Priyarat Mohanty Alias Priyabrat Mohanty vs. The State Of Jharkhand

Held

The Court held that for vicarious liability of a partner in a partnership firm concerning misappropriation or conversion of property, there must be material evidence to show the partner's involvement or interest in the misappropriated property. In this case, there was no material on record to demonstrate that the petitioner had entered into any agreement with the complainant or had signed the cheque in question. Consequently, the Court found that the petitioner could not be held vicariously liable for the actions of the co-accused. The Court set aside the impugned order and allowed the criminal miscellaneous petition, quashing the criminal proceedings against the petitioner. The ratio decidendi is that mere partnership does not automatically render a partner liable for the criminal acts of another partner without evidence of their direct involvement or benefit from the alleged offense.

Facts

This case involves a petition filed under Section 482 of the Cr.P.C. by Priyarat Mohanty (petitioner) seeking to quash criminal proceedings and a summoning order dated August 23, 2018, in Complaint Case No. 191 of 2018. The complaint, filed by RSR Enterprise (opposite party no. 2), alleges offenses under Sections 406, 420, and 34 of the Indian Penal Code. The dispute arises from the non-payment of Rs. 9,61,000/- for hired vehicles and equipment provided by the complainant to M/s Nidhi Enterprises, a firm where Sunil Kumar Singh and the petitioner were partners. A cheque issued by Sunil Kumar Singh for the outstanding amount was allegedly not presented due to the firm's financial condition. The petitioner denies any involvement with M/s Nidhi Enterprises, claiming he did not enter into any agreement or sign any cheque.

Key Issues

1. Whether the petitioner can be held vicariously liable for the alleged offenses under Sections 406 and 420 of the Indian Penal Code, despite his claims of no direct involvement with the firm's transactions and the complainant, and no signature on the dishonored cheque? Petitioner's arguments: The petitioner contends that he has no connection with M/s Nidhi Enterprises, and its GST portal lists it as a proprietorship of Sunil Kumar Singh. He asserts he neither entered into an agreement nor signed any cheque. Furthermore, he argues that since a part of the amount was paid, the intention to deceive from the inception, a prerequisite for Section 420 IPC, is absent. He relies on precedents like Binod Kumar & Others Versus State of Bihar & Another, Deepak Gaba & Others Versus State of Uttar Pradesh & Another, and Vunna Visali Versus State of A.P. & Another, arguing that the dispute is purely civil. Opposite Party No. 2's arguments: The complainant argues that under Section 25 of the Partnership Act, the liability of a partner is co-extensive with other partners, and the principle of agency applies. The cheque issued by Sunil Kumar Singh was on behalf of the firm.