Prosecution against a partner of a partnership firm under Section 138 of the N.I. Act is not maintainable without including the firm as an accused, affirming the principle of vicarious liability.

ORDER :

J. C. DOSHI, J.

1. By this application under Section 482 of the Code of Criminal Procedure (for short “the Code”), the applicant seeks quashing of proceedings of old Criminal Case No.941 of 2015 (New Criminal Case No.465 of 2017) filed by the complainant pending in the Court of Chief Judicial Magistrate, Lunavada (Now at Morvah) and further proceedings arising thereof.

2. The brief facts of the case are as under :

2.1 That applicant is partner of Honest Trading company at Lunawada and looking over the management of said company. It is further case that applicant who purchased grans from respondent no.2 agreed to pay Rs.13,10,547/- and against purchase and on demand being made by complainant for such payment, the applicant issued cheque bearing No.000238 dated10.03.2015 of Bank of Baroda, Lunavada Branch for Rs.13,10,547/- towards payment of grains pruchased. Respondent no.2 deposited the cheque with Bank of Baroda and same was returned backe with endorsement of insufficient funds. The complainant gave legal notice on 17.04.2015 and accused did not gave reply. The complainant thereafter preferred Old Criminal Case No.941 of 2015 (new Criminal Case No.465 of 2017) in Court of CJM, Lunawada (now at Morvah) which is pending. Hence, the present petition.

3. Challenging the prosecution under Section 138 of the Negotiable Instruments Act, 1881 (“the N.I. Act”, for short) preferred against the present petitioner in capacity of partner of Honest Trading Company as Criminal Case No.941 of 2015, learned advocate Mr.Barot appearing for the petitioner submits that true purport of Section 141 of the N.I. Act is that besides director or partner of the firm, the firm is also required to be arraigned as accused. He would further submit that in the present case, the complainant has filed the Criminal Case under Section 138 of the N.I. Act for return of cheque issued by Honest Traving Company signed by its partner. He would submit that Section 141 demands that besides the partner who has signed the cheque, the partnership firm is also required to be joined as party accused. In the present case, the partnership firm has not been joined as party accused nor the statutory notice was issued to partnership firm. Therefore, he submits that the ratio laid down by coordinate Bench of this Court in case of Oanali Ismailji Sadikot vs. State of Gujarat – 2016 (3) GLR 1991, would squarely apply in the present case. Upon above submissions, he would submit to quash the prosecution against the present petitioner.

4. Learned advocate for respondent - complainant supported the impugned order and submitted to dismiss the petition.

5. Learned APP in the facts and circumstances of the case submits to pass necessary order.

6. To appreciate the arguments canvassed by learned advocate Mr.Barot, at the outset, I may refer to Section 141 of the N.I. Act :

“"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 prov