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2023 DIGILAW 346 (GUJ)

Shaileshbhai Punabhai Thesiya v. State of Gujarat

2023-02-20

NISHA M.THAKORE

body2023
ORDER : 1. This is an Appeal filed under Section 378 of the Code of Criminal Procedure challenging the judgment and order of acquittal dated 10.01.2020 passed in Criminal Case No.16736 of 2016 by the learned 8th Additional Senior Civil Judge, Surat, whereby, respondent nos. 2 to 5 – original accused came to be acquitted by the learned trial Court for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 on the sole ground that the partnership firm is not joined as accused. 2. The gist of the complaint as emerges from the record is that: 2.1. The complainant Shaileshbhai Punabhai Thesiya was one of the partner of partnership firm which was constituted in the name of “Mamta Creation”, to which, accused no.1 who is also wife of accused no.2 and accused no.2 had joined as partner. It is the case of the complainant that an amount of Rs.12,50,000/- was invested by him, however, for the reasons best known to accused nos.1 and 2, the same was not reflected in the account of partnership firm. 2.2. Subsequently, the complainant had retired from the said firm and accused no.3 had joined as new partner along with accused nos.1 and 2 in the said partnership firm. It is further contended that at the time of retirement the aforesaid accused have given promise to return the amount invested by the complainant. 2.3. Initially, the assurance was given to repay such amount. However, inspite of repeated demands being raised by the complainant, the accused have failed to repay such amount. Ultimately, the disputed cheque of Central Bank of India bearing no.003454 dated 2.11.2015 of an amount of Rs.8,88,703/- was alleged to have been handed over to the complainant. 2.4. It is further contended that the complainant had presented said cheque through his HDFC Bank Account at Ghod Dod Road Branch, Surat on 2.11.2015. The Bank had returned the said cheque with the endorsement of “account closed” on 3.11.2015. Thus, a cause of action arose for the complainant to initiate proceedings under Section 138 of the Negotiable Instruments Act. 3. Initially, a statutory demand notice was raised by the complainant, which was duly served upon the accused through Registered Post AD, which was returned back with endorsement of “refused” on 27.1.2016. Similarly, notice was issued to all the accused which had again returned back with endorsement of “refused”. 3. Initially, a statutory demand notice was raised by the complainant, which was duly served upon the accused through Registered Post AD, which was returned back with endorsement of “refused” on 27.1.2016. Similarly, notice was issued to all the accused which had again returned back with endorsement of “refused”. Hence, complaint came to be lodged against the accused nos. 1 to 3 on 29.2.2016 under Section 138 of the Negotiable Instruments Act. The said complaint was registered as Criminal Case No.16736 of 2016 before the Court of 8th Additional Senior Civil Judge, Surat. 4. Upon due verification of the complainant, the trial Court had issued summons upon the accused nos. 1 to 3 who had appeared before the Court and their plea was recorded vide Exhs. 7 to 9 under Section 251 of the Code of Criminal Procedure. The accused nos. 1 to 3 have denied their offence / guilt. The further statement of the accused were recorded under Section 313 of the Code of Criminal Procedure wherein they have denied the fact alleged in the complaint. The accused no.1 had taken specific defence that he was a sleeping partner and accused nos. 2 and 3 were the active partners in the said firm. All the accused have further raised defence of misuse of cheque and had jointly prayed to not to entertain such complaint. Oral and documentary evidence were taken into consideration by the trial Court. 5. While examining issue no.1, the trial Court notice that the partnership firm which is a registered partnership firm in the name of Mamta Creation has not been joined as accused. The Trial Court took notice of Section 141 of the Negotiable Instruments Act and relied upon the decision of this Court rendered in Criminal Miscellaneous Application No.1815 of 2015 dated 2.2.2015. The trial Court thus formed opinion that the partnership firm was necessary party to be arraigned as accused for prosecution under Section 141 of the Negotiable Instruments Act against the accused. In absence of the partnership firm, the trial Court held complaint not maintainable and hence rejected. The complainant has, therefore, approached this Court seeking leave to appeal along with present appeal challenging the said judgment and order of acquittal. 6. In absence of the partnership firm, the trial Court held complaint not maintainable and hence rejected. The complainant has, therefore, approached this Court seeking leave to appeal along with present appeal challenging the said judgment and order of acquittal. 6. This Court by order dated 22.12.2022 passed in Criminal Miscellaneous Application No.3698 of 2021 after taking into consideration the submissions made by the learned advocate for the applicant and the oral evidence of the trial Court, having noticed prima facie case, had granted leave to appeal. Thereafter, present appeal has been listed for admission hearing before this Court on 12.1.2023. Mr. Pawan Barot, learned advocate had appeared on behalf of respondent nos. 3 to 5 who are the original accused nos. 1 to 3. Mr. A.R. Rockey, learned advocate for the applicant had placed reliance upon the document in the form of paper book. After hearing the learned advocates for the respective parties for sometime, Mr. Barot, learned advocate for the respondent nos. 3 to 5 was requested to take instruction for remand and the matter was adjourned for further hearing on 25.1.2023 and thereafter on 1.2.2023. Since the parties chose to address Court on merits, this Court has heard Mr. A.R. Rockey, learned advocate for the appellant, Mr. Pawan Barot, learned advocate for respondent nos. 3 to 5 and Ms. Asmita Patel, learned Additional Public Prosecutor, who has appeared for the respondent State. 