Oanali Ismailji Sadikot vs State Of Gujarat & on 3 March, 2016

[Cites 56, Cited by 13]

Gujarat High Court

Oanali Ismailji Sadikot vs State Of Gujarat & on 3 March, 2016

HC-NIC Page 1 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 1 By this writ application under Article 227 of the Constitution of India, the applicant - original complainant has prayed for the following reliefs:

"16(A) Your Lordships may be pleased to allow the present petition.

(B) Your Lordships may be pleased to issue a writ of certiorari or writ in nature of certiorari or any other appropriate writ, direction or order quashing and setting aside the order dt. 15.4.15 passed by the Ld. Additional Chief Judicial Magistrate, Gonal below Exhibit 53 i.e. the application preferred u/s. 319 of the Code of Criminal Procedure in Criminal Case No 222 / 2004; and further be pleased to allow the application at Exhibit 53 preferred in Criminal Case No.222/2004 by permitting the petitioner to show the name of Swastik Construction Company by mentioning separate serial number in the complaint at Exhibit no.1.

(C) Any other and further relief/s as may be deemed just, fit and proper in the facts and circumstances of the present case may kindly be granted in the interest of justice."

2 The facts of this case may be summarized as under:

2.1 The applicant herein filed a complaint being Criminal Case No.222 of 2004 in the Court of the Additional Chief Judicial Magistrate, Gondal, against the respondent No.2 herein for the offence punishable under Section 138 of the Negotiable Instruments Act.

2.2 As is evident on perusal of the complaint itself, which is at page -

11, Annexure: 'A' to this petition, that six individuals have been arraigned as accused being partners of a partnership firm running in the name of 'Swastik Construction'. The partnership firm, as a legal entity or juristic person, has not been arraigned as an accused.

2.3 The learned Chief Judicial Magistrate took cognizance upon the said complaint and ordered issue of process against all the six partners named as accused in the complaint.

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HC-NIC Page 2 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 2.4 It appears that the respondents herein and other coaccused preferred the Criminal Miscellaneous Application No.5043 of 2014 for quashing of the proceedings of the Criminal Case No.222 of 2004 principally on the ground that in the absence of a legal entity, they, in their capacity as partners, cannot be prosecuted for the offence punishable under Section 138 of the Act. To put it in other words, the Court could not have taken cognizance upon the complaint and ordered issue of process against the partners in the absence of the legal entity i.e. the partnership firm before the Court.

2.5 On 16th April, 2014, the following order was passed by a learned Single Judge in the application filed for quashing of the proceedings referred to above.

"Considering the submission that the partnership firm has not been joined in the complaint under Section 138 of the Negotiable Instruments Act, 1881, Rule. To be heard with Criminal Misc. Application No.2356 of 2014. Adinterim relief in terms of Paragraph9(C). Learned APP waives service.

Direct Service for rest is permitted."

2.6 It appears that during the pendency of the above referred application, the Criminal Miscellaneous Application (for modification of order) No.10036 of 2014 came to be filed. The said application was disposed of by the learned Single Judge as under:

"1. Heard learned advocates appearing for the parties.

2. Learned advocate for the applicant has relied upon the decision rendered by the Hon'ble Supreme Court in the case of Hardeepsinh Vs. State of Punjab, reported in 2014 (1) Scale 241.

3. Considering the above aspect, the application is allowed. It would be open for the applicant to file an application under Section 319 of the Criminal Procedure Code before the Trial Court.

4. The Trial Court shall decide such application on its own merits. It is further directed that the Trial Court shall not proceed further with Page 3 of 47 HC-NIC Page 3 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT the case without passing of further orders in the main matter.

5. With the above observations, present application stands disposed of. Rule made absolute. Direct service is permitted."

2.7 On the strength of the order passed by the learned Single Judge referred to above dated 23rd January, 2015, the applicant - original complainant preferred an application Exhibit : 53 in the Criminal Case No.222 of 2004 with a prayer that he may be permitted to implead the partnership firm being a legal entity as an accused in the complaint and trial Court shall take cognizance and issue process against the partnership firm. The application Exhibit : 53 is purported to have been filed under Section 319 of the Code of Criminal Procedure, 1973.

2.8 The learned Chief Judicial Magistrate, Gondal adjudicated the application Exhibit : 53 and vide order dated 15th April, 2015 rejected the same.

2.9 Being dissatisfied with the order passed below Exhibit : 53, the applicant - original complainant has come up with this application, invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India.

3 Mr. Tushar L. Sheth, the learned counsel appearing for the applicant vehemently submitted that the learned Magistrate committed a serious error in rejecting the application Exhibit : 53. He submitted that the application filed under Section 319 of the Cr.P.C. to implead the partnership firm being a legal body is maintainable. He submitted that assuming for the moment that at the relevant point of time, the partnership firm was not impleaded as an accused, and no cognizance was taken for the offence against the legal entity, yet at a later stage, it is open for the Court to permit the complainant to implead the legal entity and proceed further with the trial in accordance with law. He Page 4 of 47 HC-NIC Page 4 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT submitted that the partners of the firm, who have been arraigned as accused in the complaint, are being prosecuted by virtue of Section 141 of the Act. In the absence of the company before the Court, the prosecution would fail as the partners cannot be held vicariously liable for the offence punishable under Section 138 of the Act in the absence of the partnership firm before the Court.

4 Mr. Sheth further submitted that the matter deserves to be considered from a different angle. He submitted that a partnership firm is not a legal entity or juristic person. A partnership is merely an association of persons for carrying on the business of partnership and in law the firm's name is compendious of describing the partner. Mr. Sheth submitted that the prohibition in Section 142 of the Act stretches only to the taking cognizance of any offence. According to Mr. Sheth, a Court takes cognizance only of the offence and not of any offender. Once cognizance has been taken by the Magistrate, it is his duty to find out who the offenders really are. In such circumstances, according to Mr. Sheth, once cognizance of the offence was taken, subsequent impleadment of any other person as accused would not affect the judicial process already adopted in taking cognizance of the offence. He submitted that under Subsection (1) to Section 319 of the Cr. P.C., the Court is given power to proceed against any other person who appears to have committed any offence for which such person could be tried together with the accused already arraigned in the case.

5 Mr. Sheth submitted that the partners have already been arraigned as accused in the complaint. The Magistrate has already taken cognizance and ordered issue of process. In such circumstances, there should not be any legal impediment in the way of the Court in impleading the partnership firm as a legal entity as one of the accused Page 5 of 47 HC-NIC Page 5 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT along with the other coaccused being the partners of the firm.

6 Mr. Sheth submitted that Section 319 of the Cr.P.C. would be applicable even in cases instituted otherwise then on a police report. He prays that there being merit in the matters, the same be allowed and the original application Exhibit : 53 may also be allowed.

7 In support of his submission, Mr. Sheth placed strong reliance on the following decisions:

(1) V. Subramaniuam v. Rajesh Raghuvandra Rao [(2009) 5 SCC 608] (2) Munshi Ram v. Municipal Committee, Chheharta [(1979) 3 SCC 83] (3) Comptroller and Auditor General v. Kamlesh Vadilal Mehta [(2003) 2 SCC 349] (4) Bacha F. Guzdar, Bombay v. Commissioner of Income Tax, Bombay [[1955 AIR SC 74] (5) A Kerala High Court decision of a learned Single Judge (K.T. Thomas, J., as His Lordship then was) in the case of Plywood House v. Wood Craft Products Limited [1994 (1) Crimes 434] (6) Mahabir Cold Storage v. Commissioner of Income Tax, Patna [1991 AIR SC 1357] (7) Hardeep Singh v. State of Punjab and others [2014 (1) Scale 241]

8 Having heard the learned counsel appearing for the applicant and having considered the materials on record, the following questions fall for my consideration:

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HC-NIC Page 6 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT (I) Whether a partnership firm is a legal entity like a company so far as the offence punishable under Section 138 of the Negotiable Instruments Act is concerned?

(II) Is the prosecution of the partners of a firm, by virtue of Section 141 of the Act, maintainable in the absence of the partnership firm being impleaded or arraigned as an accused?

(III) When the complaint under Section 138 of the Act has the initial defect in its sustainability, can such defect be cured by amending the proceedings by virtue of an application under Section 319 of the Cr. P.C.?

