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2018 Supreme(P&H) 4277
IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH
Sudhir Mittal, J.
Parvesh Chadha - Appellant
Versus
Balwinder Singh - Respondent
CRM-M No.32783 of 2016
Decided On : 08-10-2018
Pushpinder Kaushal, Advocate, for the Petitioner
Liability under section 138 of the Negotiable Instruments Act, 1881 can only be fastened on the Proprietor of a proprietorship firm, not on a co-proprietor.
Headnote:
Negotiable Instruments Act, 1881 - Liability of Proprietorship Firm - Liability under section 138 of the Act can only be fastened on the Proprietor of a proprietorship firm, not on a co-proprietor. The summoning of the petitioner as a co-proprietor was an abuse of the process of law.
Fact of the Case:
The petitioner sought quashing of a complaint and summoning order under section 138 of the Negotiable Instruments Act, 1881, as the petitioner was shown as a co-proprietor of a proprietorship firm, which the petitioner argued was not legally valid.
Finding of the Court:
The court found that the liability under section 138 of the Act can only be fastened on the Proprietor of a proprietorship firm, not on a co-proprietor, and thus, the summoning of the petitioner was an abuse of the process of law.
Issues: The issue was whether the petitioner, shown as a co-proprietor of a proprietorship firm, could be made liable under section 138 of the Negotiable Instruments Act, 1881.
Ratio Decidendi: The language of section 138 of the Act leaves no room for doubt that a person who draws the cheque for payment of a debt or other liability, alone can be made liable. In the case of a juristic person, every person who is in charge of the business of the said juristic person and responsible for the conduct of its business can also be made vicariously liable by virtue of section 141 of the Act.
Final Decision: The petition was allowed, and the complaint and summoning order were quashed.
JUDGMENT
Sudhir Mittal, J. (Oral) - The petitioner seeks quashing of complaint No.999/2015 dated 25.02.2015 (Anneuxre P-4) as well as summoning order dated 26.02.2015 (Annexure P5). The complaint has been filed under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act').
2. The cheques have been placed on record as Annexure P-1. Both of them have been signed on behalf of Surindra Electric Works. The signatory is one Surindra, proprietor of M/s Surindra Electric Works.
3. In the complaint (Annexure P-4), the petitioner has been arrayed as an accused allegedly being co-proprietor of Surindra Electric Works.
4. It is submitted that under section 138 of the Act, only the person who issued the cheque can be made liable. Surindra Electric Works, is a proprietorship concern and is not a juristic person. It is only a business name. The proprietor of the said firm is thus, the person who has issued the cheque and is also the signatory thereof. Only he can be made liable for an offence under section 138 of the Act. Being a proprietorship firm, the petitioner cannot be made liable even as a partner.
5. The language of section 138 of the Act leaves no room for doubt that a person who draws the cheque for payment of a debt or other liability, alone can be made liable. In the case of a juristic person , every person who is incharge of the business of the said juristic person and responsible for the conduct of its business, can also be made vicariously liable by virtue of section 141 of the Act.
6. In the instant case, the cheques have been issued by a proprietorship firm. Liability can thus, be fastened only on the Proprietor thereof. In the complaint Annexure P-4, the petitioner is shown to be co-proprietor, whereas there is no such concept in law. The petitioner can not be a partner as the firm is proprietorship firm. Thus, the summoning of the petitioner is an abuse of the process of law.
7. In view of the above, the petition is allowed and complaint No. complaint No.999/2015 dated 25.02.2015 (Anneuxre P-4) pending before Judicial Magistrate 1st Class, Chandigarh as well as summoning order dated 26.02.2015 (Annexure P-5) passed thereon, are hereby quashed.
