IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
N. TUKARAMJI, J.
Mana Advertising and Entertainment Ltd. – Appellant
Versus
M/s. Pallavi Constructions, Rep. by its Managing Partner P. Chandrasekhar Reddy – Respondent
Criminal Revision Case No.1395 of 2019
Decided on : 14-08-2023
CRIMINAL REVISION - SECTION 319 OF CR.P.C., 1973 - SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT, 1881 - Addition of accused - Delay in filing application - Service of notice on partners of a firm - Interpretation of Section 141 of the N.I. Act.
Fact of the Case:
The complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against a firm for dishonoring a cheque. The complainant later filed an application under Section 319 of Cr.P.C. to add one of the partners of the firm as an accused. The trial court dismissed the application on the grounds that the statutory notice was not issued to the partner individually and that adding the accused at that stage would cause prejudice.
Finding of the Court:
The High Court allowed the revision petition and set aside the order of the trial court. The court held that the non-service of notice on the partner individually was not a valid ground for rejecting the application, as the statutory notice had been served on the firm. The court also held that the delay in filing the application was not fatal, as there was no malafide intention on the part of the complainant.
Issues: 1. Whether the non-service of notice on the partner individually was a valid ground for rejecting the application under Section 319 of Cr.P.C.? 2. Whether the delay in filing the application was fatal?
Ratio Decidendi: 1. The court held that the non-service of notice on the partner individually was not a valid ground for rejecting the application, as the statutory notice had been served on the firm. The court relied on the Supreme Court decision in Krishna Texport and Capital Markets Limited v. ILA A. Agarwal and others, (2015) 8 SCC 28, which held that individual notices to the directors of a company are not required under Section 138 of the N.I. Act. 2. The court held that the delay in filing the application was not fatal, as there was no malafide intention on the part of the complainant. The court noted that Section 319 of Cr.P.C. does not contemplate any timeline or the stage by which the application can be moved.
Final Decision: The High Court allowed the revision petition and set aside the order of the trial court. The court held that the non-service of notice on the partner individually was not a valid ground for rejecting the application, as the statutory notice had been served on the firm. The court also held that the delay in filing the application was not fatal, as there was no malafide intention on the part of the complainant.
ORDER :
This Criminal Revision Case is filed challenging the order dated 29.11.2019 passed in Crl.M.P.No.679 of 2019 in C.C.No.223 of 2018 on the file of the XV Special Magistrate, Hyderabad.
2. I have heard Mrs. I.Maamu Vani, learned counsel for the revision petitioner and Mr. A.S.Diwakar, learned counsel representing learned Mr. Ashok Reddy Kanathala, learned counsel for respondent Nos.1 and 2.
3. In the impugned order, the application filed by the revision petitioner/complainant to add one of the partners of the respondent firm as an accused under Section 319 of Cr.P.C., 1973 has been dismissed.
4. The relevant facts in brief are that:-
In a transaction between the revision petitioner/complainant and respondent No.1 firms, the disputed cheque was issued by respondent No.1 and the same was dis-honoured by the banker. Thereupon the revision petitioner had initiated the proceedings under Section 138 of Negotiable Instruments Act, 1881 (for short “NI Act”). After the trial and hearing, the petition under Section 319 of Cr.P.C. came to be filed with a prayer to add respondent No.2 as an accused. The trial Court in the impugned order held that as the statutory notice was issued on respondent No.1/firm but not on its partners in their individual capacity, and merely referring a person in the cause title would not be sufficient to prosecute that person and as the witnesses were already examined in inquiry adding the accused would cause prejudice and the reason of oversight cannot be accepted at the advanced stage, dismissed the application. Thus, this revision case by the complainant.
5. In revision, learned counsel for the revision petitioner would contend that as the cheque was issued by the firm, showing the managing partner as an accused, the complaint has been filed. Pertinently, the proposed accused is the partner of the firm and also one of the signatory to the cheque, because of that, he should have also been shown as an accused, however, due to inadvertence, he was not arrayed as an accused. Further pleaded that, except the delay, the other aspects observed by the trial Court are against the dictum of the Supreme Court in Krishna Texport and Capital Markets Limited v. ILA A. Agarwal and others, (2015) 8 SCC 28 and by referring to para Nos.16 to 18 submitted that when the complaint is against the company, separate notices to the directors are not required and such failure will not be observed for liability of prosecution of the directors who are in charge of the affairs of the firm. Thus, prayed for intervention.
6. Learned counsel for respondent No.2 would submit that the application for adding him as an accused was at the fag end of the proceedings and admittedly, the delay explained by the petitioner is oversight and the trial Court had rightly observed that it is unacceptable at this stage. Further, by citing the authority between Juhru and Ors v. Karim and another, 2023 LiveLaw (SC) 128 submitted that the application under Section 319 of Cr.P.C. could be at the stage of enquiry and it should be on the basis of evidence adduced during the course of trial. Therefore, the explanation of oversight will not come in aid, as such the revision petitioner shall suffer for his lapse. Thus, the impugned order deserve to be sustained.
7. I have carefully perused the material and the submissions of learned counsel are given due consideration.
8. In regard to the impugned application, the issuance of cheque by the respondent No.1 firm and his position as managing partner and the partnership of respondent No.2 in the firm are not in dispute. Nonetheless the application has been filed at the stage of hearing.
9. Be that as it may, it is evident clear that the managing partner and the respondent No.2 as executive partner had signed the disputed cheque. The managing partner has been arrayed as an accused, showing the firm, albeit the respondent No.2/executive partner was not set out in the complaint. The signature is prima-facie indicating the ro
Krishna Texport and Capital Markets Limited v. ILA A. Agarwal and others
The non-service of notice on the partner individually is not a valid ground for rejecting an application under Section 319 of Cr.P.C. to add an accused, where the statutory notice has been served on ....
Criminal proceedings under Section 138 of the N.I. Act require the partnership firm to be arraigned as an accused; failure to do so renders the proceedings against individual partners not maintainabl....
In partnership law, partners are jointly and severally liable for the firm's obligations, and notice to partners constitutes notice to the partnership firm, distinguishing it from corporate entities.
A revision petition under Section 138 involves assessing evidence and liability for issued cheques, affirming that firms’ renaming does not invalidate prosecution rights.
A partnership firm cannot be individually liable under Section 138 of the N.I. Act without including all partners in the complaint; liability is joint and several.
Question with regard to issuance of notice prior to initiation of proceedings under S.138 of the Act, being triable is to be decided by the trial court and on the basis of same, complaint cannot be o....
Partners of a firm can be individually prosecuted for cheque dishonour despite the firm's acquittal, as the firm lacks separate legal identity.
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