         ●       FIRST QUESTION: 

         9      Before I proceed to answer the first question, let me look into the

decisions relied upon by the learned counsel in that regard. In Munshi Ram (supra), the appellants before the Supreme Court were partners of a firm, Bharat Industries, Chheharta. By a Notification, 15th May, 1946, the Chheharta Municipal Committee levied a profession tax under Section 61(1)(b) of the Punjab Municipal Act, 1911. The appellants filed a suit for permanent injunction restraining the defendant - committee from realizing the profession tax demanded by it. The appellants challenged the validity of the assessment contending that construed in light of the definition given in Section 2(40) of the Punjab General Clauses Act, the term "person" occurring in Section 6(1)(b) of the Punjab Municipal Act, 1911, included a "firm" and since the trade carried on by the "firm" was one, the tax could be levied on the firm, and not on the partners individually. On such premises, it was pleaded that the Municipal Committee in levying the tax on the individual partners had exceeded its statutory powers under Section 61 (1)(b) of Page 7 of 47 HC-NIC Page 7 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT the Municipal Act.

9.1 The trial Court dismissed the suit, on appeal by the plaintiffs, the Additional District Judge, Amritsar, reversed the judgment of the trial Court and decreed the suit. The Municipal Committee carried a further appeal to the High Court. The learned Single Judge, who heard the appeal, affirmed the judgment and decree of the first appellate Court. The matter reached upto the Supreme Court. The Supreme Court in para 14 quoted Section 61(1)(b) of the Municipal Act material for the purpose of deciding the case which reads as under:

"Subject to any general or special orders which the State Government may make in this behalf, and the rules, any committee may, from time to time for the purposes of this Act, and in the manner directed by this Act, impose in the whole or any part of the municipality any of the following taxes, namely: (1) (a) ..............

(i) to (iii) ..........

(b) a tax on persons practising any profession or art or carrying on any trade or calling in the municipality.

Explanation. A person in the service or person holding an office under the State Government or the Central Government or a local or other public authority shall be deemed to be practicing a profession within the meaning of this subsection."

9.2 The Supreme Court proceeded to observe in paras 15, 16 and 18 as under:

"15. From a plain reading of the extracted provision, it is clear that a tax leviable under clause (b) is, in terms, a tax on "persons". The expression "persons" undoubtedly includes natural persons. The class of such taxable persons has been indicated by the Legislature with reference to their occupational activity. Thus, in order to be authorised, a tax under clause

(b) of Section 61 (1) must satisfy two conditions: First, it must be a tax on "persons". Second, such persons must be practicing any profession or art or carrying on any trade or calling in the municipality.

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HC-NIC Page 8 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT

16. There can be no dispute that the appellants are "person" and, as such, satisfy the first condition. Even the learned counsel for the appellants has candidly conceded that the individual partners are also "persons" within the meaning of the said clause (b). Controversy thus becomes narrowed down into the issue: Whether persons collectively doing business in partnership in the municipality, fulfill the second condition? That is to say, do such persons "carry on any trade or calling in the municipality"

within the contemplation of clause (b)?"

"18. 'Partnership' as defined in Section 4 of the Indian Partnership Act, 1932, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them for the benefit of all. The section further makes it clear that a firm or partnership is not a legal entity separate and distinct from the partners. Firm is only a compendious description of the individuals who compose the firm. The crucial words in the definition of 'partnership' are those that have been underlined. They hold the key to the question posed above. They show that the business is carried on by all or any of the partners. In the instant case, admittedly, all the plaintiffappellants are carrying on the business in partnership. All the six partners are sharing the profits and losses. All the partners are jointly and severally responsible for the liabilities incurred or obligations incurred in the course of the business. Each partner is considered an agent of the other. This being the position, it is not possible to hold that each of the six partners is not carrying on a trade or calling within the purview of clause

(b) of Section 61 (1) of the Municipal Act. At the most, it can be said that each of these six persons is severally as well as collectively carrying on a trade in the Municipality. There is nothing in the language of Section 61 or the scheme of the Municipal Act which warrants the construction that persons who are carrying on a trade in association or partnership with each other cannot be individually taxed under clause (b) of Section 61 (1).

On the contrary, definite indication is available in the language and the scheme of this statute that such partners can be taxed as persons in their individual capacity. As noticed already, clause (b) makes it clear in no uncertain terms that this is a tax on 'persons'. Its incidence falls on individuals, who belong to a class practicing any profession or art; or carrying on a trade or calling in the municipality. To hold that persons who are collectively carrying on a trade in the municipality cannot be taxed individually, would be to read into the statute words which are not there. There are no words in clause (b) or elsewhere in the statute which, expressly or by necessary implication, exclude or exempt persons carrying on a trade collectively in the municipality from being taxed as individuals. To attract liability to a tax under this clause, it is sufficient that the person concerned is carrying on a trade in the municipality, irrespective of whether such trade is being carried on by him individually or in partnership with others. Thus, both the conditions necessary for levying a tax under clause (b) of subsection (1) of Section 61 of the Municipal Act Page 9 of 47 HC-NIC Page 9 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT existed in this case. The appellants are "persons" and they are carrying on a trade in Chheharta Municipality."

9.3 By placing reliance on the observations made in para 18, the learned counsel submitted that a firm or partnership is not a legal entity separate and distinct from the partners.

10 In Mahabir Cold Storage (supra), the appeal before the Supreme Court was filed by the appellant - assessee against the judgment of the Division Bench, Patna made in the Tax Case answering in favour of the Revenue and against the Assessee. In the said case, the assessee was a registered partnership firm. In para 11, the Court observed as under:

"11. The crucial question, therefore, is whether the appellant is the owner of the machinery and plant in the relevant assessment year 196263. Acquisition of ownership is a condition precedent to avail of the development rebate under S. 33(1) of the Act.It is now fairly clear from the statement of facts that the old and the new partnership firms are separately registered under the Act and the old one was doing its business at Calcutta and the new one at Purnea. They have been separately being assessed as independent assessable entities. Only the new firm alone was reconstituted consisting of the two partners of the old firm M/s. Prayagchand Hanumanmal and Periwal and Co. (P.) Ltd. Prayagchand and Hanumanmal individually are entitled to 25 per cent shares each for the profits in the appellant firm and Periwal and Co. (P.) Ltd. has 50 per cent shares of profit. Under the Indian Partnership Act, '1932 the partnership firm registered thereunder is neither a person nor a legal entity. It is merely acollective name for the individual members of the partnership. A firm as such cannot be a partner in another firm though its partners may be partners in another firm in their individual capacity. Either under the repealed Act or the Act, a firm is liable to be separately assessed to tax as well as all its partners in their capacity as individuals if they have taxable income. The appellant is separately registered under S. 26A of the Act and assessed to tax from the assessment year 196061 and onwards. There is no reconstitution of the original firm Prayagechand Hanumanmal inducting Periwal,and Co. (P.) Ltd. as its partner. Thus it is clear that the appellant assessee is a new identity under the Act. It is not a successor in interest of the old firm as per the provisions of the Act. The question then is whether the assessee is entitled to development rebate under S. 33(1) of the Act. (Under S. 10(1)(vib) of the repealed Act). Section 33(1) gives right to development rebate only to the owner who has Page 10 of 47 HC-NIC Page 10 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT acquired the ship or installed the machinery or plant. The necessary implication is that the assessee who claims development rebate should continue to remain to be the owner of the ship or plant or machinery during the relevant previous assessment year/ years and the owner alone is entitled to the development rebate till it becomes nil in the relevant previous assessment year or the succeeding assessment years carried forward up to 8 years and not thereafter."

