Gujarat High Court
Atur Thakorbhai Patel Poa Of Patel ... vs State Of Gujarat on 31 August, 2023
NEUTRAL CITATION
R/CR.MA/15275/2023 ORDER DATED: 31/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 15275 of 2023
In F/CRIMINAL APPEAL NO. 30934 of 2023
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ATUR THAKORBHAI PATEL POA OF PATEL MAJULABEN THAKORBHAI
Versus
STATE OF GUJARAT
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Appearance:
NIRAV C BHATT(7420) for the Applicant(s) No. 1
for the Respondent(s) No. 2
MS VRUNDA SHAH ADDL. PUBLIC PROSECUTOR for the Respondent(s)
No. 1
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CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 31/08/2023
ORAL ORDER
1. Heard Mr. Nirav Bhatt, learned advocate for the applicant - original complainant.
2. Rule returnable forthwith. Learned APP waives service of Rule on behalf of the respondent No.1 - State.
3. This application is filed seeking leave to appeal against the judgment and order dated 28.06.2023 passed by the learned 3rd Additional Chief Judicial Magistrate, Vadodara, in Criminal Case No.38784 of 2021, acquitting the present respondent No.2 - original accused for the offence punishable under Section 138 of the Negotiable Instruments Act.
4. Learned advocate while inviting attention of this Court to the nature of transaction, has submitted that the complainant is running as partnership concern and is engaged in the business of construction. The accused and the complainant were known to each other for a long time and because of their friendly relations, Page 1 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined the complainant had agreed to extend financial help to the accused. It is the case of the complainant that the amount of Rs.4 Lakhs was borrowed by the accused and against repayment of the aforesaid amount, the respondent - accused had given a cheque of the aforesaid amount, on 16.09.2021 drawn from the account with J.J. & K. Bank, Alkapuri, Vadodara. It is further submitted that the said cheque was presented in the bank account of complainant with Indusind Bank, Dandia Bazar, Vadodara, on 18.09.2021. However, the same was dishonored with reason "account closed:
as reflected in the memo of return issued by the said bank on 28.09.2021. The aforesaid documents have come on record in the form of evidence. In such circumstances, the complainant was constrained to issue legal notice dated 14.10.2021 raising demand of the aforesaid outstanding amount. The said notice though duly served upon the respondent - accused, no response was given to such notice neither any amount was paid towards the same. The complainant had approached the Court of learned Additional Judicial Magistrate, Vadodara, by lodging complaint under Section 138 of the Negotiable Instruments Act, which was registered as Criminal Case No.38784 of 2021.
By referring to the aforesaid transaction, it is further submitted by the learned advocate for the applicant that the transaction had taken place with an individual, however, the cheque was drawn from the account of "Shan Associates'', which is a partnership firm in which said accused was one of the partners. It is further submitted that in such circumstances, the learned Magistrate ought not to have dismissed the complaint only on the ground that the firm was not joined as party respondent - accused. Learned advocate has emphasized on the fact that the accused could not have taken benefit of his own act. It is submitted that no response was given to the legal notice nor he had disputed the signature on the cheque in question. Learned advocate has also relied upon the judgment of the Hon'ble Supreme Court in the Page 2 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined case of Goa Plast Pvt. Ltd. Vs. Shir Chico Ursula D'Souza reported in 2003(2) GLH 75 and has submitted that even when the instructions were issued to the bank for stop payment of cheque would attract the offense punishable under Section 138 of the Negotiable Instruments Act. He, therefore urged this Court that noticing the aforesaid fact that the account was closed by the respondent - accused, learned Magistrate was required to convict the accused for the offence under Section 138 of the Negotiable Instruments Act. He, therefore, urged this Court to grant leave to appeal.
5. Learned advocate for the applicant at outset, has drawn attention of this Court to the issue involved. It is submitted by the learned advocate on record that the learned Magistrate had proceeded to pass the impugned judgment and order mainly on the ground that the complainant has failed to join the partnership firm "Shan Associates" as party respondent - accused.
