been framed on the Partnership Firm, he cannot be held
vicariously liable for the acts of the Firm, is also not tenable under Law as
being a Partner in the Firm, he has equal responsibility for the affairs of the
Partnership Firm.
(iii) On behalf of the Complainant that under Section 257
Cr.P.C., it is the discretion of the Complainant to withdraw the Complaint
against one or the other accused persons. The Complainant has exercised his
discretion under Section 257 Cr.P.C. and withdrawn the Complaint against one
Partner on account of settlement with him.
(iv) As per Section 25 of the Partnership
Act, 1932 clearly enjoins that the liability of each partner is joint and
several. Therefore, the Petitioner being a partner in the Partnership Firm, is
severally liable for the amount due from the Firm.
Therefore, it was submitted that
the impugned order does not suffer from any infirmity and the present petition should
be dismissed.
The core legal issue
(A) whether in a case under Section 138
of N.I. Act, against the Partnership Firm, compounding by one partner would be
in discharge of the entire liability of the Partnership Firm or it can be
apportioned to the partners individually?
(B) Whether a Partnership Firm is a legal
entity, which can sue or be sued in its own name?
(C) Whether compounding of Offence by one
Partner would result in complete discharge of the Liability of the Partnership
Firm against all the Partners?
In the light of the core issues, the
factual matrix has to be recapitulated. The Complaint under Section 138 of N.I.
Act was filed against the Respondent No. 3/M/s Jagat Overseas, the
Partnership Firm in which the Petitioner/Satish Kumar Pawa and the Respondent
No.4/Sant Lal Agarwal were the two partners, having their share in the ratio of
50:50. The averments in the Complaint were that the Partnership Firm/
Respondent No. 3/M/s Jagat Overseas, had issued Post-dated Cheque of Rs.
50,00,000/- under the signatures of Respondent No. 4/Sant Lal Agarwal, the
partner, drawn on State Bank of India, which on presentation, was dishonored
for “funds insufficient”.
The Cheque in question, that the
liability incurred was by the Partnership Firm and the Cheque had also been
issued for and on behalf of the Partnership Firm under the signatures of
Respondent No.4 Sant Lal Agarwal, one of the partners.
The moot point was that whether a
criminal case can be filed against an unregistered Partnership Firm. The Section 69 of the Partnership Act provides
for the effect of non-registration. Clause (2) of Section 69 states that
no Suit to enforce a right arising from a Contract, shall be instituted in any
Court by or on behalf of a Firm against any third party unless the Firm is
registered and the persons suing are or have been shown in the Register of
Firms as partners in the Firm. Section 69 of the Partnership Act clearly
stipulates the filing of Suits which are confined to proceedings under
Code of Civil Procedure and not to criminal offences. The word “Suit‟ in common parlance means a
process instituted in the Court for recovery or protection of right or
enforcement of a claim or redressal of civil injuries. It does not encompass
any criminal liability.
The Section 142 of N.I. Act deals
with “cognizance of offence‟ and provides that the Complaint
under Section 138 of NI Act in writing, can be made by the Payee or holder in
due course. The Legislature in its wisdom, has used the word ‘Complaint’ and
not ‘Suit’ in Section 142 of N.I. Act thereby indicating that the bar created
for maintaining a Suit in Section 69 of the Partnership Act by or against an
unregistered Firm, cannot be stretched and applied to maintain a criminal
proceeding under Section 138 of N.I. Act.
LEGAL
PRECEDENTS
The Supreme Court in B.S.I.
Ltd. and Another vs. Gift Holdings Pvt. Ltd. and Another, 2000 SCC (Cri) 538,
interpreted the word “Suit’ while deciding maintainability of a
proceeding under Section 138 of NI Act in the context of ban imposed by the
Sick Industrial Companies (Special Provisions) Act. It provides that no Suit
for Recovery of Money or Enforcement of any security against the Industry,
Company or Guarantee in respect of any loan or advance granted to the
Industrial Company shall lie if in respect of the Industrial Company, an
inquiry under Section 16 is pending or any scheme referred to under Section 17,
is under preparation or consideration. The Court observed that the word “Suit‟ envisaged in Section 22(1) cannot
be stretched to criminal prosecution as it is neither for recovery of money nor
for enforcement of any security, etc. Section 138 of NI Act is a penal
provision for commission of an offence which entails conviction and sentence on
proof of the guilt in duly conducted criminal proceedings. Once the offence
under Section 138 of NI Act is completed, the prosecution initiated is not for
recovery of the amount covered by the Cheque, but for bringing the offender to
penal liability.