11 In Comptroller and Auditor General (supra), the issue before the Supreme Court was whether the respondent being a proprietary concern was eligible for being brought on the panel for audit work of government companies and concerns. The audit work of the government and public undertakings was assigned to only those Chartered Accountant firms which were enrolled on the panel maintained by the appellant. The appellant through an advertisement invited applications from the firms of the Chartered Accountants for the purpose of empanelment for audit of the government companies. The respondent therein had submitted an application for enrollment on the panel, but the same was rejected on account of the fact that his firm was not a partnership firm, but a proprietary concern. Aggrieved, the respondent filed a writ application under Article 226 of the Constitution of India challenging the exclusion of the proprietary concerns from their empanelment as being discriminatory, arbitrary and violative of Article 14 of the Constitution. The learned Single Judge of this High Court allowed the writ petition. The Letters Patent Appeal before the Division Bench was also dismissed. The Comptroller and Auditor General preferred an appeal before the Supreme Court. The Supreme Court, while dismissing the appeal, observed in para 9 as under:

"9. The appellant insists that it is only a smaller group of Chartered Accountants firms that would be eligible for being brought on the panel for audit of public sector undertakings or Government concerns. The audit work of public sector undertaking, no doubt, is to be done by the qualified and efficient Chartered Accountants. Once a person is qualified, Page 11 of 47 HC-NIC Page 11 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT experienced and efficient, it is difficult to understand how he could be discriminated against only for the reason that he has chosen to act alone in the professional career and has not been able to form a partnership firm. The efficiency, as pointed out by the High Court, springs from the personal experience, proficiency and personal capacities. It is, therefore, not possible to link these characteristics and professional acumen to a person or persons in a firm alone. A single individual as an auditor in a proprietary concern can have such characteristics and professional acumen by himself and also through the assistance of experienced auditor who could be in his services as efficient as any partnership firm. It is often seen in many cases that some of the partners of the partnership firm are sleeping partners with no professional duties to discharge. A partnership concern is not a legal entity like company; it is a group of individual partners. In a partnership firm, it is the partner who will be assisted in carrying out the work but quite remains the eligible Chartered Accountant. It is the same situation as in a proprietary concern where a Chartered Accountant would be carrying on audit work allinone. Merely because some of the Chartered Accountants have formed a partnership firm, it cannot be assumed that they become more efficient for carrying out audit work than the individual Chartered Accountant who forms proprietary concern. It is, therefore, evident that the appellant himself erroneously assumed that the partnership firms are more efficient than the proprietary concern in the matter of audit of accounts of the public sector undertakings or of the Government concerns.

12 In Bacha F. Guzdar (supra), the argument before the Supreme Court was that the possession of the shareholders in a company was analogous to that of partners 'inter se'. While holding the analogy is wholly inaccurate, the Supreme Court observed, in para 9, as under:

"9. It was argued that the position of shareholders in a company is analogous to that of partners 'inter se.' This analogy is wholly inaccurate. Partnership is merely an association of persons for carrying on the business of partnership and in law the firm's name is a compendious method of describing the partners. Such is, however, not the case of a company which stands as a separate juristic entity distinct from the shareholders. In Halsbury's Laws of England, Vol. 6 (3rd Ed), page 234, the law regarding the attributes of shares is thus stated :

"A share is a right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and in its winding up. The shares or other interest of any member in a company are personal estate transferable in the manner provided by its articles, and are not of Page 12 of 47 HC-NIC Page 12 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT the nature of real estate"."

13 In V. Subramaniam (supra), the appeal before the Supreme Court arose of a suit filed before the Bombay City Civil Court instituted by the appellant praying for dissolution of an unregistered partnership firm between the appellant and the respondent. In that suit, a defence was taken that the suit was not maintainable in view of Subsection (2A) of Section 69 of the Indian Partnership Act, 1932. The Bombay City Civil Court took the view that Subsection (2A), which was introduced by the Maharastra Amendment to Section 69 of the Act, was unconstitutional being violative of Articles 14 and 19(1)(g) of the Constitution of India. The Bombay City Civil Court made a reference in that regard to the High Court under Section 113 of the Code of Civil Procedure. The High Court, held that Subsection (2A) of Section 69 was not unconstitutional. The appeal came up before the Supreme Court. After noticing Section 69(1) and (2) of the Partnership Act as well as Subsection (2A) introduced by the Maharashtra Amendment 1984, the Court observed in paras 14 and 17 as under:

"14. It may be mentioned that a partnership firm, unlike a company registered under the Indian Companies Act, is not a distinct legal entity, and is only a compendium of its partners. Even the registration of a firm does not mean that it becomes a distinct legal entity like a company. Hence the partners of a firm are coowners of the property of the firm, unlike shareholders in a company who are not coowners of the property of the company."

"17. It has already been mentioned above that a partnership firm, whether registered or unregistered, is not a distinct legal entity, and hence the property of the firm really belongs to the partners of the firm. Subsection (2A) virtually deprives a partner in an unregistered firm from recovery of his share in the property of the firm or from seeking dissolution of the firm."

14 What is discernible from a conspectus of the authorities referred to Page 13 of 47 HC-NIC Page 13 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT above is that a partnership firm, unlike a company registered under the Indian Companies Act, is not a distinct legal entity or a juristic person, but is only a compendium of its partners. Even the registration of a firm would not make it a distinct legal entity like a company. The partners of a firm are coowners of the proprietary firm, unlike the shareholders in a company who are not coowners of the property of the company.

15 However, the position of a partnership firm so far as Section 138 read with Section 141 of the Negotiable Instruments Act is concerned appears to be altogether different. Section 141 of the Act reads as under:

"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 subsection 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 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 subsection (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. Page 14 of 47 HC-NIC Page 14 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT

(a) "company" means any body corporation and includes a firm or other association of individuals; and

(b) "director", in relation to a firm, means a partner in the firm."

16 Subsection (1) of Section 141 of the Act provides that if a person committing an offence under the section is a company, every person who, at the time 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. The offender in section 138 of the Act is the drawer of the cheque. He alone would have been the offender thereunder if the Act did not contain other provisions. It is because of section 141 of the Act that penal liability under section 138 is cast on other persons connected with the company. Three categories of persons can be discerned from the said provision who are brought within the purview of the penal liability through the legal fiction envisaged in the section. They are: (1) The company the principal offender which committed the offence, (2) Every one who was in charge of and was responsible for the business of the company, (3) Any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence. However, if a person proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence, he shall not be liable to punishment under this section. Subsection (2) further provides that where any offence under this Act has been committed by a company and it is provided 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 Page 15 of 47 HC-NIC Page 15 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. The Explanation to the section defines 'company' as any body corporate and includes a firm or other association of individuals; and 'director', in relation to a firm, means a partner in the firm.

17 It is only the drawer of the cheque, who can be held responsible for an offence under Section 138 of the Act. Section 141 provides for the constructive liability. It postulates that a person, in charge of and responsible to the company, in the context of the business of the company, shall also be deemed guilty of the offence. The drawer can be a company, a firm or an association of individuals, but only those directors, partners, or officers can be held responsible for the offence punishable under Section 138 of the Act, who are responsible to the company - firm for the conduct of its business.

18 The Legislature has thought fit to provide an explanation in Section 141 of the Act and the plain reading of the expression "company" as used in Subclause (a) of the explanation appended to Section 141 of the Act shows that it is an inclusive of any body corporate or "other association of individuals". Though the heading of Section 141 of the Act reads "offences by companies"; according to the explanation to that Section, "company" means "any body corporate and includes a firm or other association of individuals and "director", in relation to a firm means "a partner in the firm". The term "other association of individuals" should not be understood to refer even to informal understanding between the individuals. It has to be understood in the context of body corporate and partnership firms. The principal of ejusdem generis gets attracted in such a case. Therefore, a sole proprietary concern is not a company within the meaning of "company"

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HC-NIC Page 16 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT as defined under the explanation to Section 141 of the Act.

19 The Explanation to Section 141 makes it clear that wherever there is a reference under Section 141 to a company it has to be substituted by the word firm where the accused is a partnership firm and the provision has to be read as if it refers to the firm. What this means is that a complaint can be filed for the offence under Section 138 Negotiable Instruments Act not only against the partnership firm on whose behalf the cheque was issued but also against an individual partner or person who, at the time of the commission of the offence, was in charge of the affairs of the firm or responsible to it for the conduct of its business. There is nothing in the provision which indicates that in every complaint involving the dishonour of a cheque issued by a firm both the firm as well as its partners have to be compulsorily impleaded. In other words a complaint in which only the firm is made an accused and the partners are not would not be bad in law for that reason. Clearly that is not the intention of the Parliament.

20 A partnership firm is a separate legal entity in terms of the Indian Partnership Act 1932 and it is answerable in law in that capacity. That is how under various statutes like the Income Tax Act 1961, the Central Excises Act 1944, the Sales Tax Laws and Section 141 Negotiable Instruments Act, a firm can be proceeded against as such. It is perfectly possible for a complainant, aggrieved by the dishonour of a cheque issued by or behalf of a firm, to file a complaint for the offence under Section 138 Negotiable Instruments Act only against the firm. The complainant may choose not to proceed against the individual partners as accused either because he is not aware as to who are the partners or is not interested in proceeding against the partners apart from the firm.

