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Siby Thomas vs M/s Somany Ceramics Ltd.

Special Leave Petition (Crl.) · 2023 INSC 890Decided 10 Oct 2023
Special Leave Petition (Crl.) No. 12 of 2020
C.T. Ravikumar · Sanjay Kumar

Background

Siby Thomas, a partner (accused No. 4) in a partnership firm called M/s Tile Store, was named in a cheque-dishonour complaint filed by Somany Ceramics Ltd. after a cheque issued by the firm for unpaid credit purchases of tiles and sanitary ware bounced. Thomas sought to quash the complaint against him, arguing he had already retired from the partnership on 28 May 2013, well before the cheque was issued on 21 August 2015, and that the complaint failed to make the mandatory specific allegations required under Section 141(1) of the NI Act about his role in the firm's business. The Punjab and Haryana High Court declined to quash the complaint, holding his retirement was a factual matter to be proved through evidence at trial.

Decision Breakdown

The Supreme Court held that regardless of the retirement issue, the complaint independently failed to meet the mandatory threshold under Section 141(1), which requires a person to have been "in charge of, and responsible to the company for the conduct of the business" at the time of the offence, both conditions must be satisfied conjunctively, not just a bare assertion that partners generally manage day-to-day affairs. Examining the complaint's actual wording, the Court found it only made a generic statement that "accused Nos. 2 to 6.. are responsible for the day-to-day conduct and business," with no specific averment describing Thomas's individual role, relying on its precedents in Anita Malhotra v. Apparel Export Promotion Council and Ashok Shewakramani v. State of Andhra Pradesh, which held that vague, boilerplate allegations cannot fix vicarious criminal liability on a partner or director. The Court accordingly allowed the appeal and quashed the complaint against Thomas alone, using its inherent power under Section 482 CrPC.

Lesson Learnt

In a cheque-bounce prosecution, merely naming someone as a partner or director and making a generic claim that they handle "day-to-day affairs" is not enough to prosecute them: the complaint must specifically spell out how that individual was in charge of and responsible for the company's business at the time the offence occurred, or the case against them can be quashed at the threshold.

Official source (sci.gov.in)View Judgment (PDF)

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