TaxTMI 
TaxTMI 
2016 (3) TMI 381
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....learned Judicial Magistrate, First Class, Shrivardhan under section 138 of the NI Act. 3. Brief facts, relevant for deciding the question of law involved in these petitions, are stated as follows: The partnership firm of the petitioner by name M/s Alamgiris and respondent no.1 - a company registered under the Companies Act, 1956 had entered into an Agreement dated 7th February 2011 to sell iron ore fines by the petitioner to respondent no.1. The final contract was entered into between these two parties on 8th April 2011. As per the Agreement, 1,65,000 MT of iron ore was to be purchased by respondent no.1. The petitioner was to supply iron ore together with trucks and barges for loading the iron ore on board the ship. Under the contract, respondent no.1 paid Rs. 11.75 crores to the petitioner towards the purchase price. However, on 25th April 2011 the petitioner informed respondent no.1 company that his partnership firm is unable to provide iron ore. As a consequence of petitioner's failure, respondent no.1 has to pay Rs. 3.60 crores as damages of the vessel and Rs. 1.50 crores as advance payment made to the petitioner. The petitioner promised to pay Rs. 20 crores by way o....
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.... NI Act, arraigning of a company as an accused is imperative. According to learned counsel for the petitioner, in view of explanation to section 141 of the NI Act, the word "company" means any body corporate which includes firm or other association of individuals and director in relation to a firm means a partner in the firm. Hence, according to learned counsel for the petitioner, the law laid down by the Apex Court in the case of Aneeta Hada (supra) that arraigning of a company as an accused is imperative in a prosecution under section 141 of the NI Act, is equally applicable when the prosecution is launched against a partnership firm. The learned counsel, therefore, submitted that in the instant case, as the partnership firm is not made an accused and one of the partner alone is sued, the prosecution itself is not tenable and on this count the process issued against the petitioner is required to be quashed and set aside. 6. Per contra, learned counsel for respondent no.1 has submitted that legally speaking a partnership firm and a company registered under the Companies Act stand on two different footings. A partnership firm is not a juristic person. It is not a separate and di....
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.... been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purposes of this section,( a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm. Thus, explanation (a) to section 141 of the NI Act abundantly makes it clear that the word "company" used in the said section is not confined in its application only to the company registered under the Companies Act, but also to the body corporate and specifically includes a firm or other association of individuals. Explanation (b) further clarifies the position that the director in relation to a firm means a partner in the firm. The point, therefore, to be noted and taken into consideration is that the Legislature is not leaving it to the imagination or discretion of either the litigating parties or to the ....
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....osecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a threeJudge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." 9. Thus, it has been laid down in unequivocal words in the abovesaid decision that for maintaining the prosecution against the director under section 141 of the NI Act, arraigning of a company as an accused is imperative. In view of explanation to section 141 of the NI Act referred to above, this legal position needs to be automatically made applicable in case of prosecution against a partnership firm also. Therefore, it has to be held that for maintaining prosecution....
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....olutely unmistakably clear that when a company is prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. It was further observed that the other categories of offenders like directors or partners of the firm can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. 14. Thus, the Apex Court has arrived at an irresistible conclusion that for maintaining the prosecution under section 141 of the NI Act, arraigning of the company as an accused is imperative, mainly and mostly on the basis of the vicarious liability of the directors of the company and not necessarily because the company is a juristic person and it has its own respectibility. That was an additional circumstance considered by the Apex Court while holding that arraigning of a company as an accused is imperative, but the main basis for arriving at its conclusion was the vicarious liability which the directors or partners of the firm can have towards the company and hence without joining the company on the touchstone of vicarious liabi....