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HC-NIC Page 17 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 21 It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision. Sarathi in 'Interpretation of Statutes' while dwelling on the various aspect of an Explanation observes as follows:

"(a) The object of an explanation is to understand the Act in the light of the explanation.

(b) It does not ordinarily enlarge the scope of the original section which it explains, but only makes the meaning clear beyond dispute."

22 Swarup in 'Legislation and Interpretation' very aptly sums up the scope and effect of an Explanation thus :

"Sometimes an explanation is appended to stress upon a particular thing which ordinarily would not appear clearly from the provisions of the section. The proper function of an explanation is to make plain or elucidate what is enacted in the substantive provision and not to add or subtract from it. Thus an explanation does not either restrict or extend the enacting part; it does not enlarge or narrow down the scope of the original section that it is supposed to explain.......... The Explanation must be interpreted according to its own tenor; that it is meant to explain and not vice versa ."

23 Bindra in 'Interpretation of Statutes' (5th Edn.) at page 67 states thus :

"An explanation does not enlarge the scope of the original section that it is supposed to explain. It is axiomatic that an explanation only explains and does not expand or add to the scope of the original section.... The purpose of an explanation is, however, not to limit the scope of the main provision.... The construction of the explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used. An 'explanation' must be interpreted Page 18 of 47 HC-NIC Page 18 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT according to its own tenor."

24 The principles laid down by the aforesaid authors are fully supported by various authorities of the Supreme Court. In Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Commercial Tax Officer [(1961) 1 SCR 902 : (AIR 1961 SC 315)], a Constitution Bench decision of the Supreme Court observed thus :

"Now, the Explanation must be interpreted according to its own tenor, and it is meant to explain cl. (1)(a) of the Article and not vice versa . It is an error to explain the Explanation with the aid of the Article, because this reverses their roles."

25 In Bihar Cooperative Development Cane Marketing Union Ltd. v. Bank of Bihar (1967) 1 SCR 848 : (AIR 1967 SC 389) the Supreme Court observed thus :

"The Explanation must be read so as to harmonise with and clear up any ambiguity in the main section. It should not be so construed as to widen the ambit of the section."

26 In Hiralal Rattanlal etc. v. State of U.P. [(AIR 1973 SC 1034)], the Supreme Court observed thus :

"On the basis, of the language of the Explanation this Court held that it did not widen the scope of clause (c). But from what has been said in the case, it is clear that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the legislature named that provision as an Explanation. "

27 In Dattatraya Govind Mahajan v. State of Maharashtra [(1977) 2 SCR 790: (AIR 1977 SC 915), the Supreme Court observed thus :

"It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and Page 19 of 47 HC-NIC Page 19 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT to clear up any doubt or ambiguity in it.......... Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations."

28 Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is

(a) to explain the meaning and intendment of the Act itself,

(b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve,

(d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and

(e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.

The first question is answered accordingly in the affirmative.

         ●       SECOND QUESTION: 
         29     In the case of Aneeta Hada v. Godfather Travels & Tours Private

Limited [(2012) 5 SCC 661], the question that arose for disposal of the Supreme Court was whether an authorized signatory of a company would be liable for prosecution under Section 138 of the Negotiable Act without the company being arraigned as an accused. As initially there was difference of opinion between the two learned Judges' regarding the interpretation of Section 138 of the Negotiable Instruments Act, a Page 20 of 47 HC-NIC Page 20 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT Reference was made to the Larger Bench of three Judges'. While deciding the said Reference and interpreting Sections 138 and 141 of the Negotiable Instruments Act, the Supreme Court observed as under:

"53. 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.

58. Applying the doctrine of strict construction, 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 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 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 threeJudge 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 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove."

30 Thus, it has been laid down in unequivocal words in the aforesaid decision that for maintaining the prosecution against the director under Section 141 of the Negotiable Instruments Act, arraigning of a company as an accused is imperative. In view of explanation to Section 141 of the Negotiable Instruments Act referred to above, this legal position needs to Page 21 of 47 HC-NIC Page 21 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT be automatically made applicable in case of prosecution against a partnership firm also. Therefore, it has to be held that for maintaining prosecution against a partner under Section 141 of the Negotiable Instruments Act, arraigning of partnership firm as an accused is imperative.

31 The conclusions drawn by the Supreme Court in the case of Aneeta Hada (supra) are not based merely on the fact that the company is a separate legal entity and juristic person, but these conclusions are drawn on the basis of the fact that Section 141 of the Negotiable Instruments Act deals with the vicarious liability. In paras 58 and 59 of the said judgment , referred above, the Supreme Court has referred to the wordings in Section 141 of the Negotiable Instruments Act and observed that commission of offence by a company is an express condition precedent to attract the vicarious liability of others. It was further held that the words "as well as the company" appearing in the section make it unmistakably clear that when a company is 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. It was further observed that the other categories of offenders like directors or partners of the firm can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself.

32 Thus, the Supreme Court has arrived at an irresistible conclusion that for maintaining the prosecution under Section 141 of the Negotiable Instruments Act, arraigning of the company as an accused is imperative, mainly on the basis of the vicarious liability of the directors of the company and not necessarily because the company is a juristic person and it has its own respectibility. That was an additional Page 22 of 47 HC-NIC Page 22 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT circumstance considered by the Apex Court while holding that arraigning of a company as an accused is imperative, but the main basis for arriving at its conclusion was the vicarious liability which the directors or partners of the firm can have towards the company and hence without joining the company on the touchstone of vicarious liability they cannot be prosecuted.

33 Therefore, the ratio laid down in the case of Aneeta Hada (supra) can be made equally applicable in the case of a partnership firm also. The partners are liable and sued in their vicarious liability. Whether the partnership firm is a juristic person or not is a different aspect. What is important is that a partner of the firm is arraigned as an accused in the dragnet on the touchstone of vicarious liability, as is done in the case of directors of the company. Therefore, there is no reason at all to draw any distinction in respect of the law to be made applicable to a partnership firm and the company.

34 Moreover, the Legislature has already made it clear that the company includes any body corporate which includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. On this count also, when Section 141 of the Negotiable Instruments Act and explanation thereto does not make any distinction between the company and the partnership firm, there is absolutely no reason to draw such distinction while making applicable the law laid down by the Apex Court in Aneeta Hada (supra) to the partnership firm merely because in that judgment the Apex Court was considering the eventuality of nonjoining of the company. The basic premise of holding either the director or the partner liable for prosecution being the same that of the vicarious liability. Therefore, Page 23 of 47 HC-NIC Page 23 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT once the company is held to be an essential party and that arraigning of a company as an accused is imperative for prosecution under Section 141 of the Negotiable Instruments Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under Section 141 of the Negotiable Instruments Act. The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable.

35 In view of the specific provisions of the Act itself, it is very difficult for the Court to take a view that a partnership firm for the purpose of Section 138 read with Section 141 of the Act is not a legal entity, and therefore, it need not be made an accused in the complaint. The decisions relied upon by the learned counsel appearing for the petitioner are of no avail in any manner. Thus, the first question is answered accordingly.

36 The second question is answered accordingly.

         ●       THIRD QUESTION: 

         37     Before I proceed to answer the third question, I deem fit to quote 
         Sections 138 and 142 of the Act:

"138. Dishonour of cheque for insufficiency, etc., of funds in the account Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a [a term Page 24 of 47 HC-NIC Page 24 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both :

Provided that nothing contained in this section shall apply unless

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, b [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation.For the purposes of this section, "debt or other liability"

means a legally enforceable debt or other liability."

"142. Cognizance of offences Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),

(a) no Court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138 :

[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;]

(c) no Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section

138.]"

