Partnership firms must be included in criminal proceedings under Section 138 of the Negotiable Instruments Act; individual partners cannot be prosecuted without the firm as a necessary party.

JUDGEMENT

1. The petitioner, as partner of “Ambika Builders”, has challenged the proceedings under Section 138 of Negotiable Instruments Act, 1881 being Criminal Case No. 31803 of 2019 before the Additional Chief Judicial Magistrate Court, Vadodara under Articles 226 and 227 of the Constitution of India and under Section 482 of the Code of Criminal Procedure, 1973 on the grounds that M/s “Ambika Builders” is having eight partners, who had purchased land vide registered sale deed dated 01.02.2019 from the complainant of Criminal Case No.31809 of 2019 and one Vijaybhai Ishwarbhai Patel. Cheques were drawn by the “Ambika Builders”

on the Bank a/c maintained by the firm. It was assured that undisputed possession of the land with clear title would be handed over and therefore, part payment was done. However, as a dispute arose regarding the title and possession of land, the payment of cheques was instructed to be stopped by “Ambika Builders”.

1.1. It is stated that two cheques bearing Nos. 254174 and 724369 dated 01.08.2019 of State Bank of India were returned unpaid and therefore, statutory notice was issued to the present petitioner, in the capacity of being Partner of “Ambika Builders”.

1.2. Ms. Meghna A. Patel, learned counsel for the petitioner contends that the transaction of land took place between “Ambika Builders” as a Partnership Firm and the complainant and Vijaybhai Ishwarbhai Patel. The cheques were drawn by “Ambika Builders”

from the Bank account maintained by “Ambika Builders”. No Statutory Notice was issued to “Ambika Builders”, nor “Ambika Builders” was made a party in the criminal case. Thus, contents that the initiation of proceedings under Section 138 of the N.I. Act against petitioner, without joining the Partnership Firm, is bad in law and it would be unreasonable to prosecute him under the N.I. Act.

2. Ms.Meghna A. Patel, learned advocate for the petitioner further submitted that the sale-deed so executed also discloses that the land in question was purchased by the Partnership Firm. She states that the petitioner does not agitate the fact that he is an authorized Partner of the firm. Ms. Patel submits that any proceedings under Section 138 of the N.I. Act keeping in view the provisions of Section 141 of the Act, mandates that the partnership firm has to be made a party to the proceedings. She further states that cheque was drawn by “Ambika Builders”- partnership firm and therefore the firm is a necessary party to the proceedings.

3. She relied on the decisions rendered in the case of Anil Vasudev Rajgor vs. State of Gujarat reported in [2017 (3) GLH 802] and in the case of Sharma Pramod Narayanprasad vs. State of Gujarat , in Criminal Revision Application No.529 of 2014 dated 11.04.2018.

4. Countering the arguments, learned advocate Mr. P.B. Shah for respondent No.2 by relying on the provisions of Sections 24 and 25 of the Indian Partnership Act , submitted that a notice to the authorized Partner of the firm, is deemed to be a notice to the firm itself and that every partner is jointly & severally liable for all acts of the firm done while he is a Partner .

4.1. Mr. Shah further stated that partnership firm is not a separate legal entity and therefore, liability of partner is joint and several.

He further stated that criminal prosecution is neither for recovery of the money nor for enforcement of any security, etc. Section 138 of the Negotiable Instruments Act is a penal provision,