2018 (4) TMI 1911
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....ly Sharma Pramod Narayanprasad and Bhargava Satish Ramchandra were convicted under the above provisions as the partners of Gajanand Developers. 3. The question of law raised herein is whether in absence of indictment of partnership firm as co-accused for the offence punishable under section 138 of the N.I. Act, the prosecution would be maintainable? 4. The rival contentions further give rise to the following question: Is it permissible to go beyond section 141 of the N.I. Act for interpretation of the expression "firm" applied in Explanation to section 141 of the N.I. Act? 4.1. For ready reference the said provision is quoted hereunder: [141 Offences by companies. -(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, 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: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without hi....
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....onclusion that for maintaining the prosecution 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 three Judge 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 para 51. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." 6. Thus it was ruled that for maintaining the prosecution under section 141 of the N.I. Act, arraigning of company as an accused is imperative. As can be noticed, in section 141 itself, the explanation "company", would include firm. Pertinently the Apex Court did not seek assistance of the legal provisions of the Companies Act and rested its findings purely on interpretation of section 141 of N.I. Act. The learned counsel for the respond....
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....of offence by a company is an express condition precedent to attract the vicarious liability of others. It was further held that the words "as well as the company" appearing in the section make it 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. 32. Thus, the Supreme Court has arrived at an irresistible conclusion that for maintaining the prosecution under section 141 of the Negotiable Instruments Act, arraigning of the company as an accused is imperative, mainly 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 respectability. 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 ar....
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....pany Act according to which, the company is a juristic and legal entity which can be sued and be sued in its own name and therefore if the company is an offender, the persons incharge of its affairs may be arraigned as accused but when it comes to partnership firm, arraigning of the partners responsible for the affairs of the firm without arraigning partnership firm as co-accused would be sufficient compliance of section 141 of the N.I. Act. In his submission the partners are not vicariously liable to the firm but liability of the firm and partners is coextensive. For this purpose, the learned counsel referred to various provisions of the Partnership Act. The learned counsel would also contend that as such having regard to the expression 'company' in clause (1) to the explanation to section 141, the company would mean any body corporate and not the firm and that so far as firm is concerned, the inclusive words in the said explanation follow after the expression 'body corporate' and is disjuncted by the word 'and' indicating that the firm is not treated as 'body corporate' but is only included for the purposes of the Act. It was contended that by mere....