AI Drafter 
TaxTMI 
TaxTMI 
2008 (1) TMI 987
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....Magistrate No. 3, Vellore, took the same on file as C.C. No. 21 of 1993. On appearance of the accused and on the plea of not guilty made by the accused, the accused (the respondent herein) was tried for an offence punishable under Section 138 of the Negotiable Instruments Act. 3. In the trial, four witnesses were examined as P.Ws.1 to 4 and 15 documents were marked as Ex.P1 to P15 on the side of the complainant/prosecution. No witness was examined, however one document was marked as Ex.D1 on the side of the accused. Ex.C1 was marked as Court document. At the conclusion of trial, the learned Judicial Magistrate No. 3, Vellore held the accused (the respondent herein) guilty of an offence punishable under Section 138 of the Negotiable Instruments Act, convicted the accused and imposed a sentence of six months simple imprisonment and a fine of Rs. 3,000/- along with a default sentence of three months simple imprisonment to be undergone in case of default of payment of fine. It was also directed therein that out of the fine amount, Rs. 2,000/- should be paid to the complainant as compensation. 4. Challenging the correctness and legality of the conviction recorded and sentence impo....
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....e complaint will show that an industrial concern (a partnership firm) by name "M/s. Dalton Ceramic Industries" represented by its partner Subramanian is shown to be the accused and the prosecution has been launched against the industrial concern alone and not the above said Subramanian in his personal capacity. Section 141 of the Negotiable Instruments Act is an enabling provision to prosecute the persons responsible for the management or business of a company for an offence committed by the company under Section 138 of the Negotiable Instruments Act. It is to the effect that when such an offence is committed by a company, every person, who was in charge of and was responsible to the company for the conduct of its business as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. 7. The first proviso to Section 141(1) is to the effect that any such person referred to in Sub-clause (1) shall not be liable to punishment, if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of such offence. Sub-clause 2 of Section 141 mak....
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....ompany or a corporation, the punishment to such artificial persons can only be in the nature of fine. While considering the constitutionality of Section 141, the Hon'ble supreme Court held that though it is quite impossible to put the corporate personality in prison, the section has to be interpreted in such a way that only fine shall be imposed on such corporate personalities. 9. In this case, the learned Judicial Magistrate has chosen to award a substantive sentence of six months simple imprisonment which goes to show that the learned Judicial Magistrate was proceeding on the assumption that the complaint was against Subramanian as an individual and not against the partnership firm coming under the definition of company as per the explanation found under Section 141. 10. On the other hand, the learned Additional District and Sessions Judge-cum-Chief Judicial Magistrate, Vellore, while dealing with the appeal, also committed the very same mistake by making an observation that the company (partnership firm) was not prosecuted and on the other hand its partner alone as an individual was prosecuted before the trial Court. The learned lower appellate Judge, relying on the ju....
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.... the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act. 12. The said view was also followed by a subsequent judgment in R. Rajagopal v. S.S. Venkat reported in (2001) 10 SCC 91. In that case also it was clearly held that the prosecution of a partner of a firm without arraying the firm as an accused was nonetheless maintainable. 13. Therefore, the above said conclusion arrived at by the learned Judge of the lower appellate Court on the legal issue - whether a prosecution of a partner of a partnership firm for an offence under Section 138 of the Negotiable Instruments Act committed by the firm shall be maintainable without the partnership firm and other partners being made as co-accused? - is not in tune with the views expressed by the Hon'ble Supreme Court and hence, the same deserves disapproval. 14. Apart from holding that the ....
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....Shri Bhalla, to see that the payments are made within the stipulated period of 15 days. It is not disputed (signature alleged) that Shri Bhalla has not signed the cheques, nor is it disputed that Shri Bhalla was not the Director of the company. Bearing in mind the object of issuance of such notice, it must be held that the notices cannot be construed in a narrow technical way without examining the substance of the matter. We really fail to understand as to why the judgment of this Court in Bilakchand Gyanchand Co., will have no application. In that case also criminal proceedings had been initiated against A. Chinnaswami, who was the Managing Director of the company and the cheques in question had been signed by him. In the aforesaid premises, we have no hesitation to come to the conclusion that the High Court committed an error in recording a finding that there was no notice to the drawer of the cheque as required under Section 138 of the Negotiable Instruments Act. In our opinion, after the cheques were dishonoured by the bank, the way the payee had served due notice and yet there was a failure on the part of the accused to pay who had signed the cheques as the director of the com....