IMPORTANT POINT
A HUF simpliciter without any activity will not come within purview of association of individuals in terms of Section 141 of N.I. Act.

U. Durga Prasad Rao, J.—The point for determination is:

Whether a Hindu Undivided Family (HUF) is association of individuals within the mischief of Section 141 of Negotiable Instruments Act, 1881 (for short N.I. Act) so as to be called as a company to prosecute the accused under Section 138 of N.I. Act?

2. The factual matrix of the case is thus:

(a) The 2nd respondent herein is the complainant, who filed C.C.No.1054 of 2012 on the file of IX Additional Chief Metropolitan Magistrate, Nampally, Hyderabad, under Sections 138 and 142 of N.I. Act against A.1 and petitioner/A.2. A.1 is the son of A.2 and as per complaint allegations theirs is a Hindu Undivided Family. Both the accused approached the complainant and sought hand loan for the purpose of meeting their urgent family necessities and in view of the acquaintance with them, complainant advanced an amount of Rs.9,00,000/- from time to time. The accused promised to repay the amount with interest @ 18% per annum within a period of two(2) years.

In the last week of August, 2012 on the demand of the complainant, Accused No.2 being the Kartha of HUF, confirmed the due amount as Rs.13,50,000/-. Accused No.1 as a member of HUF, issued a cheque bearing No.271860 drawn on Central Bank of India, Himayathnagar Branch, Hyderabad dated 04.09.2012 for an amount of Rs.13,50,000/- to the complainant towards full and final settlement of the said loan. The said cheque on presentation bounced back with an endorsement insufficient funds. After following legal procedure, the complainant filed the complaint.

Accused No.2 filed the instant Criminal Petition seeking to quash the proceedings against him.

3. Heard arguments of Sri M. Jagadish Kumar, learned counsel for petitioner and Sri K. Chaitanya, learned counsel for 2nd respondent.

4. The main plank of argument of learned counsel for petitioner/A.2 is that A.1 issued the cheque to 2nd respondent/complainant from his individual bank account and he signed on the cheque and since A.2 is not a drawer and signatory of the said cheque, no penal liability, muchless, vicarious liability can be attributed against him under Section 138 of N.I.Act. He would further argue that the petitioner and A.1 though constituted as HUF, would not come within the purview of association of individuals in terms of Section 141 of N.I. Act, so as to be called as company to impose penal liability on petitioner/A.2 on the plea that he was in-charge of and responsible to the affairs of HUF. Thus his argument is that he is neither a signatory of the cheque nor their HUF is a company within the mischief of Section 141 to impose vicarious criminal liability on petitioner/A.2. Learned counsel placed reliance on the decision reported in Mrs. Aparna A. Shah v. M/s. Sheth Developers Pvt. Ltd. & another , to contend that except the drawer of the cheque none others can be held liable for the offence under Section 138 of N.I.Act. He thus prayed to quash the proceedings against him.

5. Per contra, learned counsel for 2nd respondent/complainant would argue that admittedly the petitioner and A.1 constitute a HUF and both of them being Doctors are the active members of HUF and they approached the complainant and took loan of Rs.9,00,000/- from time to time for their family necessities and both of them promised to repay the loan with interest @ 18% p.a. A.1, on the instructions of petitioner/A.2 issued a cheque for Rs.13,50,000/- in due discharge of the loan amount, which was bounced back. In this backdrop, learned counsel would argue, though A.1 alone was the signatory of the cheque, still penal liability under Section 138 of N.I. Act can be imposed against petitioner/A.2 also as their HUF would come under the term company in terms of Section 141 of N.I. Act and petitioner/A.2 being the Kartha was in-charge of and responsible for the activities of the HUF. He thus prayed to dismiss the petition.

6. POINT: In this case admittedly A.1 issued the cheque and if it is established in