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BOMBAY HIGH COURT
Dr. Shalini Phansalkar-Joshi, J.
Philip J. —Petitioner
versus
Ashapura Minechem Ltd. & Anr. —Respondents
Criminal Writ Petition Nos.2909, 2910, 2914, 2915 of 2013
Decided on 29.1.2016
Counsel for the Parties:
For the Petitioner: Mr. P.H. Naik i/b Mr. Sachin R. Pawar
For the Respondent No.1: Mr. Mr. Amrut Joshi with Mr. Rushabh Seth i/b M.S. Bodhanwalla & Co.
For the Respondent No.2/State: Mr. Deepak Thakare, A.P.P.
IMPORTANT POINT
For maintaining prosecution against a partner under Section 141 of NI Act, arraigning of partnership firm as an accused is imperative.
Headnote:(A) Negotiable Instruments Act, 1881—Sections 138 and 141—Constitution of India—Article 226—Dishonour of cheque—Offence by Partnership Firm—Maintainability of complaint against partner—For maintaining prosecution against Director under Section 141 of NI Act, arraigning of company as an accused is imperative—This legal position needs to be automatically made applicable in case of prosecution against a partnership firm also—For maintaining prosecution against a partner under Section 141 of NI Act, arraigning of partnership firm as an accused is imperative—For maintaining prosecution under Section 141 of NI Act, arraigning of company as an accused is imperative, mainly and mostly on the basis of vicarious liability of Directors of company and not necessarily because company is a juristic person and it has its own respectability. (Paras 9 and 14)
(B) Negotiable Instruments Act, 1881—Sections 138 and 141—Constitution of India—Article 226—Dishonour of cheque—Offence by Partnership Firm—Maintainability of complaint against partner—Whether partnership firm is a juristic person or not is a different aspect—What is important is that a partner of firm is arraigned as an accused in dragnet on touchstone of vicarious liability as is done in case of Directors of company—There is no reason at all to make any distinction in respect of law to be made applicable to partnership firm and company—Once company is held to be essential party and that arraigning of a company as an accused is imperative for prosecution under Section 141 of NI Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against partners under Section 141 of NI Act—Prosecution launched against only one of partners of partnership firm, without joining partnership firm, cannot be maintainable and on this very ground, process issued against petitioner is liable to be quashed and set aside. (Paras 15 and 16)
Result: Criminal Writ Petitions allowed.
Dr. Shalini Phansalkar-Joshi, J.—In all these four writ petitions, the parties are one and same and they raise a common question of law as to whether a prosectuion launched under section 138 of the Negotiable Instruments Act (“NI Act” for short) against a partner alone without joining the partnership firm can be maintainable. Hence, they are being decided by this common judgment.
2. By these petitions, the original accused is challenging the order dated 23rd July 2013 in Criminal Revision Petition No.7 of 2012 passed by the learned Additional Sessions Judge, Mangaon, Dist. Raigad, thereby confirming the order of issue of process dated 3rd January 2012 in Summary Case No. 312 of 2011 passed by the learned Judicial Magistrate, First Class, Shrivardhan under section 138 of the NI Act.
3. Brief facts, relevant for deciding the question of law involved in these petitions, are stated as follows: The partnership firm of the petitioner by name M/s Alamgiris and respondent no.1 – a company registered under the Companies Act, 1956 had entered into an Agreement dated 7th February 2011 to sell iron ore fines by the petitioner to respondent no.1. The final contract was entered into between these two parties on 8th April 2011. As per the Agreement, 1,65,000 MT of iron ore was to be purchased by respondent no.1. The petitioner was to supply iron ore together with trucks and barges for loading the iron ore on board the ship. Under the contract, respondent no.1 paid Rs.11.75 crores to the petitioner towards the purchase price. However, on 25th April 2011 the petitioner informed respondent no.1 company that his partnership firm is unable to provide iron ore. As a consequence of petitioner’s failure, respondent no.1 has to pay Rs.3.60 crores as damages of the vessel and Rs.1.50 crores as advance payment made to the petitioner. The petitioner promised to pay Rs.20 crores by way of damages and advance which the petitioner’s firm had received. To satisfy this amount, the petitioner’s firm issued four cheques of Rs.5 crores each drawn on Bank of India, Tisgaon Branch, Goa. However, when the cheques were presented to the bank, they came to be dishonoured on 24th August 2011 for want of sufficient funds. Hence, after issuing the requisite mandatory notice, respondent no.1 filed four private criminal cases against the petitioner in respect of the four dishonoured cheques. The learned Magistrate, after being satisfied, issued process against the petitioner for the offence under section 138 of the NI Act. The petitioner challenged the said order of issue of process by filing criminal revisions in the Court of Additional Sessions Judge, Raigad. However, as the revisions came to be dismissed, the petitioner is constrained to approach this Court under Article 227 of the Constitution of India and section 482 of the Code of Criminal Procedure for quashing the order of issue of process.
4. At this stage, it may be stated that though several grounds are raised in the petition challenging the order of issue of process, at the time of advancing the submissions before this Court, learned counsel for the petitioner has fairly conceded that he is challenging the order only on one count, i.e. not joining the partnership firm of the petitioner in the proceedings launched against the petitioner. It is submitted that undisputedly the transaction was entered into by respondent no.1 company with the petitioner’s firm. However, the petitioner’s firm is not joined as party to the complaint. The petitioner alone is sued in his capacity as a partner, without joining even the other partners of the partnership firm. According to learned counsel for the petitioner, therefore, the very complaint filed before the Trial Court is not at all maintainable in view of the settled position of law that the company is an essential party to the proceedings initiated under section 138 read with section 141 of the NI Act.
5. In support of his submissions, learned counsel for the petitio
