2020 (8) TMI 899 - HC - Indian Laws

Partnership Firm Must Be Accused in Section 138 Cases for Valid Complaints

The court allowed the Criminal Original Petition and quashed the proceedings in STC.No.437 of 2019 under Section 138 of the Negotiable Instruments Act. It ... Dishonor of Cheque - non-impleading the partnership firm as an accused - cheque was issued by the partnership firm - respondent did not issue any statutory notice to the partnership firm - HELD THAT:- The cheque was issued on behalf of partnership firm, namely Sanjey Heavy Engineering partnership firm. Whereas, the respondent caused statutory notice only to the partner who signed the cheque, namely the petitioner herein. Admittedly, the respondent did not issue any notice to the partnership firm and also did not implead the partnership firm as an accused in the complaint lodged for the offences under Section 138 of NI Act. Even according to the respondent, the partnership firm purchased materials and issued cheque towards part payment of the balance amount. Therefore, the complaint impugned is not at all maintainable as against the partner without impleading the partnership firm as an accused. In the case on hand, admittedly the alleged cheque was issued by the partnership firm and the respondent did not issue any statutory notice to the partnership firm and also did not implead the partnership firm as an accused. There are two partners in the firm, in which the petitioner is being one of the partners only impleaded as an accused. Petition allowed. Issues:Quashing of proceedings in STC.No.437 of 2019 under Section 138 of Negotiable Instruments Act, 1881 due to failure to include partnership firm as an accused.Analysis:The petition sought to quash proceedings in STC.No.437 of 2019 under Section 138 of the Negotiable Instruments Act, contending that the complaint was not maintainable without including the partnership firm as an accused. The petitioner, accused in the complaint, argued that the complaint was lodged without issuing statutory notice to the partnership firm and without impleading it as an accused. The respondent, a company supplying cranes, alleged that the accused partnership firm had issued a dishonored cheque towards payment. However, the statutory notice was directed only to the partner who signed the cheque, not to the partnership firm itself. The petitioner relied on various judgments, including Aneeta Hada Vs. Godfather Travels and Tours Private Limited, emphasizing the necessity of including the company as an accused for maintaining a prosecution under Section 138.The court noted that the cheque was issued by the partnership firm, but the respondent failed to issue any statutory notice to the firm or include it as an accused. Despite two partners in the firm, only the petitioner was impleaded as an accused. Citing precedents like Himanshu Vs. B.Shivamurthy, the court emphasized the importance of fulfilling conditions under Section 138, including presentation of the cheque within the specified period and sending a written demand notice. The court reiterated that a complaint under Section 138 cannot be sustained without issuing a statutory notice to the company and adding the company as an accused, not just the director.Consequently, the court allowed the Criminal Original Petition and quashed the proceedings in STC.No.437 of 2019, emphasizing the necessity of including the partnership firm as an accused for a valid complaint under Section 138. The judgment underscored the legal requirement to adhere to statutory procedures and include all relevant parties in complaints under the Negotiable Instruments Act to ensure the integrity of legal proceedings and protect the rights of all concerned parties.