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2007 Supreme(Guj) 596
2008 (2) GCD 844 (Guj)
Hon’ble Mr. Justice M.R. Shah
Mahendrakumar Tulsibhai Patel
Versus
State of Gujarat & Anr.
Criminal Misc. Application No. 177 of 20071—Decided on 26/09/2007
Appearance :
Mr. V.M. Pancholi, for the Applicant No. 1.
Mr. M.R. Mengde, Addl. Public Prosecutor, for the Respondent No. 1.
None, for the Respondent No. 2.
Rule Served by DS, for the Respondent No. 2.
Decided in Favour of :
Applicant
Applications Allowed
Headnote:Point in Issue :
Negotiable Instruments Act, 1881 — Sections 138 & 141 — Dishonour of cheque — Proprietorship firm — Quashing of complaint.
Head Note :
Negotiable Instruments Act, 1881 (Central Act 26 of 1881) — Sections 138 and 141 — Dishonour of cheque — Proprietorship firm — Quashing of complaint — Respondent No. 2 filed complaint for offence under Section 138 of the Act alleging that Accused No. 2 is the proprietor of one proprietorship firm and doing business of selling and purchasing tobacco and he is sole responsible person for issuing the cheque with his signature towards the goods supplied to it and Accused No. 2 is the nominated person of Accused No. 1 and he is also responsible for cheque issued by accused No. 1 — It is also alleged that Accused No. 2 purchased goods and given various cheques signed by Accused No. 1 — Accused No. 2 is neither the signatory nor has drawn the cheque in question on an account maintained by him with banker — Held, complaints filed against Accused No. 2 and Criminal Proceedings under Section 138 of Act quashed and set aside.
Held :
Considering the facts of the case on hand and as stated above, more particularly, when the applicant-original Accused No. 2 is neither the signatory nor has drawn the cheques in question on an account maintained by him with a banker, it cannot be said that the aplicant-original Accused No. 2 has committed any offence as alleged under Section 138 of the NI Act and/or the ingredients of making out a case under Section 138 of the NI Act against the applicant are satisfied. Admittedly, original Accused No. 1, who has drawn the cheques in question and/or issued the cheques in question is a Proprietorship Firm and as held by the Hon’ble Supreme Court in case of Raghu Lakshminarayanan vs. M/s Fine Tubes, AIR 2007 SC 1634, a proprietor stands absolutely on and different footing. As held by the Hon’ble Supreme Court in the said decision, a proprietor concerned stands absolutely on a different footing and a person making a business in the name of a business concerned if he is the proprietor thereof would be solely responsible for conduct of its affairs and proprietor concerned is not a company. Therefore, it is held that if the offence has not been committed by the company, a question of their being a director or is being vicariously liable therefore, would not arise. Now, considering the aforesaid facts and circumstances of the case and when ingredients of Section 138 of the NI Act are not fulfilled so far as the applicant-original Accused No. 2 is concerned, the impugned complaints against the applicant-original Accused No. 2 requires to be quashed and set aside, more particularly, in other two criminal cases, in which similar allegations and averments are made, the summons are issued only against the original accused No. 1 only and the said order has become final. [Para 11]
Law Laid Down :
If the offence has not been committed by the company, a question of their being a director or is being vicariously liable therefore, would not arise.
M.R. Shah, J.—As common question of law and facts arise in this group of applications, they are being disposed of by this common judgment and order.
2. Criminal Misc. Application No. 177 of 2007 is filed by the applicant-original Accused No. 2 to quash and set aside the complaint being Criminal Case No. 2210 of 2005 pending before the learned JMFC, 4th Court, Cadodara qua the applicant.
Criminal Misc. Application No. 178 of 2007 is filed by the applicant-original Accused No. 2 to quash and set aside the complaint being Criminal Case No. 2211 of 2005 pending before the learned JMFC, 4th Court, Vadodara qua the applicant.
Criminal Misc. Application No. 179 of 2007 is filed by the applicant-original Accused No. 2 to quash and set aside the complaint being Criminal Case No. 2212 of 2005 pending before the learned JMFC, 4th Court, Vadodara qua the applicant.
Criminal Misc. Application No. 181 of 2007 is filed by the applicant-original Accused No. 2 to quash and set aside the complaint being Criminal Case No. 2213 of 2005 pending before the learned JMFC, 4th Court, Vadodara qua the applicant.
3. Aforesaid four complaints-criminal cases are filed by the Respondent No. 2 – original complainant against the respective applicants before the learned JMFC, 4th Court, Vadodara for the offence under Section 138 of the Negotiable Instrument Act, 1881(hereinafter referred to as “the NI Act” for short) alleging inter alia that the original Accused No. 1 is the proprietor of one Proprietorship Firm- S.J. Patel Firm and is doing business of selling and purchasing tobacco and that he is the sole responsible person for issuing the cheque with his signature towards the goods supplied to it and Accused No. 2 is the nominated person of the original Accused No. 1 and that he is also responsible for the cheque issued by the original Accused No. 1, who has purchased the goods for and on behalf of the original Accused No. 1. It is further alleged in the said complaints that the Accused No. 2 on behalf of the Accused No. 1 has purchased the goods by different eight invoices and the Accused No. 2 has given various cheques signed by the original Accused No. 1 and the said cheques were deposited with their banker and all the cheques were returned by the bank with an endorsement “insufficient fund.” It is further averred in the complaints that both the accused persons were served with the statutory demand notices as requires under Section 138 of the NI Act and the applicant has given evasive reply and as the cheque amounts were not paid within 15 days from the date of receipt of the statutory notices, the original complainant has preferred aforesaid criminal cases against the applicant and others for the offence under Section 138 of the NI Act. In all the aforesaid four complaints, the learned JMFC has issued summons upon the applicant and other for the offence under Section 138 of the NI Act and therefore, the applicant –original Accused No. 2 has preferred present applicants to quash and set aside the aforesaid criminal complaints.
4. Shri V.M. Pancholi, learned Advocate appearing for the respective applicants- original Accused No. 2 has vehemently submitted that as the cheques in question were neither signed by the applicants nor drawn by the applicants, and admittedly even as per the averments in the complaints, goods have been purchased by the original Accused No. 1 and he has issued the cheques in question, the applicants cannot be held liable for the prosecution under Section 138 of the NI Act. It is also further submitted that admittedly the original Accused No. 1 who has issued the cheques and in whose favour of the goods have been sold is a Proprietorship Firm and therefore, the applicants cannot be even held vicariously liable under Section 141 of the NI Act. Shri Pancholi, learned Advocate has relied upon the decision of the Hon’ble Supreme Court in case of Raghu Lakshminarayanan vs. M/s Fine Tubes reported in AIR 2007 SC 1634. He has also fur
