IMPORTANT POINT
Partners of a firm can be prosecuted for offence u/s 138 Negotiable Instruments Act even without firm being arraigned as an accused.

S. Venkataraman, J. - This petition is filed by the first accused in C.C.No. 20939/93 on the file of the Chief Metropolitan Magistrate, Bangalore, against the issue of process to the petitioner and also for quashing the entire proceedings.

For the purpose of convenience the parties will be referred to by their rank in the lower court.

2. The defendant has filed the complaint against the petitioner and another person for an offence under Section 138 of the Negotiable Instruments Act ('the Act' for short) alleging that in respect of G.I. sheets which had been supplied by the complainant on the orders issued by the accused, a cheque for Rs. 1,15,000/- was issued by the accused on 27.5.1993, that when the cheque was presented for realisation on 28.5.1993 it was returned with an endorsement "exceeds arrangement" dated 31.5.1993 that the complainant got issued a legal notice dated 8.6.1993 demanding payment of the amount, that the notices were sent both by the registered post acknowledgment due as well as by certificate of posting to both the accused, that while the first accused received the notice the second accused refused the same, that the first accused sent a reply in which he admitted the issuance of the cheque but made other false allegations and that as the accused had failed to pay the amount in spite of the notice they have committed offence under Section 138 of the Act and also under Section 429 I.P.C.

3. The Magistrate after recording the sworn statement of the complainant and after perusing the complaint and the sworn statement as well as documents, issued summons to both the accused persons. The learned Counsel for the petitioner has urged the following grounds in support of the petition:

(1) The Magistrate has taken cognizance of the offence after recording the sworn statement which is illegal and it vitiates the proceedings.

(2) The notices as well as the cheque produced along with the complaint would show that it was the partnership firm which had issued the cheque and as such it is the firm which has committed the offence, if at all and as the firm itself is not made as accused and as the complaint also does not indicate that the offence is committed by the firm; prosecution of accused person in their individual capacity cannot be sustained.

(3) The complainant has issued a notice giving only 7 days time for payment and this is in contravention of the proviso to Section 138 of the Act and that as such the offence under Section 138 cannot be said to have been committed.

4. So far as the first contention is concerned it is no doubt true that in some of the decisions of this Court and especially in State by Mahadev v. Papireddy1, it has been held that cognizance should precede the recording of the sworn statement and that if the Magistrate straight away on receipt of the complaint records the sworn statement and thereafter he takes cognizance, it would be in contravention of Section 200 Cr. P.C. But it is equally well settled that when a Magistrate after receiving the complaint applies his mind to take further steps under Chapter XV, then he must be deemed to have taken cognizance of the offence and that it is not necessary that the Magistrate should pass specific order stating that he has taken cognizance of the offence. In the present case it is seen that when the complaint was presented before the Magistrate he has passed the following order on the complaint itself: "Presented by complainant on 6.7.1993. Check and register as P.C.R. and put up on 17.7.1993". On 17.7.1993 when the matter was brought before him the Magistrate has thereafter proceeded to record the sworn statement of the complainant. On 24.7.1993 to which date the case had been adjourned for hearing, the complainant was recalled and his further statement was recorded. After two more adjournments and after hearing the complainant the Magistrate has passed the following order:

"Heard Sworn statement of the complainant recorded. Peruse