Vicarious liability is maintainable where specific averments and partnership agreements establish active management of LLP affairs.

The applicants are partners/designated partners of Aditya Multinational LLP, registered under the LLP Act, 2008, engaged in metal trading from Rajkot.

The complainant (respondent no.2), a partnership firm trading in steel and metal, supplied goods worth Rs.2,88,09,655/- to the LLP under GST invoices; Rs.98,48,333/- remained unpaid, towards which various cheques were issued under the signature of accused no.2, all of which were dishonoured with the endorsement "insufficient funds".

The statutory demand notice dated 25.01.2025 was returned with the endorsement "address left without instructions," whereupon notice was published in the newspaper "Jai Hind" on 25.01.2025.

After expiry of the notice period, nine complaints were filed before the Chief Judicial Magistrate, Bhavnagar under Sections 138, 141, 142 and 143 of the N.I. Act; the Magistrate, after recording verification, issued summons vide order Exh.1 dated 19.02.2025.

The applicants — arraigned as accused no.3, non-signatory partners of the LLP — sought quashing of the complaints and summons on the ground that the complaints contained only general, bald and mechanical averments and failed to satisfy the mandatory requirements of Section 141 of the N.I. Act.

1. Whether the impugned complaints contained specific and cogent averments satisfying the mandatory requirement of Section 141 of the N.I. Act, i.e., that the applicant-partners were "in charge of and responsible to" the LLP for the conduct of its business at the time the offence was committed.

2. Whether arraigning the applicants merely on the strength of their designation as partners of the LLP, without specific averments of active involvement, consent, connivance or negligence, rendered the complaints an abuse of process liable to be quashed at the threshold.

Section 138 of the N.I. Act (offence of dishonour of cheque) read with Section 141, which extends criminal liability to every person who, at the time of the offence, was "in charge of, and was responsible to, the company for the conduct of the business," its Explanation bringing a firm/association of individuals within "company" and partners within "director".

National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 (there is no deemed liability; the person must be averred to be in charge of and responsible for the conduct of business as a fact).

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 (mere designation as director is insufficient; specific role and responsibility must be disclosed).

Bijoy Kumar Mohanty v. Paresh Manna, 2024 INSC 1024 (Section 141 requires strict proof of being in charge of and responsible for the conduct of business).

State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 (quashing where prosecution constitutes abuse of process).

Mansi Finance (Chennai) Ltd. v. M. Lalitha, 2026(0) AIJEL-SC 77062 (vicarious liability must be pleaded and proved, not inferred; however, no specific averment is needed against a Managing Director/Joint Managing Director or a director/officer who signed the cheque).

The Court also affirmed that a complaint need not mechanically reproduce Section 141's phraseology provided the substance of the allegations, read as a whole, discloses the factual foundation of liability.

The Court scrutinised the complaint's averments, which stated that accused nos. 2 and 3 were partners "associated with all the day-to-day affairs and management" of the LLP, that they personally approached the complainant for the metal-trading business, and that they personally handed over the cheques with assurances that sufficient funds were available.

The Court further examined the LLP Agreement, which showed both applicants as designated partners sharing profits and losses equally (50% each), with clause 32 expressly stipulating that all partners "shall be the working partners" who shall give time and attention to the LLP's objectives.

Read cumulatively, the Court found that the complainant had "pleaded and shown" that the applicant was responsible for the conduct of the LLP's business at the time of the offence, and that the LLP Agreement gave rise to an inference that the applicant was responsible for day-to-day affairs.

The contention that GST returns were signed solely by accused no.2 was rejected, as GST returns cannot constitute conclusive evidence for a prima facie finding negating vicarious liability, Section 141 operating as a legal fiction.

The sworn statement of the complainant asserting that the applicant was in-charge of the LLP's business sufficed at the prima facie stage, and no further material could be expected of the complainant at the threshold.

All nine Criminal Miscellaneous Applications were dismissed and the Rule was discharged.