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2010 DIGILAW 590 (AP)

Venkata Sainath Enterprises v. Dhanuka Pesticides Ltd.

2010-07-08

SAMUDRALA GOVINDARAJULU

body2010
ORDER : SAMUDRALA GOVINDARAJULU, J. 1. These two petitions raise common question regarding liability of A-1 company for dishonour of cheques issued by proprietor of A-2 proprietary concern. 2. It is contention of the complainants/1st respondent in both the petitions that A-1 is a dealer and that as per instructions of A-1, goods have been supplied by the complainants to A-2. According to the 1st respondent's Counsel, sale/purchase invoices show that they were prepared in the name of A-1, but goods thereunder were delivered to A-2. It was proprietor of A-2 who issued the two dishonoured cheques in favour of the two complainants/1st respondents. A-1 in C.C. Nos. 1219 of 2006 (old C.C. No. 1009 of 2003) and C.C. No. 566 of 2006 (old C.C. No. 1006 of 2003) on the file of I Additional Chief Metropolitan Magistrate, Hyderabad is the petitioner in these two petitions. A-2 whose proprietor issued the cheques is not questioning the complaints. 3. Placing reliance on Ramanlal Bhailal Patel and Others Vs. State of Gujarat, AIR 2008 SC 1246 of the Supreme Court, it is contended by the 1st respondent's Counsel that "other association of individuals" occurring in Clause (a) of Explanation to Section 141 of the Negotiable Instruments Act (in short, the Act) has to be extended to a case of this nature where A-1 and A-2 put together are responsible for supply of goods by the complainant and for whose value the dishonoured cheques were issued by A-2. In Ramanlal (supra), the Supreme Court observed that the terms "association of persons" and "body of individuals" have a legal connotation and refer to an entity having rights and duties. It is further observed that the said phrases have to be understood in the legal sense and not in the literal sense. Therefore, this Court is of the view that applying the doctrine of ejusdem generis, the phrase "association of individuals" occurring in Clause (a) of Explanation to Section 141 of the Act, has to be interpreted as an entity similar to a body corporate or a firm and not mere association of persons in stray transactions. 4. In the case on hand, A-1 did not issue any cheque much less on its own account in any Bank, and it was A-2 who issued the cheque on A-2's account in the Bank. 4. In the case on hand, A-1 did not issue any cheque much less on its own account in any Bank, and it was A-2 who issued the cheque on A-2's account in the Bank. Therefore, there is absolutely no criminal liability for A-1 for offence punishable u/s 138 of the Act. This will not take away right of the complainants/ 1st respondents to make a claim against A-1 in Civil Court in a properly constituted civil suit. 5. In the result, both the petitions are allowed quashing proceedings in C.C. Nos. 1219 of 2006 (old C.C. No. 1009 of 2003) and C.C. No. 566 of 2006 (old C.C. No. 1006 of 2003) on the file of 1st Additional Chief Metropolitan Magistrate, Hyderabad insofar as the petitioner/A-1 is concerned.