6. Having heard the learned advocate for the applicant and having gone through the reasons assigned by the learned Magistrate and the documents placed on record, the only question of law, which arises for consideration in the present aspect is whether the partner of the firm can be prosecuted without arraigning Firm / Company as accused for dishonor of cheque under Section 138 of the Negotiable Instruments Act. In other words, whether a complaint is maintainable under Section 138 of the Negotiable Instruments Act in absence of firm being joined as accused.
7. If one looks at charge in Section 138 of the Negotiable Instruments Act, the following ingredients are required to be complied with to attract the offence under Section 138 of the Act.
1. There is legally enforceable debt.
2. That the cheque was drawn from the account of the bank for discharge in whole or in part of any debt or other liability Page 3 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined which presupposes the legally enforceable debt.
3. Cheque so issued has been returned due to insufficient funds.
Plain reading of Section 138 of the Negotiable Instruments Act indicates that the person, who has drawn the cheque on the account maintained by him with the banker for payment of any amount of money to another person, out of that amount for discharge in whole or in part or any debt or other liability, if returned unpaid, then such person shall be deemed to have committed offense. Thus, the fastening of the criminal liability under Section 138 of the Negotiable Instruments Act, it would be the drawer of the cheque, who would be held responsible.
8. At this stage, it would be appropriate to look into the provisions of Section 141 of the Negotiable Instruments Act. Section 141 is reproduced as under:
"Section 141:
141 Offences by companies. --
(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government Page 4 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-- For the purposes of this section,--
(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.]"
The plain reading of the aforesaid section indicates that vicarious liability of a partner arises only if the partner has been directly involved in day to day affairs of running business with consent, connivance or is attributed to any negligent of said partner of the firm. The Director or partner cannot be held vicariously liable for a criminal offence under Section 138 of the Act merely because of he holding position as Director or partner or the Company or the firm, unless the Company or the firm is made an accused in the criminal proceedings and further if proved that such offence was committed as principal accused. The aforesaid provision deals with the offence committed by the Company. The explanation appended to Section 141 provides that the term "Company" means any body corporate and includes a firm or other association of individuals. Explanation (b) provides the term "Director" in relation to a firm, means a "partner" in the firm. Section 141 of the Negotiable Instruments Act clearly stipulates that when the person, which is a Company commits an offence, then certain categories of persons in-charge as well as Company Page 5 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined both would be liable.
9. The statutory intendment as reflected in section 141 according to the Hon'ble Supreme Court is absolutely plain as held in the case of Aneeta Handa Vs. M/s. Godfather Travels & Tours Pvt. Ltd. reported in (2012) 5 SCC 661. The relevant observations of Hon'ble Supreme Court are reproduced as under:
"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 dragnet 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 (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph
51. he decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove."
In light of the aforesaid principle laid down, the effect of reading Section 141 is that when the Company / Firm is the drawer of the cheque, such Company / Firm is the principal offender under Section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the legislature as per the section. Thus, the impleadment of partnership firm is mandatory as the firm would be treated as principal offender and liability of the partners would be fixed thereafter.
10. This Court, while examining the impugned judgment and Page 6 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023 NEUTRAL CITATION R/CR.MA/15275/2023 ORDER DATED: 31/08/2023 undefined order, had called upon the learned advocate to explain the cause title of the original complaint. In the cause title, the name of the respondent - accused has been reflected as "Ravi Dinanath Thakur (Shan Associates)". Learned advocate has fairly submitted that the firm has not been joined as party respondent - accused in the original proceedings. He also submitted that it is an individual with whom the transaction had taken place, who has been joined as party respondent - accused. Indisputably, the disputed cheque has been drawn from the account of the partnership firm i.e. "Shan Associates".
11. Thus, in the opinion of this Court, no error can be found with the approach of the learned Magistrate in passing the impugned judgment and order of acquittal. The issue involved in the present case which goes to the very root of maintainability of complaint itself being a moot question of law, this Court is not inclined to grant leave to appeal. Hence, the present application seeking leave to appeal is rejected. Rule is discharged.
In view of the dismissal of the application for leave to appeal, the Criminal Appeal does not survive and hence, disposed of.
(NISHA M. THAKORE,J) Y.N. VYAS Page 7 of 7 Downloaded on : Sun Sep 17 03:05:56 IST 2023