The registration or
non-registration of the Partnership Firm would have no bearing insofar as
Section 141 of NI Act is concerned. The same has been held by the Karnataka
High Court in the case of Gowri Containers vs. S C Shetty, ILR 2007
Kar 4586.
The Kerala High Court in Abdul
Gafoor vs. Abdurahiman, 1999 (4) Crimes 98, held that Section 138 is
not a Suit and the bar of Section 69(2) of the Partnership Act would not
operate in such cases. It was further observed that the effect of
non-registration of a Partnership Firm, is applicable only to the cases
involving civil rights and has no application to criminal cases.
It was therefore held by the
hon’ble Delhi High Court in SATISH KUMAR PAWA (Supra)
on the basis of the aforesaid discussion that the Complaint under
Section 138 of NI Act was not maintainable as the Partnership Firm was
unregistered, is not tenable in law.
B. Whether
a Partnership Firm is a legal entity, which can sue or be sued in its own name?
It is a matter of record that M/s
Jagat Overseas was a Partnership Firm, in discharge of whose liabilities,
the Cheque had been issued under the signatures of Respondent No. 4/Sant Lal
Agarwal. It is not in dispute that the Complaint under S.138 NI Act was filed
against the Respondent No. 3/M/s Jagat Overseas and the two Partners. The
Section 141 of N.I. Act provides that where offences are committed by the
Company, then every person at the time of offence committed was in charge of
and was responsible to the Company for the conduct of its business as well as
the Company shall be deemed to be guilty of the offence.
Explanation to Section 141 reads
as under: -
“Explanation.— (a)
“company” means any body corporate and includes a firm or other association of
individuals; and (b) “director”, in relation to a firm, means a partner in the
firm.”
Section 141 of N.I. Act read with
Explanation, therefore, makes it abundantly clear that when an offence is
committed by a Company or a Firm, every member who is responsible and in charge
of the affairs of the Company/Firm is guilty of the offence committed under
Section 138 of NI Act.
The situation, though , became
somewhat piquant owing to the fact that the ld Metropolitan Magistrate, while
framing a Notice under Section 251 of Cr.P.C., 1973 on 07.03.2018, observed that
the Partnership Firm is not a separate entity but it is only a compendium of
persons, and did not frame a Notice against the Partnership Firm, but only
against Respondent No. 4/Sant Lal Agarwal and the Petitioner/Satish Kumar Pawa
separately by describing them as the partner of the Respondent No. 3/M/s
Jagat Overseas.
LAW
Thus, the Notice under Section
251 N.I. Act was framed on 18.04.2018 only against the two partners and not the
Partnership Firm, which has not been challenged by either Party. The Supreme
Court in Aneeta Hada vs M/s Godfather Travels & Tours Pvt. Ltd., AIR
2012 SC 2795, after referring to judgments in Iridium India Telecom Ltd.
v. Motorola Inc and Ors., 2004 (1) BOM CR 479 and Standard Chartered
Bank and others v. Directorate of Enforcement and others, AIR 2006 SC 1301,
has observed that :
“the Company can have criminal
liability and further, if a group of persons that guide the business of the
companies have the criminal intent, that would be imputed to the body
corporate. In this backdrop, Section 141 of the Act has to be understood. The
said provision clearly stipulates that when a person which is a Company commits
an offence, then certain categories of persons in charge as well as the Company
would be deemed to be liable for the offences under Section 138. Thus, the
statutory intendment is absolutely plain.”
According to the Supreme Court “for
maintaining the prosecution under Section 141 of the Act, arraigning of a
company as an accused is imperative.” The relevant paras of the judgment are
reproduced as under: -
“the common proposition of law
that has emerged for consideration is whether an authorised signatory of a
company would be liable for prosecution under Section 138 of the Negotiable
Instruments Act, 1881 (for brevity 'the Act') without the company being arraigned
as an accused. Be it noted, these two appeals were initially heard by a
two-Judge Bench and there was difference of opinion between the two learned
Judges in the interpretation of Sections 138 and 141 of the Act and, therefore,
the matter has been placed before us.
