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2021 Supreme(Online)(Guj) 2538
HIGH COURT OF GUJARAT
GITA GOPI, J
NILESHKUMAR VITTHALBHAI PRAJAPATI – Appellant
Versus
STATE OF GUJARAT – Respondent
R/CRIMINAL MISC.APPLICATION NO. 6838 of 2019
For the Appellants/Petitioners: MR ROHAN MAJMUDAR
For the Respondents: KULDEEP K ADESARA, MR KM PARIKH, MR PRANAV TRIVEDI
Prosecution under the NI Act requires clear evidence of the accused's direct involvement in the firm's misconduct; mere status as a partner is insufficient.
Headnote:(A) Constitution of India - Article 226 - Criminal Procedure Code, 1973 - Section 482 - Quashing of complaint - Petitioner claimed he was falsely implicated in cheque dishonor complaint related to a firm he had no ties with - Courts emphasized on specific legal responsibility and vicarious liability in complaints under the NI Act - The Court ruled that insufficient evidence links the petitioner to the firm's operations and all allegations against him lacked substantiation. (Paras 4, 10, 14)
(B) Vicarious Liability - A partner's liability under the NI Act requires clear allegations of responsibility and participation in the firm's affairs - Merely being a partner is insufficient to invoke liability unless specific parameters are met. (Paras 10.1, 12.1)
Facts of the case:
The petitioner was wrongly accused of being a partner in a firm involved in cheque dishonor, asserting lack of connection to the business activities leading to the complaint.
Findings of Court:
The petitioner's prosecution was unjustified, due to lack of evidence establishing his role or responsibility concerning the firm's transactions leading to the complaint.
Issues: The primary issue was whether the petitioner bore any liability under the NI Act as a partner of the accused firm.
Ratio Decidendi: The Court concluded that without a clear demonstration of the petitioner's involvement in the firm's conduct at the time of the alleged offence, the prosecution could not stand.
Result: The impugned complaint was quashed, dismissing the proceedings against the petitioner.
| Table of Content |
|---|
| 1. procedure of quashing a petition under article 226. (Para 1 , 2) |
| 2. allegations and context of the complaint against the petitioner. (Para 3 , 4) |
| 3. summary of arguments regarding petitioner's involvement and liability. (Para 5 , 6) |
| 4. legal definitions of vicarious liability under ni act discussed. (Para 8 , 9) |
| 5. final court decision based on lack of evidence linking petitioner to the complaint. (Para 10 , 11) |
JUDGEMENT
1. Rule. Mr. Pranav Trivedi, learned Additional Public Prosecutor and Mr. K.M. Parikh, learned advocate waive service of notice of rule on behalf of respondent nos.1 and 2 respectively.
2. The petitioner has filed this petition under Article 226 of the Constitution of India and under Section 482 of the Code of Criminal Procedure, 1973 , (for short “the Cr.P.C .”) for quashing and setting aside the Criminal Case No.22509/2018 filed before the Court of Chief Judicial Magistrate, Vadodara.
3. The petitioner states that in and around February/March 2018, he was serving in a private organization and had never ventured into any business nor had become Director of any of the Companies, nor he was any authorized signatory or partner in any partnership firm.
3.1 The petitioner states that Criminal Complaint No.22509 of 2018 came to be registered and he was served with summons. The petitioner states that mother of the petitioner is the occupier of Plot No. 2/46, Muktalaya, Post Office Road, Near Janakpuri Society, Kim. He has no connection whatsoever with the said land as he was serving in Bharuch and other town in private section and organizations. However, as the cheques came to be dishonoured, the complainant had mentioned the address of M/s. Hoventa Pharma – respondent no.3 firm and the summons was served upon the petitioner in respect of the criminal complaint.
3.2 The petitioner states that neither he has any connection with M/s. Hoventa Pharma nor has any participation in the affairs or business of the firm, nor has any join account with any of the said firm, and had never any kind of transaction with any partner of the firm. The petitioner also contends that he had not invested any money in the said firm and the partnership deed reveals that he was not partner of the M/s. Hoventa Pharma.
3.3 The petitioner states that wife of the petitioner, Snehal Prajapati was the sleeping partner, but she too has not participated in day-to-day affairs of the firm, nor she has taken any decision of placing orders of the goods from the respondent no.2. The petitioner states that she neither has signed any invoices, bills or challans nor she has singed any cheques including the cheques, which is stated to be dishonoured.
3.4 The petitioner contends that though he has no connection with the partnership firm nor in the alleged transaction, received and purchased of the goods, he has been wrongly joined in the complaint; thus states that the complaint qua him is required to be quashed and set aside.
4. Advocate Mr. Rohan Majmudar for Mr. N.K. Majmudar, learned advocate for the petitioner has relied on the judgment of Madhusudan Mohanlal Somani Vs. State of Gujarat , reported in 2017 (0) AIJEL-HC 237542 to contend that there should be specific averments against the Directors, showing as to how and in what manner the Directors are responsible for the conduct of the business of the Company. Mr. Majmudar has also relied on the case of Patel Nitaben Chetanbhai Vs. State of Gujarat , reported in 2017 (0) AIJEL-HC 237429, to submit that husband and wife are different entity and therefore there cannot be any prosecution against the husband, if the wife has dealing in her individual capacity.
4.1 Mr. Majmudar relied on Form-G of Register Of Firms and the copy of partnership deed to substantiate that the present petitioner is not the partner of M/s.
Hoventa Pharma. He submits that the Certificate of Register of Firms give the details of
