2024 (2) TMI 721 - HC - Indian Laws

Partners cannot be prosecuted under Section 138 without impleading partnership firm as accused first

Delhi HC quashed a criminal complaint under Section 138 NI Act filed against partners for cheque dishonour. The cheque was issued from the partnership ... Dishonour of cheque - insufficient funds - vicarious liability of partners - cheque in question was issued from the account of the partnership firm and signed by both partners - no legal notice was issued to the partnership firm - partnership firm was not impleaded - HELD THAT:- Admittedly, the cheque in question was not issued by the partners from their individual accounts. Rather, it was issued from the account of the partnership firm and signed by both the partners. Thus, the liability of the partners is vicarious and flow from Section 141 of the NI Act. It is apt to observe that sub-section 1 of Section 141 NI Act stipulates that if an offence is committed by a company, then every person, who at the time of commission of offence, was in charge and was responsible to the company for the conduct of its business, as well as company itself, would be guilty of the offence. The first proviso, which is in the nature of exception, provides that in case such a person is able to prove that offence was committed without his knowledge or that he exercised due diligence to prevent the commission of offence, then such a person would not be liable for punishment. The onus to satisfy the said requirement is on the person alleging/stating the same. However, this does not take away the initial onus cast on the complainant to establish the requirements of sub-section 1 of Section 141. The issue whether any person under Section 141(1) can be proceeded against in the absence of a company, came up before the Supreme Court in Aneeta Hada v. Godfather Travels & Tours (P.) Ltd. [2012 (5) TMI 83 - SUPREME COURT], wherein a three Judges Bench held that for maintaining prosecution under Section 141, arraigning of company as an accused is imperative. The other categories of offenders can only be brought in the drag-net by way of vicarious liability. The position with respect to a partnership firm is no different. Likewise in the case of the partnership firm, the liability of its partners is vicarious and thus impleading of the partnership firm is necessary. In the present case, though the complainant sought to overcome the said issue by way of filing an amended memo of parties however, the same would not come to its rescue. When a cheque issued for discharge of any debt or other liability is returned unpaid, the drawer or holder of the cheque in due course is required to issue a demand notice for payment of the amount under the cheque within 30 days of the receipt of the information from the bank of its dishonour and if the drawer fails to make such payment within 15 days of the receipt of the said notice, then the offence under Section 138 NI arises. In the present case, no such demand notice was issued to the partnership firm and as such, the filing of the criminal complaint suffered from a material defect. The criminal complaint under Section 138 of the NI Act was filed only against the partners, without impleading the partnership firm and as such this Court deems it fit to exercise its power under Section 482 Cr.P.C. to quash the complaint. Petition allowed. Issues:The issues involved in the judgment are:1. Assailing the order of summoning passed by the Trial Court under Section 138 of the Negotiable Instruments Act, 1881.2. Legal notice not issued to the partnership firm, and the complaint filed against the partners without impleading the partnership firm.Issue 1:The petitioners sought to challenge the order of summoning dated 30.09.2021 under Section 138 of the Negotiable Instruments Act, 1881. The respondent alleged that a loan was given to the accused persons, and a cheque issued by them was dishonoured. The Revisional Court upheld the order, considering Section 24 of the Partnership Act, stating that notice to the partners shall operate as notice to the partnership firm. The amended memo of parties was filed before the issuance of summons, and no material irregularity was found.Issue 2:The main issue in the present petition was the absence of a legal notice to the partnership firm and the complaint being filed against the partners without impleading the partnership firm. The liability of the partners was considered vicarious under Section 141 of the NI Act. The complainant filed an amended memo of parties to include the partnership firm, but no demand notice was issued to the partnership firm as required by law. The courts below erred in allowing the amended memo of parties to overcome this defect. Citing precedent cases, the Court quashed the complaint under Section 138 of the NI Act as it was filed only against the partners without involving the partnership firm.In conclusion, the petition was allowed, and the orders of the Trial Court and Revisional Court were set aside. The Court exercised its power under Section 482 Cr.P.C. to quash the complaint.