It is to be borne in mind that
Section 141 of the Act is concerned with the offences by the company. It makes
the other persons vicariously liable for commission of an offence on the part
of the company. As has been stated by us earlier, the vicarious liability gets
attracted when the condition precedent laid down in Section 141 of the Act
stands satisfied. There can be no dispute that as the liability is penal in
nature, a strict construction of the provision would be necessitous and, in a
way, the warrant”.
The supreme court while applying
the doctrine of strict construction has held that “ we are of the considered
opinion that commission of offence by the company is an express condition
precedent to attract the vicarious liability of others. Thus, the words
"as well as the company" appearing in the section 8 make it
absolutely unmistakably clear that when the company can be prosecuted, then
only the persons mentioned in the other categories could be vicariously liable
for the offence subject to the averments in the petition and proof thereof. One
cannot be oblivious of the fact that the company is a juristic person and it
has its own respectability. If a finding is recorded against it, it would
create a concavity in its reputation. There can be situations when the
corporate reputation is affected when a Director is indicted. [59] In view of
our aforesaid analysis, we arrive at the irresistible conclusion that for
maintaining the prosecution under Section 141 of the Act, arraigning of a
company as an accused is imperative. The other categories of offenders can only
be brought in the drag-net on the touchstone of vicarious liability as the same
has been stipulated in the provision itself. We say so on the basis of the
ratio laid down in C.V.
Parekh [(1970) 3 SCC 491]
which is a three- Judge Bench decision. Thus, the view expressed in Sheoratan
Agarwal [(1984) 4 SCC 352], does not correctly lay down the law and,
accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1]
is overruled with the qualifier as stated in paragraph 37. The decision in Modi
Distilleries [AIR 1988 Supreme Court 1128] has to be treated to be
restricted to its own facts as has been explained by us hereinabove.”
The Supreme Court has reiterated
in Anil Gupta vs Star India Pvt. Ltd., 2014 (10) SCC 373, Himanshu vs
B. Shivamurthy & Anr., (2019) 3 SCC 797, and recently in Bijoy Kumar
Moni vs Paresh Manna & Anr., 2024 INSC 1024.
What therefore emerged is that it
is settled that in the absence of Company being arraigned as an accused, the
Directors cannot be held liable for the offence committed by a company. Since
the Notice under S.251 Cr.P.C. has not been framed against the Partnership
Firm, this itself is a sufficient ground for discharge of the Petitioner.
C. Whether compounding of Offence
by one Partner would result in complete discharge of the Liability of the
Partnership Firm against all the Partners?
According to the petitioner, the
Partnership Firm defines the group of persons who form a Partnership Firm and
the liability of the partners is joint and several and thus, compounding done
by one partner for the liability of the Partnership Firm, would result in
compounding of the entire case and cannot be apportioned to the Partner who was
not a party to the compromise, by leaving his liability to the extent of his
share in the Partnership Firm.
In the present case, one partner,
the Respondent No. 4/Sant Lal Agarwal has compromised the matter with the
Complainant vide Mediated Settlement Agreement dated 17.01.2019, wherein
the Respondent No. 4/Sant Lal Agarwal, being equal partner of Respondent No.
3/M/s Jagat Overseas, the Partnership Firm, agreed to pay a sum of Rs.
25,00,000/- which is half of the dishonored cheque amount, to the Complainant “towards
full and final settlement of all disputes/claims arising out of instant
complaint case against him”. The said Compromise has been accepted by the
learned Metropolitan Magistrate vide Order dated 02.07.2019 and the case
has been directed to be continued against the Petitioner/Satish Kumar Pawa.
The question arise as to whether
such partial compounding by one partner for the liabilities of the Partnership
Firm, would result in total discharge of all liabilities or it can be
apportioned in the manner it was done by the Respondent No. 4/Sant Lal Agarwal
and the Complainant?.
To delve the issue further, it is
worthwhile to refer to Section 25 of the Partnership Act which provides
that every partner is liable, jointly with all the other partners and also
severally, for all acts of the Firm done while he is a partner. It reads as
under:
“25. Liability of a partner for acts of the firm:
- Every partner is liable, jointly with all the other partners and also
severally, for all acts of the firm done while he is a partner.”
