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2016 Supreme(Guj) 199

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
J.B. Pardiwala, J.
Ankit Pradipbhai Kapadia – Appellant
Vs.
State of Gujarat and Ors. – Respondents
Criminal Misc. Application (For Quashing & Set Aside Fir/Order) No. 1071 of 2016
Decided On: 27.01.2016

Advocates:
Advocate Appeared:
For Appellant :Hardik A. Dave, Advocate
For Respondents: H.K. Patel, APP

Headnote:

Section 482 - Quashing of Criminal Case - 141 of the Negotiable Instruments Act - [141 of the Negotiable Instruments Act] - The court discussed the interpretation of Section 141 of the Negotiable Instruments Act, which holds a company, including a firm, and its directors or partners liable for the offence under Section 138. The court emphasized that for maintaining the prosecution under Section 141, arraigning of a company as an accused is imperative, and commission of offence by the company is an express condition precedent to attract the vicarious liability of others. The court also highlighted the distinction between a partnership firm and a proprietary concern, stating that a proprietary concern would not answer the description of either a company or a firm within the meaning of the provisions of the Act.

Fact of the Case:

The applicant sought to quash the Criminal Case No. 24357 of 2015 pending in the Court for the offence punishable under Section 138 of the Negotiable Instruments Act, arguing that the complaint is not maintainable in the absence of the partnership firm being a legal entity.

Finding of the Court:

The court allowed the application and quashed the proceedings, emphasizing that in the absence of the partnership firm being a juristic person or a legal entity, the applicant, in his capacity as one of the partners, cannot be proceeded for the alleged offence under Section 138 of the Negotiable Instruments Act.

Issues: The main issue was whether the complaint was maintainable in the absence of the partnership firm being a legal entity.

Ratio Decidendi: The court's decision was based on the interpretation of Section 141 of the Negotiable Instruments Act, emphasizing the necessity of arraigning a company as an accused and the commission of the offence by the company as a condition precedent to attract the vicarious liability of others.

Final Decision: The court allowed the application and quashed the proceedings of the Criminal Case No. 24357 of 2015 pending in the Court, terminating all consequential proceedings pursuant thereto.

ORDER :

J.B. Pardiwala, J.

1. By this application under Section 482 of the Code of Criminal Procedure, 1973, the applicant seeks to invoke the inherent powers of this Court, praying for quashing of the Criminal Case No. 24357 of 2015 pending in the Court of the learned 4th Additional Senior Civil Judge, Surat, for the offence punishable under Section 138 of the Negotiable Instruments Act.

2. It is not in dispute that the cheque in question for the amount of Rs. 2 lac was issued by the applicant herein in his capacity as a partner of a partnership firm running in the name of Tanish Enterprise. It is also not in dispute that in the complaint itself, the applicant herein has been shown as a partner of a partnership firm.

3. The short point for my consideration is, whether the complaint is maintainable in the absence of the partnership firm being a legal entity.

4. In the complaint, only two persons have been shown as an accused. Both are the partners of a firm. This issue is no longer res integra.

5. Section 141 of the Negotiable Instruments Act reads as under:--

"141. Offences by companies:

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

6. The Section clarifies that for the purpose of Section 141 Company means any Body Corporate and includes a firm or other association of individuals; and Director, in relation to a firm, means a partner in the firm.

7. This issue has been exhaustively answered by the Supreme Court in the case of Aneeta Hada v. M/s. Godfather Travels and Tours Pvt. Ltd., 2012(5) SCC 661. I may quote the observations made by the Supreme Court from paragraph No. 39 to 59 as under:--

"39. The word deemed used in Section 141 of the Act applies to the company and the persons responsible for the acts of the company. It crystallizes the corporate criminal liability and vicarious liability of a person who is in-charge of the company. What averments should be required to make a person vicariously liable has been dealt with in SMS Pharmaceuticals Ltd., (AIR 2005 SC 3512 : 2005 AIR SCW 4740) (supra). In the said case, it has been opined that the criminal liability on account of dishonour of cheque primarily falls on the drawee company and is extended to the officers of the company and as there is a specific provision extending the liability to the officers, the conditions incorporated in Section 141 are to be satisfied.

40. It has been ruled as follow:--

"It primarily falls on the drawer company and is extended to officers of the company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is












































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