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2007(2) Bankmann 530
CHHATTISGARH HIGH COURT
Dhirendra Mishra, J.
Sharmendra Maheshwari —Applicant
versus
Pramod Kedia & Anr. —Respondent
Criminal M.P. No. 227 of 2007
Decided on 13-11-2007
Counsel for the Parties:
For the Applicant:Mr. A.V. Shridhar, Advocate.
For the Respondent No. 1:Mr. Ravindra Agrawal, Advocate.
For the Respondent No. 2: None.
IMPORTANT POINT
Where cheque was drawn by a person as proprietor of his business concern for dishonour of cheque other person though connected with business of that proprietary concern could be prosecuted except the proprietor who signed and issued the cheque.
Headnote:Negotiable Instruments Act, 1881—Section 138 and 141—Dishonour of cheque issued by proprietary concern through proprietor accused No. 1—Prosecution of accused No. 1 and 2 on allegation that both being father and son were in controlling business affairs of concern—Whether prosecution of accused No. 2 was justified and sustainable also.
Held: The Hon’ble Supreme Court dealing with Section 141 of the Act has held that the concept of vicarious liability was introduced in penal statutes like Negotiable Instruments Act to make the Directors, partners or other persons, in-charge of and in control of the business of the Company or otherwise responsible for its affairs; the Company itself being a juristic person. A juristic person can be a company within the meaning of the provisions of the Companies Act, 1956 or a partnership firm within the meaning of the provisions of the Indian Partnership Act, 1932 or an association of persons which ordinarily would mean a body of persons which is not incorporated under any statue. A proprietary concern, however stands absolutely on a different footing. A person may carry on business in the name of a business concern, but he being proprietor thereof, would be solely responsible for conduct of its affairs. A proprietary concern is not a Company. The Company in terms of the explanation appended to Section 141 of the Negotiable Instruments Act, means any body-corporate and includes a firm or other association of individuals. Further dealing with the distinction between the partnership firm and proprietary concern, it has been held that it is trite that a proprietary concern would not answer the description of either a company incorporated under the Indian Companies Act or a firm within the meaning of the provisions of the Section 4 of the Indian Partnership Act. (Para 7)
However in the instant case, it is evident that the accused drawing cheques is a proprietary concern and accused No.1 is its proprietor. The applicant is in no way connected with the firm either as partner or as signatory of the cheques. A person may carry on business in the name of a business concern, but he being proprietor thereof would be solely responsible for conduct of its affairs. A proprietary concern is not a Company. In the aforesaid circumstances, the trial Court can take cognizance only against the accused No.1 Giriraj Maheshwari and issuance of process against the applicant is an abuse of process of Court and the same cannot be sustained. Para 11)
Result: Petition allowed.
Dhirendra Mishra. J— The applicant by this petition, under Section 482 of Cr.P.C. has prayed for quashing of the Criminal Complaint No. 194/2007 against him pending in the Court of Additional Chief Judicial Magistrate, Bilaspur.
2. Briefly stated the facts necessary for this petition are that the complainant/applicant No.1 filed a complaint against the present applicant and non-applicant No.2 with the averments that the accused No. 1 is proprietor of M/s Balaji Oil Industries, Bilaspur and he was appointed dealer of Nokia Mobiles by the complainant whereas the accused No.2 is authorized person of M/s Balaji Oil Industries and both the accused persons are engaged in the business of selling of mobile and they are father and son. Two cheques of ICICI Bank, Branch Surat of Rs.75,352 dated 28.10.2006 and Rs.75,352 dated 27.10.2006 were drawn by the accused No.1 towards price of Mobiles supplied to them. The same were deposited by the complainant, however, it was returned by the bankers of the accused No.1 because of insufficient fund in the account of accused No.1. On the request of the accused No.1, the cheque was again deposited on 1.12.2006, however the same was again dishonored on the same ground. Even after notice, the accused persons did not pay the amount against the cheques and thus the accused persons committed offence which is punishable under Section 138 of Negotiable Instruments Act (For short hereinafter referred to as the Act) and Section 420 of Indian Penal Code. The trial Court took cognizance of the offence against both the accused under Sections 138 of the Act and directed issuance of summons vide order dated 7.2.2007.
3. The applicant/accused No. 2 preferred a criminal revision No.65/2007 before the 3rd Additional Sessions Judge, Bilaspur against the order of issuance of summons, however the same was rejected with an observation that the remedy available to the applicant accused was to move an application under Section 482 of Cr.P.C. and criminal revision under Section 397(2) of Cr.P.C. is not maintainable.
4. Learned counsel for the applicant submits that the cheques were drawn by the accused No.1 the proprietor of M/s Balaji Oil Industries. Neither the account on which the cheques were drawn is in the name of the present applicant nor he is signatory of the instrument. Referring to Section 138 of the Negotiable Instrument Act, it was argued that from the allegations present in the complaint, it is evident that accused Giriraj Maheshwari is proprietor of M/s Balaji Oil Industries and the cheques were issued by him and the Bank account is also in his name and, therefore, proprietary concern does not come within the definition of a company as per Section 141 of the Act. Reliance is placed in the matter of Raghu Lakshminarayanan v. M/s Fine Tubes1 and Dr. V. Bala Raju v. M/s. Pashak Feeds Pvt. Ltd and another.2
5. On the other hand, learned counsel for the non-applicant No. l/complainant argued that there are allegations in the complaint that both the accused persons trade in Mobile and they are father and son. They had business transactions with the complainant and mobile sets were supplied to both of them. The applicant was fully aware of the fact at the time of issuance of cheques sufficient fund was not available in the account of his son Giriraj Maheshwari. There is averment that the applicant was in-charge of and responsible for the conduct of the business of the company at the time of offence, and therefore, the trial Court has rightly taken cognizance against him also. Reliance is placed in the matter of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another3; and N. Rangachari v. Bharat Sanchar Nigam Limited.4
6. The only question to be decided in this petition is where cheque drawn by proprietor of a propriety concern is dishonored on the ground of insufficient fund, whether cognizance of offence under the Negotiable Instruments Act can be taken against an individual who is neither the signatory of t
