Back
BOMBAY HIGH COURT
Dr. Shalini Phansalkarjoshi, J.
Philip J. —Petitioner
versus
Ashapura Minechem Ltd. —Respondent
Criminal Writ Petition Nos.2909, 2910, 2914 and 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, Advocate
For the Respondent No.1: Mr. Mr. Amrut Joshi with Mr. Rushabh Seth i/b M.S. Bodhanwalla & Co.
For the Respondent No.2: Mr. Deepak Thakare, A.P.P.
IMPORTANT POINT
Prosecution launched under Section 138 of N.I. Act against a partner alone without joining partnership firm is not maintainable.
Headnote:Negotiable Instruments Act, 1881—Sections 138 and 141—Dishonour of cheque—Offence by partnership firm—Whether a prosecution launched under Section 138 against a partner alone without joining partnership firm can be maintainable—For maintaining prosecution against a partner under Section 141 of NI Act, arraigning of partnership firm as an accused is imperative—Partners are liable and sued in their vicarious liability—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—Process issued against petitioner alone for offence under Section 138 read with Section 141 of N. l. Act without joining partnership firm stands quashed.
Held: It has been laid down in unequivocal words in the above said decision that for maintaining the prosecution against the director under section 141 of the NI Act, arraigning of a company as an accused is imperative. In view of explanation to section 141 of the NI Act referred to above, this legal position needs to 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 NI Act, arraigning of partnership firm as an accused is imperative.
Therefore, the ratio laid down in the case of Aneeta Hada (supra) can be made equally applicable in the case of 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 make any distinction in respect of the law to be made applicable to partnership firm and the company.
As a result, all the four writ petitions are allowed. The process issue against the petitioner alone for the offence under section 138 read with section 141 of the Nl Act without joining the partnership firm stands quashed and set aside. However, it will be open for the respondent no.1 to move the Court of competent jurisdiction for appropriate relief with a petition under section 14 of the Limitation Act seeking exclusion of the period during which he was prosecuting this case. (Paras 9, 15 and 19)
Result: Criminal Writ Petitions allowed.
Dr. Shalini Phansalkarjoshi, 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 prosecution 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. l 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 com- plaint 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