7. Mr. Rockey, learned advocate for the appellant, at the outset, has invited attention of this Court to the cause title of the original complaint. He has further invited attention of this Court to the legal notice addressed to the accused. By referring to the aforesaid documents, he submitted that in fact the name of partnership firm viz. M/s. Mamta Creation was reflected in the cause title and said firm was joined through accused nos. 1 to 3, who were the existing partners on the date of filing of the complaint. He, therefore, submitted that the learned trial Court committed gross error in fact by ignoring the cause title of the original complaint. He further submitted that even the statutory notice which was addressed to the accused was served in their capacity as partners of the partnership firm. He, therefore, submitted that the learned trial Court committed gross error in fact by ignoring the cause title of the original complaint. He further submitted that even the statutory notice which was addressed to the accused was served in their capacity as partners of the partnership firm. He, therefore, submitted that legal notice stood duly served upon the firm through their partners and inspite of service of statutory notice upon the accused, no reply was given by the accused. He further submitted that the various documents were brought on record including the disputed cheque being Exh.14, cheque returned memo at Exhs. 15 & 16 and the statutory notice at Exhs. 17 and 18 to 25. None of the aforesaid documents were denied by the accused during the trial. He further submitted that oral evidence in the form of deposition of the complainant and the deposition of one witness viz. Mehulbhai B Gohel (Exh.56) was brought on record in support of case of the complainant. He further invited attention of this Court to the legal provisions and submitted that the requirement of Section 141 of the Negotiable Instruments Act has been duly complied with by joining partnership firm as reflected in the cause title of the original complaint. He further invited attention of this Court to the orders dated 28.1.2015 and 2.2.2015 passed by this Court in Criminal Miscellaneous Application No.1815 of 2015 and submitted that orders relied upon by the trial Court in fact does not relate to any principle being laid down under the Negotiable Instruments Act. He further submitted that the aforesaid application relate to anticipatory bail. He, therefore, submitted that order passed by the trial Court is required to be quashed and set aside on the ground of non application of mind and urged this Court to remand the matter to the trial Court. 8. On the other hand, Mr. Pawan Barot, learned advocate for the respondent nos. 3 to 5 – original accused has vehemently objected to the admission of this Appeal. He has submitted that merely mentioning the name of partnership firm in the cause title itself is not sufficient to be treated as necessary party i.e. partnership firm being actually joined as accused in the proceedings before the trial Court. He submitted that no statutory notice has never been served upon the partnership firm. He has submitted that merely mentioning the name of partnership firm in the cause title itself is not sufficient to be treated as necessary party i.e. partnership firm being actually joined as accused in the proceedings before the trial Court. He submitted that no statutory notice has never been served upon the partnership firm. He further submitted that the summons of the proceedings were served on accused nos. 1 to 3 in their individual capacity and not as partners of the firm. He, therefore, submitted that the trial Court had rightly taken into consideration the Section 141 of the Negotiable Instruments Act and has rejected the complaint. He has relied upon the decision of the Hon’ble Supreme Court in the case of Arvind Kumar Jaiswal (D) Through Legal heirs vs. Devendra Prasad Jaiswal Varun rendered in SLP(C) No.9172 of 2020 dated 13.2.2023 and has submitted that the High Court as the First Appellate Court is under obligation to decide the case on merits and in accordance to the given facts of the case, the Hon’ble Supreme Court noticed that as the appeal was pending for considerable time, the High Court was directed to decide the appeal expeditiously. Mr. Rocky also relied upon decision of Hon’ble Supreme Court in the case of Aneeta Hada vs. M/s. Godfather Travels & Tours reported in (2012) 5 SCC 661 . 9. The only question which falls for consideration of this Court is whether the order passed by the trial Court recording acquittal of the original accused – respondent nos. 3 to 5 herein on the sole ground of non joinder of partnership firm was correct or not ? 10. I have gone through the reasons recorded by the trial Court as well as I have also looked into the relevant documents brought on record through paper book. On examination of the cause title of the Criminal Case No.16736 of 2016, it transpires that M/s. Mamta Creation i.e. partnership firm is joined as main accused through its partners who are joined as accused nos. 1 to 3 respectively. Merely because, the partnership firm has not been separately numbered as accused would not lead to an inference of not being joined as accused in the criminal case. The respondent accused have not disputed the fact of being partners in the said partnership firm as on the date of filing of the complaint. 