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Issues: (i) whether the partners of a registered partnership firm could be prosecuted for non-compliance with a security-deposit demand issued to the firm when the firm itself was not made an accused; and (ii) whether cognizance of the alleged offence was barred by limitation on the facts disclosed in the complaint and challan.
Issue (i): whether the partners of a registered partnership firm could be prosecuted for non-compliance with a security-deposit demand issued to the firm when the firm itself was not made an accused.
Analysis: The demand for security under the sales tax law was addressed to the registered dealer, namely the firm, which was treated as a distinct entity for the purpose of the statutory demand. Section 11A was held applicable to a proprietary business carried on under a trade name, not to a partnership firm registered as a dealer. In the absence of the firm being impleaded as an accused, the partners alone could not be fastened with liability for the alleged contravention of the demand issued to the firm.
Conclusion: The prosecution of the partners alone was not maintainable and continuation of the proceeding against them was unjustified.
Issue (ii): whether cognizance of the alleged offence was barred by limitation on the facts disclosed in the complaint and challan.
Analysis: The alleged default was treated as a completed offence when the registered dealer failed to comply with the demand within the stipulated time. It was not accepted as a continuing offence. Since cognizance was taken long after the relevant period disclosed in the materials, the bar under the limitation provision applied and the Magistrate was held to have acted without jurisdiction in taking cognizance.
Conclusion: Cognizance was barred by limitation and was invalid.
Final Conclusion: The proceeding could not be sustained either on the ground of absence of the firm as an accused or on the ground of limitation, and quashing of the proceeding followed as a consequence.
Ratio Decidendi: Where a statutory demand is issued to a registered partnership firm treated as the dealer, partners alone cannot be prosecuted in the absence of the firm as an accused, and a default of this kind is a completed offence rather than a continuing one for limitation purposes.
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