2014 (10) TMI 1050 - HC - Indian Laws

Liability of Partner in Partnership Firm: Importance of Including Firm as Accused

Ratishbhai D. Ramani Versus State of Gujarat and Ors.

The Court held that the liability of an administrator/partner of a partnership firm under Section 138 of the Negotiable Instruments Act, 1881 requires the ... Dishonor of Cheque - liability of administrator/partner of a partnership firm - Whether an administrator/partner of a partnership firm would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without partnership firm being arraigned as an accused? - HELD THAT:- In the present case, the original complainant has not joined the partnership firm as an accused, and the complaint is filed only against the driver of the firm, and therefore, in view of the decision rendered by the Honourable Apex Court in the case of In the present case, the original complainant has not joined the partnership firm as an accused, and the complaint is filed only against the driver of the firm, and therefore, in view of the decision rendered by the Honourable Apex Court in the case of ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT], all the aforesaid impugned complaints in the present three cases are not maintainable. Hence, this Court can exercise the powers under Section 482 of the Cr.P.C. for quashing and setting aside the impugned complaints. All the aforesaid impugned complaints in the present three cases are not maintainable. Hence, this Court can exercise the powers under Section 482 of the Cr.P.C. for quashing and setting aside the impugned complaints. Application allowed. Issues Involved:1. Liability of an administrator/partner of a partnership firm under Section 138 of the Negotiable Instruments Act, 1881 without the partnership firm being arraigned as an accused.Detailed Analysis:Issue 1: Liability of an administrator/partner of a partnership firm under Section 138 of the Negotiable Instruments Act, 1881 without the partnership firm being arraigned as an accused.The common proposition of law for consideration was whether an administrator/partner of a partnership firm would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act) without the partnership firm being arraigned as an accused.The brief facts leading to the filing of the present applications are as follows: The applicant, a partner/administrator of a partnership firm, issued three cheques to the respondent (original complainant) to discharge liabilities. These cheques were dishonored due to 'insufficient funds' and 'payments stopped by the drawer.' The respondent issued a notice under Section 138 of the N.I. Act, but the applicant did not respond or make any payment. Consequently, the respondent filed three different complaints against the applicant and others.Learned advocate for the applicant argued that the complaints were filed against the partners without joining the partnership firm as an accused, which is a requirement under Section 138 read with Section 141 of the N.I. Act. The advocate relied on the Supreme Court decision in Aneeta Hada v. M/s. Godfather Travels and Tours Private Limited, which held that arraigning a company as an accused is imperative for maintaining prosecution under Section 141 of the N.I. Act.On the other hand, the respondent's advocate contended that the ingredients of Section 138 of the N.I. Act were made out in the complaints. The cheques were signed by the applicant as a partner, and when deposited, were returned due to insufficient funds. Notices were issued under Section 138, but payment was not made, justifying the filing of the complaints.The Court referred to Sections 138 and 141 of the N.I. Act. Section 138 deals with the dishonor of cheques for insufficiency of funds, while Section 141 deals with offences by companies, making every person in charge of the company at the time of the offence liable, along with the company itself.The Court emphasized the need for strict observance of these provisions, given their penal nature. It cited the Supreme Court's decision in Aneeta Hada, which clarified that for maintaining prosecution under Section 141, arraigning the company as an accused is imperative. The vicarious liability of other persons associated with the company arises only if the company is prosecuted.In conclusion, the Court found that the applicant's case was covered by the Supreme Court's decision in Aneeta Hada. Since the original complainant did not join the partnership firm as an accused, the complaints against the applicant were not maintainable. Therefore, the Court exercised its powers under Section 482 of the Cr.P.C. to quash and set aside the impugned complaints.Accordingly, the Criminal Miscellaneous Applications were allowed, and the criminal complaints, being Criminal Cases No. 283 of 2007, 284 of 2007, and 154 of 2008, pending before the learned Judicial Magistrate First Class, Sayla, were quashed and set aside. Rule was made absolute.