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of <h1>Quashing of Criminal Petitions on Negotiable Instruments Act: Legal Principles & Liability Analysis</h1> <h3>J. Sumathi Versus M/s. Choudhary Milling Industries,</h3> The court allowed the Criminal Original Petitions, quashing the proceedings against the petitioner/A3 in the Fast Track Court. The judgment highlighted ... Dishonor of Cheque - insufficiency of funds - difference between a 'firm' and a proprietary concern - HELD THAT:- In this case, A1 M/s.Varshini Traders is a Proprietorship concern, A2 N.Jai Ganeshen is the Proprietor of A1 and A3 is the wife of A2. A proprietary concern is not a firm. A firm is a partnership concern consisting of partners. In this case, the first accused is not a firm. It is only a proprietary concern. Only the drawer of the cheque can be prosecuted. In this case, the drawer of the cheques is A2 - Further, there is a basic and fundamental difference between a 'firm' and a proprietary concern. The first accused is only a Proprietary concern, its proprietor being A2 N.Jai Ganeshen. A1 and A2 are one and the same person. The issuance of the cheque by A2 as Proprietor of A1 M/s.Varshini Traders would amount to issuance of the cheque by A2. The complaint of the respondent is not maintainable against A3. On the ground that A1 and A2 are same persons and that A1 is not a 'firm' as per Section 141 of the Negotiable Instruments Act - Petition allowed. Issues:Quash petitions under Section 138 of the Negotiable Instruments Act - Liability of accused for dishonored cheques - Application of Section 141 of the Act - Maintainability of complaint against accused A3.Analysis:1. Liability under Section 138 of the Negotiable Instruments Act:The petitioner/A3 faced trial for offenses under Section 138 of the Negotiable Instruments Act. The respondent/complainant alleged that the accused purchased goods on credit but failed to make payment, leading to the issuance of dishonored cheques. The respondent maintained a ledger showing the due amount, and legal notices were served after the cheques bounced.2. Application of Section 141 of the Act:The petitioner contended that as A1 M/s.Varshini Traders is a proprietary concern, only the drawer of the cheque, A2, could be prosecuted. The petitioner, A3, argued that she was not issued any cheques and was not an authorized signatory of A1. The defense emphasized that the sole proprietor, A2, was the only authorized signatory, and the petitioner's involvement was incorrect.3. Maintainability of Complaint Against A3:The court analyzed the nature of a proprietary concern versus a firm, citing precedents that clarified the distinction. It was established that A1 and A2 were the same person, and A1 was not a firm under Section 141 of the Act. Therefore, the complaint against A3 was deemed not maintainable, and the proceedings against A3 were quashed.Conclusion:The court allowed the Criminal Original Petitions, quashing the proceedings against the petitioner/A3 in the Fast Track Court. The judgment highlighted the legal principles surrounding proprietary concerns, authorized signatories, and the application of Section 141 of the Negotiable Instruments Act. The detailed analysis provided clarity on the liability of the accused and the grounds for quashing the complaint against A3 based on legal interpretations and precedents cited during the proceedings.
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