The court clarified the conditions for prosecution under Sec. 138 of the N.I. Act, emphasizing that joint liability does not automatically lead to prosecution.

JUDGMENT

1. Heard finally with consent of learned counsel for the parties.

2. This petition has been filed for quashment of complaint/criminal proceeding of Summary Criminal Case No. 2566 of 2021, instituted for the offence punishable under Sec. 138 of Negotiable Instruments Act ('N.I. Act'). The petitioners herein are Accused Nos. 1 to 4 in the said case.

3. The facts, giving rise to the present proceeding are as follows :- Respondent No.2 is a private limited company engaged in business of arranging or helping or assisting in fund raising. Petitioner No.1 is a partnership firm. Petitioner Nos. 2 to 4 are it's partners. The petitioners wanted to set-up a unit for manufacturing jaggery in Maharashtra. They, therefore, approached Respondent No.2 - complainant for raising of funds for the proposed project. An agreement in writing came to be executed between the petitioners and Respondent No.2 on 14/9/2020. Respondent No.2 - complainant claims to have provided all the assistance and ensured grant of loan by the Central Bank of India for the proposed project. The petitioners, however backed-out of the transaction. It is also the case of Respondent No.2 - complainant that since it had to spend a lot, it only raised a bill of Rs.4, 50, 000.00 (50% of the fixed fees). Accused No.5 in the case, was looking after the business of Petitioner No.1 - partnership firm. He issued a cheque of Rs.4, 50, 000.00 towards payment of Respondent No.2's fees. The cheque was presented for encashment. It, however returned unpaid for the reason 'Funds Insufficient'. Respondent No.2 - complainant, therefore, issued statutory demand notice to the petitioners and Accused No.5. The notice was replied with false contentions. Prosecution, therefore, came to be initiated.

4. Learned counsel for the petitioners disputed almost all the averments in the complaint. He denied Accused No.5 to have been anyway related with Petitioner No.1 - partnership firm. According to the petitioners, merely a pre-sanction letter was issued by the bank. The services extended by Respondent No.2 - complainant were unsatisfactory. It was so communicated to it. The cheque issued by Accused No.5 was under his signature alone and drawn on his personal account. The petitioner firm and it's partners no way liable for the offence punishable under Sec. 138 of the N.I. Act. Learned counsel has relied on the judgment of the Apex Court in the case of Alka Khandu Avhad Vs. Amar Syamprasad Mishra and Another, (2021) 4 SCC 675.

5. Learned counsel for Respondent No.2 - complainant placed on record an agreement entered into between the petitioner - firm and Respondent No.2 - company. It has also placed on record a communication made by Accused No.5 with Respondent No.2, for and on behalf of the petitioner - firm. Learned counsel has placed reliance on the judgment of the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhall and Another, AIR 2005 SC 3512. According to him, the complaint contains all the averments constituting ingredients of an offence of dishonour of cheque. Whatever contentions the petitioners have raised, are all in the nature of defence, to be proved during trial. Learned counsel, therefore, urged for dismissal of the petition.

6. Considered the submissions advanced. Perused the complaint and the documents relied on. It is not in dispute that agreement in writing was executed between Respondent No.2 - complainant on one hand and Petitioner No.1 - partnership firm on the other. Respondent No.2 - complainant was supplied with the details of promoters and the deed of Petitioner No.1 - firm, wherein Petitioner Nos. 2 to 4 are shown as partners of the firm. Accused No.5 was shown as Founder and Managing Director of Petitioner No.1 - firm. There is evidence to indicate that Petitioner No.1 - firm had proposed to set-up jaggery manufacturing unit. It, therefore, engaged Respondent No.2 - company for it's services for raising funds. An agreement was entered into in that re