1 to 3 respectively. Merely because, the partnership firm has not been separately numbered as accused would not lead to an inference of not being joined as accused in the criminal case. The respondent accused have not disputed the fact of being partners in the said partnership firm as on the date of filing of the complaint. Indisputably, the respondents are partners of the said partnership firm. The legal notice which is brought on record vide Exh. 17 refers to the name of partnership firm and is addressed to the accused nos. 1 to 3 as partners of the said partnership firm. In my opinion, the statutory legal notice has in fact been addressed to the partnership firm as well as is duly served through its partners. In absence of any reply being given by the accused, cause of action has arose for the complainant to proceed under Section 138 of the Negotiable Instruments Act by lodging the complaint. At this stage, it would be appropriate to look into the provisions itself. Section 141 of the Negotiable Instruments Act reads as under: “Section 141: Offences by companies. In absence of any reply being given by the accused, cause of action has arose for the complainant to proceed under Section 138 of the Negotiable Instruments Act by lodging the complaint. At this stage, it would be appropriate to look into the provisions itself. Section 141 of the Negotiable Instruments Act reads as under: “Section 141: Offences by companies. — (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.— For the purposes of this section,— (a) “company” means any body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.” 11. On bare reading of the aforesaid provision, it becomes imperative to join the partnership firm as accused in the proceedings under Section 138 of the Negotiable Instruments Act and the non compliance of the same would render the prosecution against the partners not maintainable. On bare reading of the aforesaid provision, it becomes imperative to join the partnership firm as accused in the proceedings under Section 138 of the Negotiable Instruments Act and the non compliance of the same would render the prosecution against the partners not maintainable. In absence of partnership firm, the accused cannot be convicted upon mere allegation in their individual capacity. Section 141 imposes vicarious liability by deeming fiction which presupposes and requires commission of the offence by the company or the firm and therefore, unless company or firm has committed the offence as a principal accused, the persons mentioned in sub-section(1) or (2) would not be liable and convicted as vicariously liable. This view has been reiterated in various decisions of the Hon’ble Supreme Court. Recent decision of the Hon’ble Supreme Court in the case of Dayle De Souza v. Government of India Through Deputy Chief Labour Commissioner and Another reported in 2021 SCC OnLine SC 1012 has answered the question whether a director or a partner can be prosecuted when the company being prosecuted. The Hon’ble Supreme Court has followed its earlier judgment in the case of State of Madras v. C.V. Parekh & Another reported in (1970) 3 SCC 491 and Aneeta Hada vs. M/s. Godfather Travels & Tours reported in (2012) 5 SCC 661 wherein the difference between the primary / substantial liability under Section 141 of the NI Act is interpreted and explained. 12. In light of the settled legal position, if we examine the present case, it transpires from record that the trial Court on erroneous footing of partnership firm being not joined as accused has proceeded to take into consideration the aforesaid provisions of Section 141 of the Negotiable Instruments Act. There can be no issue that as liability is penal in nature, therefore strict construction of the provisions would be necessary. Resultantly, for maintaining prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act arraigning the partnership firm as an accused is imperative. However, the record goes to suggest that the name of partnership firm has been in fact reflected in the cause title of the complaint as the main accused and accused nos. 1 to 3, who were admittedly the partners on the date of filing of the complaint, have been joined. However, the record goes to suggest that the name of partnership firm has been in fact reflected in the cause title of the complaint as the main accused and accused nos. 1 to 3, who were admittedly the partners on the date of filing of the complaint, have been joined. In my opinion, the requirement of Section 141 of the Negotiable Instruments Act has been duly complied with. I am, therefore, of the view that the present appeal requires consideration. Since the trial Court had proceeded not to entertain the complaint solely on the ground of non joinder of necessary party, this Court has taken up this appeal for final hearing at the admission stage. I am, therefore, of the view that the complaint be restored and same may be heard on merits. 13. With the aforesaid observations, the judgment and order of acquittal dated 10.01.2020 passed in Criminal Case No.16736 of 2016 by the learned 8th Additional Senior Civil Judge, Surat, is hereby quashed and set aside. The learned trial Court is directed to hear the case on merits. Since the evidence have already been brought on record, the trial Court is directed to decide the Criminal Case No.16736 of 2016, as expeditiously as possible, preferably within a period of two months from the date of receipt of the present order. 14. In view of the above and for the reasons stated above, present appeal is allowed to the aforesaid extent. No cost.