38 The plain reading of the two sections referred to above would indicate that steps, for lodging of a complaint under Section 138 of the Page 25 of 47 HC-NIC Page 25 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT Act, are required to be taken within the time frame provided under Section 138 of the Act. As regards filing of a complaint for an offence under Section 138 of the Act, Section 142 of the Act, which deals with cognizance of offences punishable under Section 138, lays down a necessary precondition i.e. a written complaint by the payee or the holder of the cheque in due course and prescribes a special period of limitation within which the complaints must be filed (clause (b)). Clause

(b) of Section 142 read with Clause (a) of the section suggests that a Court shall not take cognizance of an offence punishable under Section 138 of the Act unless the complaint in that behalf is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 i.e. on expiry of period of fifteen days from the date of receipt of notice of dishonour by the accused. However, by reason of addition of proviso to Subclause (b) of Section 142, the special period of limitation prescribed thereunder is no longer indefeasible. The proviso vests a discretionary jurisdiction in the criminal Court to waive the period of one month prescribed for taking cognizance of the case under the Act and to take cognizance of an offence punishable under Section 138 despite expiry of such period of limitation, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.

39 Limitation under the Section is, however, provided only for filing the complaint and not for taking cognizance or even for issuing the process. The thrust is only on "making the complaint" meaning thereby "presenting it to the Magistrate". The concept of its cognizance or the concept of issuance of process on the basis of such complaint is simply not to be found in the whole section. It is clear that once the complaint is filed within time contemplated under Section 142(b), the cognizance could be taken later.

Page 26 of 47

HC-NIC Page 26 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 40 In the case in hand, it is not in dispute that the complaint was filed without arraigning the partnership firm being a legal entity as an accused. It is not in dispute that the Magistrate took cognizance upon the complaint in the absence of the legal entity being the principal accused and thought fit to issue process against the Directors by virtue of their vicarious liabilities under Section 141 of the Act.

41 The following are the questions I need to look into:

(I) Whether the complaint under Section 138 of the Act the day it was filed was maintainable in law against the partners alone in the absence of the partnership firm being a legal entity not being impleaded as an accused?

(II) Whether the Magistrate could have taken cognizance upon the complaint and ordered issue of process against the partners of the firm in the absence of the partnership firm being an accused?

(III) Whether, after a period of almost twelve years, the complainant can file an application under Section 319 of the Cr.P.C. to implead the partnership firm as an accused to make the complaint maintainable and pray before the Magistrate to issue process to the firm as a legal entity?

(IV) If the complainant is permitted to do so, could it not be said that indirectly he is substantially amending the complaint thereby changing the entire complexion of the same which is otherwise not permissible in law.

(V) Could it be said that although the cognizance was taken in the year 2004, yet the impleading of the partnership firm, after twelve years, would be in consonance with Section 142(b) of the Page 27 of 47 HC-NIC Page 27 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT Act read with Clause (a)? To put it in other words, could it be said that the complaint against the partnership firm is made within one month from the date on which the cause of action arises under Clause (c) of Proviso to Section 138 of the Act i.e. on expiry of period of fifteen days from the date of receipt of notice of dishonour by the accused?

(VI) Will the situation be saved by virtue of Section 319 of the Cr.P.C., which is sought to be invoked in the present case?

42 I am of the view that Section 319 of the Cr.P.C. has no application worth the name.

43 Section 319 of the Cr.P.C. reads as under:

"319. Power to proceed against other persons appearing to be guilty of offence (1) Where, in the course of any inquiry into, or trial of, an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person could be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed.

(2) Where such person is not attending the Court, he may be arrested or summoned, as the circumstances of the case may require, for the purpose aforesaid.

(3) Any person attending the Court, although not under arrest or upon a summons, may be detained by such Court for the purpose of the enquiry into, or trial of, the offence which he appears to have committed.

(4) Where the Court proceeds against any person under subsection (1), then

(a) the proceedings in respect of such person shall be commenced afresh, and the witnesses reheard;

(b) subject to the provisions of clause (a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced."

Page 28 of 47

HC-NIC Page 28 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 44 The objects and reasons of Section 319 of the Cr.P.C. are as under:

"The Law Commission in its 41st Report observed : "24.80. It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, is also concerned in that very offence or in a connected offence. It is only proper that a Magistrate should have the power to call and join him in the proceedings. Section 351 provides for such a situation, but only if that person happens to be attending the Court. He can then be detained and proceeded against. There is no express provision in S. 351 for summoning such a person if he is not present in Court. Such a provision would make S. 351 fairly comprehensive, and we think it proper to expressly provide for that situation.

24.81. Section 351 assumes that the Magistrate proceeding under it has the power of taking cognizance of the new case. It does not, however, say in what manner cognizance is taken by the Magistrate. The modes of taking cognizance are mentioned in section 190, and are apparently exhaustive. The question is, whether against the newly added accused, cognizance will be supposed to have been taken on the Magistrate's own information under S. 190(1)(c), or only in the manner in which cognizance was first taken of the offence against the accused..................The question is important, because the methods of inquiry and trial in the two cases differ. About the true position under the existing law, there has been difference of opinion, and we think it should be made clear. It seems to us that the main purpose of this particular provision is, that the whole case against all known suspects should be proceeded with expeditiously, and convenience requires, that cognizance against the newly added accused should be taken in the same manner as against the other accused. We, therefore, propose to recast S. 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings. It is, of course, necessary (as is already provided) that in such a situation the evidence must be reheard in the presence of the newly added accused."

45 The crucial words in the section are, 'any person not being the accused.' This section empowers the Court to proceed against persons not being the accused appearing to be guilty of offence. Subsections (1) Page 29 of 47 HC-NIC Page 29 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT and (2) of this section provide for a situation when a Court hearing a case against certain accused person finds from the evidence that some person or persons, other than the accused before it is or are also connected in this very offence or any connected offence; and it empowers the Court to proceed against such person or persons for the offence which he or they appears or appear to have committed and issue process for the purpose. It provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.It naturally deals with a matter arising from the course of the proceeding already initiated. The scope of the section is wide enough to include cases instituted on private complaint.

46 It is therefore abundantly clear that the object of the makers of the statute in enacting Section 319 of the Code was to provide for a more comprehensive provision, with considerable improvement in the old Section 351, for proceeding against other persons appearing to be guilty, although he is not an accused. Section 319 of the Code provides that where in the course of an enquiry or trial of an offence, if it appears from the evidence that any person not being accused has committed any offence, Court may proceed against such person for the offence which he appears to have committed. The intention of the Legislature in enacting Section 319 appears to be that if somebody other than the person who is party and facing trial or enquiry is also an accused, he may be summoned on the basis of some evidence available on the record.

47 Thus, having regard to the substantive provision of Section 319 of the Cr.P.C. read in conjunction with the objectives and reasons, Section 319 of the Cr.P.C. authorizes the Court concerned to take cognizance against any person who has not been tried with the accused, but, who Page 30 of 47 HC-NIC Page 30 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT appears to be a person not being accused has committed any offence along with the accused persons and in such circumstances that person can also be tried together with the original accused subject to the conditions precedent that under the provisions of Section 319 of the Cr.P.C. which must appear from the evidence during the course of inquiry or trial that any other person than the original accused have also committed the alleged offence along with the original accused, then only, cognizance can be taken under the provisions of Section 319.

48 Let me give a simple illustration. Take a case where the partnership firm being a legal entity is an accused. The trial Court has taken cognizance and issued process against the partnership firm as a legal entity. In the course of the trial, it comes to the notice of the Court that one of the partners not being accused has committed an offence for which he could be tried together with other partners (coaccused), the Court would be justified in invoking Section 319 of the Cr.P.C.

[See: Division Bench judgment in Satish Chand Singhal v. State of Gujarat, 2006 Cri. Law Journal 3854] 49 However, when the complaint itself is not maintainable in the absence of the partnership firm being a legal entity before the Court and the cognizance and issue of process against the partners alone is illegal, then there is no question of invoking Section 319 of the Cr.P.C. in such a situation. Section 319 of the Cr.P.C. would not save the situation and is actually not meant to take care of such a serious infirmity in the complaint.

50 The best test in the construction of statutes is to see the subject matter of the purpose for which a provision of law is enacted. One should always get at its real object and purpose; the importance of the Page 31 of 47 HC-NIC Page 31 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT provision of law enacted and its relation to or effect on the general object intended to be secured by its enactment. The surroundings, the purpose of enactment, the end to be accomplished and the consequences that may result by adopting one meaning rather than the other are important factors which must be taken into account while interpreting law.

51 The complaint in question was in fact liable to be dismissed under Section 203 of the Code of Criminal Procedure on the very first day of its prosecution before the learned Magistrate. The maintainability of the complaint is sought to be saved by virtue of Section 319 of the Cr.P.C.

