2019 (7) TMI 2041 - HC - Indian Laws

Section 138 complaint against partners requires partnership firm as accused and statutory notice to firm Hada

Rangabashyam and V. Rajeshwari Versus Ramesh

Rangabashyam and V. Rajeshwari Versus Ramesh - TMI Issues Involved:1. Whether an unregistered Partnership Firm can be brought within the purview of Section 141 of the Negotiable Instruments Act.2. Whether the Partnership Firm must be made an accused along with the partners to maintain a complaint for an offence under Section 138 of the Negotiable Instruments Act.Issue-wise Detailed Analysis:1. Unregistered Partnership Firm and Section 141 of the Negotiable Instruments Act:The primary issue in this case is whether an unregistered Partnership Firm can be considered under Section 141 of the Negotiable Instruments Act. The petitioners argued that the provisions of Section 141, which deal with offences by companies, should equally apply to partnership firms, based on the explanation provided under the same section. They contended that the Hon'ble Supreme Court has established that a complaint under Section 138 cannot be maintained against directors without making the company an accused, and this principle should extend to partnership firms. The respondent, however, argued that Section 141 applies only to registered firms that satisfy the requirements of a legal entity. Since the firm in question was unregistered, the respondent proceeded to file the complaint against the partners directly. The court relied on previous judgments, including those from the Kerala and Allahabad High Courts, which clarified that the effect of non-registration under Section 69 of the Partnership Act is applicable only to civil rights and not to criminal cases. Therefore, the bar under Section 69(2) of the Partnership Act does not apply to criminal prosecutions under Section 138 of the Negotiable Instruments Act.2. Requirement to Make the Partnership Firm an Accused:The second issue is whether the partnership firm must be made an accused along with the partners to maintain a complaint under Section 138. The petitioners argued that without making the firm an accused, the complaint against the partners alone is unsustainable. The court examined the legal framework and precedents, including the Supreme Court's decision in Aneeta Hada vs. Godfather Travels and Tours Private Limited. It was established that a complaint cannot be maintained against directors without making the company an accused. This principle extends to partnership firms, as confirmed in N. Elangovan vs. C. Ganesan. The court reiterated that the registration status of the firm is immaterial for Section 141 of the Negotiable Instruments Act. In this case, since the cheque was issued in the name of the partnership firm, and no statutory notice was issued to the firm nor was it made an accused, the complaint against the partners alone is not maintainable. The court concluded that the proceedings were unsustainable and quashed the complaint, emphasizing that the law requires the partnership firm to be included as an accused for the complaint to be valid under Section 141.The court's decision underscores the importance of adhering to procedural requirements when dealing with offences under the Negotiable Instruments Act, particularly concerning the inclusion of the legal entity as an accused in cases involving partnership firms.