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2019 Supreme(Mad) 3333
MADRAS HIGH COURT
SINGLE BENCH
N. Anand Venkatesh, J.
V.RAJESHWARI — Appellant
Vs.
RAMESH — Respondent
CRL.O.P No. 13147 of 2015 and Crl.M.P. Nos. 1 and 2 of 2015
Decided on : 23-07-2019
Counsel for Appearing Parties
Mr. V.V. Sairam, Advocate, for the Appellant; Mr. V.S. Sivasundaram , Advocate, for the Respondent
The registration or non-registration of the Partnership Firm does not affect its liability under Section 141 of the Negotiable Instruments Act, and the bar under Section 69(2) of the Indian Partnership Act does not apply to criminal prosecutions under Section 138 of the Negotiable Instruments Act.
Headnote:
Negotiable Instruments Act - Unregistered Partnership Firm - Section 141 - 138 - 69(2) of the Indian Partnership Act - Summary of Acts and Sections: Section 141 of the Negotiable Instruments Act deals with the concept of vicarious liability, wherein for the offence committed by the Company or a partnership firm, the directors or the partners, as the case may, are deemed to be guilty of the offence when it is shown that they are in charge of and responsible for the conduct of the day-to-day affairs of the business or the firm, as the case may be. The registration or non-registration of the Partnership Firm will have no bearing insofar as 141 of the Negotiable Instruments Act is concerned.
Fact of the Case:
The respondent filed a complaint against the petitioners for an offence under Section 138 of the Negotiable Instruments Act, alleging that the petitioners issued a cheque on behalf of an unregistered Partnership Firm, which was dishonored. The petitioners sought to quash the proceedings, arguing that the complaint cannot be maintained without making the Partnership Firm as an accused.
Finding of the Court:
The court found that the complaint was unsustainable as it did not comply with Section 141 of the Negotiable Instruments Act and the law laid down by the Hon'ble Supreme Court, which extended the concept of vicarious liability to Partnership Firms.
Issues: The main issue was whether an unregistered Partnership Firm can be brought within the purview of Section 141 of the Negotiable Instruments Act and whether the Partnership Firm must be made as an accused along with the partners to maintain a complaint for an offence under Section 138.
Ratio Decidendi: The court held that the registration or non-registration of the Partnership Firm will have no bearing insofar as Section 141 of the Negotiable Instruments Act is concerned. It also emphasized that the bar under Section 69(2) of the Indian Partnership Act does not apply to criminal prosecutions under Section 138 of the Negotiable Instruments Act.
Final Decision: The court quashed the proceedings in C.C.No.550 of 2012, pending on the file of the learned Judicial Magistrate No. I, Villupuram, and allowed the Criminal Original Petition.
ORDER
N. Anand Venkatesh, J. - This petition has been filed seeking to call for the records on the file of Judicial Magistrate No.I, Villupuram in C.C.No.550 of 2012 and quash the proceedings.
2. An interesting issue has come up for consideration before this Court. The question involved in this case is whether an unregistered Partnership Firm can also be brought within the purview of Section 141 of the Negotiable Instruments Act, and in such cases whether the Partnership Firm must be made as an accused along with the other partners, in order to maintain a complaint for an offence under Section 138 of the Negotiable Instruments Act ?
3. The brief facts of the case are that the respondent has filed a complaint against the petitioners for an offence under Section 138 of the Negotiable Instruments Act on the ground that he was a partner in the firm named as 'Laxmi Agencies' and he was compelled to retire from the Partnership Firm. There were certain amounts due and payable to the respondent and towards the discharge of the said liability, the accused persons namely the petitioners issued a cheque for a sum of Rs.3,00,000/-(Rupees three lakhs only). The said cheque was dishonored on the ground of in-sufficiency of funds and after the issuance of the statutory notice, the respondent proceeded to file a complaint against the petitioners.
4.The petitioners who are shown as accused persons in this complaint, have filed this petition to quash the proceedings primarily on the ground that the cheque in question was drawn in favour of the respondent only on behalf of the partnership firm. Therefore, the complaint cannot be maintained without issuing the statutory notice to the partnership firm and making the partnership firm as an accused in the complaint.
5. The learned counsel for the petitioners submitted that the provisions of Section 141 of the Negotiable Instruments Act, which deals with offences by Companies, will equally apply to the partnership firm also by virtue of the explanation given under the said provision. The learned counsel further submitted that the Hon'ble Supreme Court has now settled the law to the effect that the complaint under Section 138 of the Negotiable Instruments Act, cannot be maintained against the directors of the Company, without making the Company as an accused. This law has now been extended to Partnership Firm also. Therefore, the learned counsel submitted that without arraying the firm as an accused in the complaint, the partners cannot be prosecuted by the respondent since admittedly the cheque was issued by the Partnership Firm represented by its partners.
6. The learned counsel appearing on behalf of the respondent submitted that Section 141 of the Negotiable Instruments Act, will apply only to those Partnership Firms which satisfies the requirements of a legal entity. The learned counsel submitted that if the Partnership Firm is not registered, it cannot be recognized as an entity. In the present case, the Partnership Firm has not been registered and therefore the respondent has proceeded to file the complaint as against the petitioners who were the partners in the firm. The learned counsel submitted that since the Partnership Firm has not attained the status of a legal entity, there is no requirement to make the Partnership Firm as an accused and the complaint is maintainable as against the petitioners.
7. The learned counsel for the petitioners in reply to the submissions, submitted that the registration or non-registration of a partnership firm is immaterial insofar as Section 141 of the Negotiable Instruments Act, is concerned. Section 69(2) of the Partnership Act cannot be read into Section 141 of the Negotiable Instruments Act. In order to substantiate his submissions, the learned counsel for the petitioners relied upon the Judgment of the Kerala High Court in the case of Abdul Gafoor vs Abdurahiman reported in, (1999) 4 Crimes 98 and the Allahabad High Court in the case of Gurcharan Singh vs. Stat