52 It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a factsituation, the legal maxim "sublato fundamento cadit opus" meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case.

53 In Badrinath v. State of Tamil Nadu and Ors. [AIR 2000 SC 3243]; and State of Kerala v. Puthenkavu N.S.S. Karayogam and Anr., [(2001) 10 SCC 191], the Supreme Court observed that once the basis of a proceeding is gone, all consequential acts, actions, orders would fall to the ground automatically and this principle is applicable to judicial, quasijudicial and administrative proceedings equally.

54 Similarly in Mangal Prasad Tamoli (dead) by L.Rs. v. Narvadeshwar Mishra (dead) by L.Rs. and Ors., [(2005) 3 SCC 422 :

(AIR 2005 SC 1964)], the Supreme Court held that if an order at the initial stage is bad in law, then all further proceedings, consequent thereto, will be non est and have to be necessarily set aside.

Page 32 of 47

HC-NIC Page 32 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT

55 In C. Albert Morris v. K. Chandrasekaran and Ors., [(2006) 1 SCC 228], the Supreme Court held that a right in law exists only and only when it has a lawful origin.

56 I am of the view that the application under Section 319 of the Cr.P.C. seeking impleadment of the partnership firm as an accused is more in the nature of a substantive amendment. There is no provision in the Code of Criminal Procedure giving right to the parties to file an application for amendment in the pleadings and give power to the lower Courts to allow the same. Had it been an application for substitution of the complainant on death or a technical flaw, the position would be different. What cannot be done directly by the Court, should not be done indirectly.

57 With regard to the aforesaid, I may quote a recent pronouncement of the Supreme Court in the case of S.R. Sukumar v. S. Sunaad Raghuram [(2015) 9 SCC 609]. The observation in paras 17 and 18 is the answer to the question whether it is permissible for the Court to allow any amendment in the complaint:

"17. Insofar as merits of the contention regarding allowing of amendment application, it is true that there is no specific provision in the Code to amend either a complaint or a petition filed under the provisions of the Code, but the Courts have held that the petitions seeking such amendment to correct curable infirmities can be allowed even in respect of complaints. In U.P. Pollution Control Board vs. Modi Distillery and ors., (1987) 3 SCC 684, wherein the name of the company was wrongly mentioned in the complaint that is, instead of Modi Industries Ltd. the name of the company was mentioned as Modi Distillery and the name was sought to be amended. In such factual background, this Court has held as follows: "...The learned Single Judge has focussed his attention only on the [pic]technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Modi Page 33 of 47 HC-NIC Page 33 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in para 2 of the complaint so as to make the controlling company of the industrial unit figure as the concerned accused in the complaint. All that has to be done is the making of a formal application for amendment by the appellant for leave to amend by substituting the name of Modi Industries Limited, the company owning the industrial unit, in place of Modi Distillery.... Furthermore, the legal infirmity is of such a nature which could be easily cured..."

18. What is discernible from the U.P. Pollution Control Board's case is that easily curable legal infirmity could be cured by means of a formal application for amendment. If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the Court may permit such an amendment to be made. On the contrary, if the amendment sought to be made in the complaint does not relate either to a curable infirmity or the same cannot be corrected by a formal amendment or if there is likelihood of prejudice to the other side, then the Court shall not allow such amendment in the complaint."

58 The Supreme Court in Delhi Administration vs. Gurdip Uban and others [(2007) 7 SCC 296] has explained the principle of doing something indirectly which is otherwise not permitted. The said principle has been explained in para 17 observing thus:

"17. . . . .This procedure is meant to save the time of Court and to preclude frivolous review petitions being filed and heard in open Court. However, with a view to avoid this procedure of 'no hearing,' we find that sometimes applications are filed for 'clarification,' 'modification' or 'recall' etc. not because any such clarification, modification is indeed necessary but because the applicant in reality wants a review and also wants a hearing, thus avoiding listing of the same in chambers by way of circulation. Such applications, if they are in substance review applications deserve to be rejected straightway inasmuch as the attempt is obviously to bypass O. XL, Rule 3 relating to circulation of the application in Chambers for consideration without oral hearing. By describing an application as one for 'clarification' or 'modification,' though it is really one of review a party cannot be permitted to circumvent or bypass the circulation Page 34 of 47 HC-NIC Page 34 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT procedure and indirectly obtain a hearing in the open Court. What cannot be done directly cannot be permitted to be done indirectly."

59 The learned counsel appearing for the petitioner placed strong reliance on one decision of the Kerala High Court delivered by Justice K.T. Thomas (as His Lordship then was), in which, His Lordship took the view that by virtue of Section 319 of the Cr.P.C., the partnership firm can be subsequently impleaded in the complaint. Let me look into the judgment closely. It is a short judgment of eight paras. I deem fit to quote the entire judgment:

"1. The petitioner is a firm. On the strength of some cheques said to" have been issued by the petitionerfirm, two complaints have been filed against the managing partner of the firm for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act"). The first complaint was filed on November 23, 1991, and the other was filed on June 28, 1991. The managing partner of the firm, after entering appearance, raised a contention in the lower court that prosecution against him is not maintainable as the firm which drew the cheques was not made an accused in the complaints. On November 6, 1992, the complainant filed a petition in each case praying for impleading the firm as additional accused. Though the petitions were stoutly resisted, the Chief Judicial Magistrate before whom the complaints were filed, allowed the petitions by the impugned order.

2. Two main contentions have been advanced by learned counsel for quashing the order. The first is that since there is no provision in the Act for impleading a new accused in the case, the court cannot have recourse to the general provisions contained in the Code of Criminal Procedure, 1973 (for short "the Code"). Even otherwise Section 142 of the Act makes it clear that the prosecution proceedings contemplated therein are either untrammelled or unaided by anything contained in the Code, contended counsel. The second contention is that the court is debarred from taking cognizance of the offence against the firm after the expiry of the period of one month from the date of cause of action envisaged in Clause (c) of Section 138 of the Act, and hence the firm cannot be impleaded after the said period.

3. Section 142 of the Act reads as follows :

"Cognizance of offences.Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), Page 35 of 47 HC-NIC Page 35 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT

(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque ;

(b) such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 ;.

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under Section 138,"

4. Section 4(2) of the Code requires that all offences under any law, other than the Indian Penal Code, 1860, shall also be enquired into or tried and otherwise dealt with according to the provisions of the Code, subject to any other enactment which requires a different mode of trial for such offence. The nonobstante clause in Section 142 of the Act is intended to make it clear that the three matters specified in the section have overriding effect on the provisions of the Code. The clause does not keep the provisions of the Code away from trial or inquiry into the offence under Section 138 of the Act as for all other purposes. All that Section 142 restricts is that for taking cognizance of the offence under Section 138 a written complaint (made by either the payee or the holder in due course) within one month of the cause of action envisaged in Clause (c) of the section is the sine qua non, whatever be the provisions in the Code. The contention that the non obstante clause in Section 142 is intended to sweep out all the provisions of the Code bell, book and candle is, therefore, unsound and unsustainable.

5. The second contention seems to be based on the erroneous premise that cognizance taken is against the offender and not of the offence. The prohibition in Section 142 stretches only to the taking of cognizance of any offence. It is now wellsettled that a court takes cognizance only of the offence and not of any offender; It was pointed out by the Supreme Court in Raghubans Dubey v. State of Bihar, AIR 1967 SC 1167, 1169, that "once cognizance has been taken by the Magistrate. ... it is his duty to find out who the offenders really are and once he comes to the conclusion that apart from the persons sent up by the police some other persons are involved, it is his duty to proceed against those persons." A Division Bench of this court has followed the said legal position in Asokan v. Narayonan [1972] KLT 728. Subsequently, the Supreme Court reiterated it in Hareram v. Tikaram, AIR 1978 SC 1568.

6. Thus, the legal position is, when once cognizance of the offence was taken, subsequent impleadment of any other person as accused would not affect the judicial process already adopted in taking cognizance of the offence.

7. In the aforesaid context, a reference to Section 319 of the Code, is necessary. Under Subsection (1), the court is given power to proceed Page 36 of 47 HC-NIC Page 36 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT against any other person who appears to have committed any offence for which such person could be tried together with the accused already arraigned in the case. Once the court decides to proceed against such other person then Subsection (4) will save the earlier act of taking cognizance of the offence. Subsection (4) says that "the case may proceed as if such person had een an accused person when the court took cognizance of the offence upon which the inquiry or trial was commenced". Hence the stage at which the new accused was brought in the array of the accused has no legal impact on the proceedings.