The Firm is not a legal entity;
it is a collective or compendious name for all the partners. In other words, a
Firm does not have any existence away from its partners, though by virtue of
S.141 NI Act, it can be sued in its name. A Decree in favour of or against a
Firm has the same effect as a Decree in favour of or against the partners. When
the Firm incurs a liability, it can be assumed that all the partners were
incurring that liability and so the partners remain liable jointly and
severally for all the acts of the Firm. Therefore, the liability of the
partners is joint and several.
In Ashutosh vs State of
Rajasthan & Ors., AIR 2005 SC 3434, it had been observed by the Supreme
Court that it is open to a creditor of the Firm to recover the debt from any
one or more of the partners. Each partner shall be liable as if the debt of the
Firm has been incurred on his personal liability.
Therefore, when there is a
compromise by one partner, it has to be for and on behalf of the Partnership
Firm and there cannot be any partial settlement with one partner, as has been
done in the present case.
The Complainant has sought to
justify partial compounding and
the withdrawal of the Complaint qua Respondent No. 4 under Section 257 of the
Cr.P.C. which empowers withdrawal of Complaint against one or more accused
persons.
Sections 257 of Cr.P.C. reads as under:
“257. Withdrawal of complaint
— If a complainant, at any time before a final order is passed in any case
under this Chapter, satisfies the Magistrate that there are sufficient grounds
for permitting him to withdraw his complaint against the accused, or if there
be more than one accused, against all or any of them, the Magistrate may
permit him to withdraw the same, and shall thereupon acquit the accused against
whom the complaint is so withdrawn.”
The Delhi High Court in SATISH
KUMAR PAWA (Supra) has held as under:
“59.No doubt, Section 257
empowers a Complainant to withdraw the case on sufficient grounds against ‘all
or any of the accused persons’, but it has to be understood in the right perspective.
As already discussed above, the liability was that of the Partnership Firm,
against whom, in the first instance, the Notice under Section 251 of Cr.P.C.
has not been framed. Furthermore, as already held above, the liability was that
of the Partnership Firm for which both Respondent No. 4/Sant Lal Aggarwal and
the Petitioner/Satish Kumar Pawa were jointly and severally liable for the
liability incurred by the Firm. The Settlement with one partner could not have
been apportioned in the manner it has been done in the present case”.
60. Consequently, when the
Complaint is withdrawn under Section 257 by the Complainant as against
Respondent No. 4/Sant Lal Aggarwal, the same is essentially withdrawn against
the Partnership Firm, which is originally liable for the debt owed to the complainant.
61. In view of Section 25 of the
Partnership Act, the Partners, accused persons herein, are jointly and
severally liable for the acts of the Partnership Firm/M/s Jagat Overseas.
62. In the present case, both the partners,
namely, Petitioner/Satish Kumar Pawa and the Respondent No. 4/Sant Lal Agarwal,
were jointly and severally responsible for the liability incurred by the
Partnership Firm, meaning thereby that each is liable for the entire liability
individually as well as jointly. The partners may have agreed to be entitled to
the share profit & loss in a particular ratio, but their legal liability
towards the third person is joint and several and there can be no apportionment.
In the Mediated Settlement
Agreement dated 17.01.2019 itself, it has been noted that the Compromise is
towards all the existing liabilities of the Partnership Firm which also
acknowledges that the payment made by the Respondent No. 4/Sant Lal Agarwal in
discharge of his liabilities of the Partnership Firm.
The liability of Sh. Sant Lal was
not limited to his 50% as has been erroneously assumed, but is towards the
entire liability. Once this compounding has been accepted by the Complainant,
the necessary implication shall be that it is for and on behalf of the
Partnership Firm.
Therefore, once the matter stands
compromised for whatever the amount, the offence is compounded towards all the
existing liabilities of the Partnership Firm; nothing survives in the Complaint
which has to be necessarily disposed of as compromised against the second
partner/Petitioner as well. Thus, Section 257 of Cr.P.C. do not come to the
rescue of the Complainant/Respondent No. 2 in the case herein.
The Petition was thus allowed and
the Complaint Case No. 10445/2016 under Section 138 of N.I. Act filed by the
Respondent No. 2 was quashed/disposed of as compounded and the
Petitioner/Satish Kumar Pawa was acquitted.
----
Anil
K Khaware
Founder &
Senior Associate
Societylawandjustice.com
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