8. In the result, I dismiss both criminal miscellaneous cases in limine."

60 In M/s. Plywood House (supra), one of the submissions before the learned Single Judge of the Kerala High Court on behalf of the petitioner was that since there was no provision in the Negotiable Instruments Act for impleading a new accused in the case, the Court could not have recourse to the general provisions contained in the Cr.P.C. Such submission was canvassed by the accused to oppose an application filed by the complainant for impleading the firm as an additional accused. The submission was rejected on the ground that Section 142 of the Negotiable Instruments Act itself makes it clear that the prosecution proceedings contemplated therein are either untrammelled or unaided by anything contained in the Code. The learned Judge took the view that the nonobstante clause in Section 142 of the Act is intended to make it clear that the three matters specified in the section have an overriding effect on the provisions of the Code. There cannot be any debate on the proposition of law explained in the decision. The second contention, which was raised, was as regards the prohibition in Section 142 to taking of cognizance of any offence. The submission canvassed was that the Court was debarred from taking cognizance of the offence against the partnership firm after the expiry of the period of one month from the date of cause of action envisaged in clause (c) of Section 138 of the Act, and therefore, the firm could not be impleaded after the said period. Such submission was negatived on the Page 37 of 47 HC-NIC Page 37 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT reasoning that the Court takes cognizance only of the offence and not of any offender. The learned Judge observed that when once cognizance of the offence was taken, subsequently impleadment of any other person as accused, would not affect the judicial process already adopted in taking cognizance of the offence. At this stage, I would like to say that the learned Single Judge of the Kerala High Court had no occasion to consider the matter from the angle I am looking at i.e. the legality and validity of the cognizance itself. Let me take note of the fact that when the judgment in the case of M/s. Plywood House (supra) was pronounced, the law was altogether different. The law was that even in the absence of a firm, the partner of the firm could be prosecuted. This proposition of law is no longer good after the pronouncement of the Supreme Court in the case of Aneeta Hada (supra), which I have discussed at length while answering the second question. When the cognizance itself is bad, would the position be saved by virtue of Section 319 (4)(b) of the Code.

61 As observed by the Supreme Court in State of Orissa vs. Sudhansu Sekhar Misra (AIR 1968 SC 647 vide para 13):

"A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury, LC said in Quinn v. Leathem, 1901 AC 495:

Now before discussing the case of allen v. Floo (1989) A 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of Page 38 of 47 HC-NIC Page 38 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all.

62 In Ambica Quarry Works vs. State of Gujarat & Others (1987) 1 SCC 213 (vide para 18), the Supreme Court observed:

The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it.

63 In Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd (2003) 2 SCC 111 (vide para 59), the Supreme Court observed: It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.

64 The endeavour on the part of the learned counsel appearing for the petitioner in the present case all through out the course of his submissions was that when a person is impleaded or added as an accused by virtue of Section 319 of the Code, then by a deeming fiction, he is deemed to be an accused from the day one i.e. from the time when the cognizance was taken by the Court of the offence, and therefore, the partnership firm should be deemed to be an accused. The argument before me is that if the partnership firm is deemed to be an accused, then the Court need not go into the question of the legality and validity of the cognizance.

65 The argument at the first blush appears to be quite attractive, but if considered closely, the same deserves to be rejected.

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HC-NIC Page 39 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 66 A deeming fiction is a supposition of law that the thing is true without inquiring whether it be so or not, that it may have the effect of truth so far as it is consistent with justice. A deeming provision is made to include what is obvious or what is uncertain or to impose, for the purpose of statute, an ordinary construction of a word or phrase that would not otherwise prevail but, in each case, it would be a separate question as to that what object the Legislature has made on such a deeming fiction.

67 The word "deemed" is used in various senses. Sometimes, it means "generally regarded". At other time, it signifies 'taken prima facie to be', while in other case, it means, 'taken conclusively'. Its various meanings are, 'to deem' is 'to hold in belief, estimation or opinion'; to judge; adjudge; decide; considered to be; to have or to be of an opinion; to esteem; to suppose, to think, decide or believe on considerations; to account, to regard; to adjudge or decide; to conclude upon consideration. (see Major Law Lexicon by P.Ramanatha Aiyar, 4th Edition 2010 Vol.2) 68 In this connection, I deem it necessary to consider few precedents on the true meaning of the word 'deemed' and 'deeming fiction'.

69 In Consolidated Coffee Ltd. v/s. Coffee Board, Bangalore, reported in AIR 1980 SC 1468, the purpose of the word 'deemed' occurring in Section 5(3) of the Central Sales Tax Act, 1956 came for consideration. The issue that emanated was whether a legal fiction had been created by use of the word 'deemed'. It is fruitful to reproduce what has been exposited by Their Lordships:

"A deeming provision might be made to include what is obvious or what is Page 40 of 47 HC-NIC Page 40 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT uncertain or to impose for the purpose of a statute an artificial construction of a word or phrase that would not otherwise prevail, but in each case it would be a question as to with what object the legislature has made such a deeming provision. In St. Aubyn and Ors. v/s. Attorney General, 1952 A.C. 15 at p.53 Lord Radcliffe observed thus:

"The word 'deemed' is used a great deal in modern legislation. Sometimes it is used to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible."

70 In State of Tamil Nadu v. M/s. Arooran Sugars Ltd., reported in AIR 1997 SC 1815, a Constitution Bench, while dealing with the deeming provision in a statute, opined that the role of a provision in a statute creating legal fiction is well settled. Their Lordships referred to the decisions in East End Dwellings Co. Ltd. v/s. Finsbury Borough Council, 1952 AC 109, Chief Inspector of Mines v/s. Karam Chand Thapar, AIR 1961 SC 838, J.K. Cotton Spinning and Weaving Mills Ltd. v/s. Union of India, AIR 1988 SC 191, M. Venugopal v/s. Divisional Manager, Life Insurance Corporation of India, AIR 1994 SC 1343 and Harish Tandon v/s. Addl. District Magistrate, Allahabad, AIR 1995 SC 676, and came to hold that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the Court has to examine and ascertain as to for what purpose and between which persons such a statutory fiction is to be resorted to and thereafter the courts have to give full effect "6. ... It is a well known principle of construction that in interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable Page 41 of 47 HC-NIC Page 41 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT corollaries to giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the Section by which it is created..."

71 From the aforesaid pronouncements, the principle discernible is that, it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the Court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term deemed has to be read in its context and further the fullest logical purpose and import are to be understood. It is because in modern legislation, the term deemed has been used for manifold purposes. The object of the Legislature has to be kept in mind. (See Andaleeb Sehgal v/s. Union of India and another, AIR 2011 Delhi 29(FB)).

72 I am of the view that by virtue of a legal fiction, it cannot be said that on the date of filing of the complaint, the Court was justified in taking cognizance and issue process against the partners in the absence of the legal entity and no fault could be found so far as the legality and validity of the cognizance is concerned. The legal fiction is altogether for a different purpose and it should not be brought in aid of curing a serious defect or infirmity in the complaint or the order taking cognizance. When Subsection (4)(b) of Section 319 of the Code says that it will be presumed that the newly added person had been an accused person when the Court took cognizance of the complaint upon which the inquiry or trial was commenced, the same indicates that the Court is not empowered to take cognizance of any fresh offence if any accused is impleaded by invoking Section 319 and the newly added accused could be tried only for the offence already taken cognizance against the other accused.

Page 42 of 47

HC-NIC Page 42 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT 73 The policy of the Code is that the offence can be taken cognizance of once only and not repeatedly upon discovery of further particulars. In a given case, the complainant may not even know the names and other particulars of the offenders, and it would, therefore, be sufficient for him to lodge a complaint making the persons who are known as the accused. When such a trial proceeds against the known accused, if the evidence led in trial discloses offences committed by other persons who could be tried along with the accused, then there need not be a fresh complaint and fresh order of cognizance against those persons. I reiterate that the complaint was liable to be dismissed on the very first day of its presentation and no process could have been issued against the partners in the absence of the partnership firm.

74 My view is fortified by a decision of the Madras High Court in the case of Suryanarayan v. Anchor Marine Service [1995 (1) Bank Case 466]. A learned Single Judge of the High Court observed in paras 6, 7 and 8 as under:

"6. The wording in the section "as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against makes it clear that the company also shall be prosecuted along with the others, who were in charge of the company. Therefore, if the company has not been impleaded as an accused in the proceedings, it will not be in compliance with Section 141 of the Negotiable Instruments Act, 1881, and, therefore, the prosecution is not sustainable against the directors or persons in the administration of the company as held in the decisions cited above.

7. Learned counsel for the respondents placed another submission that the complainant is always entitled to implead the other accused in the course of the proceedings under Section 319 of the Code of Criminal Procedure, and, therefore, now he may be permitted to implead the company also as one of the accused and if the company is brought on record, the present infirmity gets cured, and, therefore, the prosecution cannot be quashed. Section 319 of the Code of Criminal Procedure, no doubt permits for impleading another accused in the course of the enquiry or trial when it appeared from the evidence that another person also has committed Page 43 of 47 HC-NIC Page 43 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT offence and he also should be tried together with the other accused. Learned counsel for the respondent relies upon the decision in U.P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77; AIR 1988 SC 1123, in support of his argument. The decision cited above is about the right of the complainant to set right the technical flaw by amending the complaint. But learned senior counsel for the petitioner, Mr. N. T. Vanamamalai, would contend that that was a case in which the company also was impleaded as a party, but the company was wrongly described as the industrial unit, wilfully failed to furnish the requisite information to the complainant therein, and, therefore, the amendment was permitted. The apex court observes that the industrial unit having failed to furnish the correct description of the company, it was not open to them to take advantage of their own lapses to quash the proceedings alleging that the company was not properly described. So, in that case, the company was impleaded as a party but the description of the company was found to be a mistake, and, therefore, the apex court observed that this technical flaw of describing the name of the company can be rectified by amending the complaint. Therefore, that decision will not come in support of the respondent's contention because in this case, the respondent has deliberately omitted to implead the company. According to the learned senior counsel, Mr. Vanamamalai, the defect in this case, is a serious legal infirmity in the complaint itself, and, therefore, when the complaint itself has the initial defect, the proceedings cannot be allowed to continue against the petitioner. He also draws support from the decision in Delhi Municipality v. Ram Kishan, , wherein the Supreme Court observes that it is manifestly clear that proceedings against an accused in the initial stage can be quashed only if on the basis of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations in the complaint, as they are, without adding or subtracting anything, if no offence is made out, then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code. In the above view of the Supreme Court, the maintainability of the proceedings against a particular accused has to be considered without adding or subtracting anything in the complaint.

8. Now it is found that without impleading the company, the present complaint against the petitioner is not sustainable. Therefore, when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings. Section 319 of the Code of Criminal Procedure, no doubt permits for impleading any other accused, who was party to the commission of the offence. But impleading such coaccused under Section 319 of the Code of Criminal Procedure will not have any bearing as to the maintainability of the proceedings against other accused. Section 319 of the Code of Criminal Procedure is not intended for curing the infirmity in the proceedings but only to bring all the culprits before the court when their role in the commission of the offence was brought to light only after the evidence before court. Such is not the position in this case. The respondent had deliberately omitted to implead the company in the Page 44 of 47 HC-NIC Page 44 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT complaint though Section 141 of the Negotiable Instruments Act, 1881, emphasizes that the company also shall be an accused. When the proceedings has legal infirmity in its initiation itself, the respondent is not entitled to invoke Section 319 of the Code of Criminal Procedure because on the date of the complaint, it was not maintainable against the petitioner. Therefore, accepting the contention of the learned senior counsel, Mr. N. T. Vanamamalai, the proceedings against the petitioner have to be quashed."

The view taken by the learned Single Judge of the Madras High Court is quite commendable, and I propose to adopt the same line of reasoning.

75 Suryanarayan (supra) later came to be followed by the Madras High Court in the case of Anandan v. Arivazhagan [1999 (96) Company case 503]. A learned Single Judge observed in paras 7, 8 and 9 as under:

"7. It is not in dispute that the cheque was issued by the first petitioner as managing partner of K. S. Muthu Constructions for the liability to the complainant. Learned counsel, Mr. Dhanyakumar, relying upon certain decisions of the Kerala High Court, would contend that when the court has taken cognizance of the offence against a partner, it will not affect the proceedings for the failure to implied the other accused including the company. In Alex v. Vijayan [1994] 81 Comp Cas 910 (Ker); [1993] MWN 192, the Kerala High Court has held that when the managing partner of a firm was prosecuted under Section 138 of the Negotiable Instruments Act for the dishonour of the cheque issued by the managing partner and without impleading the partnership, the partners alone were prosecuted, the complaint is maintainable against the partners alone. Following this decision, the same court in M.O.H. Iqbal v. Uthaman (M) [1995] 82 Comp Cas 726; [1993] MWN 146, also repeated the same view that the complaint against the partners is maintainable without impleading the company under Section 138 of the Negotiable Instruments Act. In Plywood House v. Woodcraft Products Ltd. [1993] MWN 140; [1997] 88 Comp Cas 565 the Kerala High Court has again held that when the managing partner was prosecuted for the offence under Section 138 of the Negotiable Instruments Act without impleading the partnership, the partnership can be impleaded subsequently also as when once the cognizance of the offence was taken by the court, the subsequent impleadment of another person as accused, would not affect the judicial process as it has already commenced by taking cognizance. But these views Page 45 of 47 HC-NIC Page 45 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT of the Kerala High Court have not been accepted by this court in a series of decisions and this court has taken a consistent view that a complaint under Section 138 of the Negotiable Instruments Act is not sustainable without complying with the mandatory provision, viz., Section 141 of the Negotiable Instruments Act, without impleading the company or the partnership and when there was defect even in the initial stage in the initiation of the proceedings itself, that cannot be cured by impleading the company or partnership subsequently.

8. This court in Suryanarayan v. Anchor Marine Service [1998] 94 Comp Cas 874 (Mad); [1995] 1 LW (Crl.) 132, following the previous decisions of this court, has held that the prosecution is not sustainable against the directors of a company without impleading the company itself. As a matter of fact, this court has considered the views taken by the Kerala High Court in Alex v. Vijayan [1994] 81 Comp Cas 910; [1993] MWN 192, which were followed in the later decision in M.O.H. Iqbal v. Utharnan (M) [1995] 82 Comp Cas 726 and this court has not followed the view of the Kerala High Court. Therefore, the respondent is not entitled to contend that the complaint is maintainable even without the partnership K. S. Muthu Constructions.

9. Then coming to the next point with regard to the curable aspect of the defect in the complaint, by invoking Section 319 of the Code of Criminal Procedure, this court, in the above decision, following the view taken by the apex court in Delhi Municipality v. Ramkishan, , has held that when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings under Section 319 of the Code of Criminal. Procedure will not come to the rescue for such defects. Learned counsel for the respondent cited the decision of the apex court in U.P. Pollution Control Board v. Modi Distillery, to support his argument for the right to amend the complaint. This decision also has been distinguished in the above decision of this court and this court has held that the amendment to implied the company cannot be ordered. Therefore, as the view of this court is that the company or partnership cannot be subsequently impleaded to set right the defect in the proceedings, the respondent/complainant is not entitled to seek for amendment of the complaint. So, as on today, the proceedings under Section 138 of the Negotiable Instruments Act against the petitioners is defective for the non prosecution of K. S. Muthu Constructions. Hence, the petitioners alone cannot be prosecuted for the alleged offence and for this noncompliance with the provision, the petitioners are certainly entitled to be discharged. Though the grounds raised before the lower court do not confer a right for discharge of the petitioners, the point raised in this court by the revision petitioners certainly enables them to be discharged from the proceedings."

76 In view of the aforesaid discussion, I hold that the application Page 46 of 47 HC-NIC Page 46 of 47 Created On Fri Mar 04 02:34:08 IST 2016 R/SCR.A/4536/2015 CAV JUDGMENT under Section 319 of the Cr.P.C. is not maintainable, and the Court below rightly rejected the same. The third question is answered accordingly.

77 In the result, this application fails and is, hereby, rejected in limine.

(J.B.PARDIWALA, J.) chandresh Page 47 of 47 HC-NIC Page 47 of 47 Created On Fri Mar 04 02:34:08 IST 2016

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