TaxTMI 
TaxTMI 
TaxTMI 
1997 (7) TMI 701
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....Branch, Bangalore, for a sum of Rs. 35,00,000/- lakhs in part payment of the advance received in that transaction. Subsequently, on 11-11-1996 after informing the petitioners the respondent presented the cheque for encashment. However on 13-11-1996 the said cheque was returned dishonoured with an endorsement "not arranged for". Thereafter, the respondent got issued statutory notice to the petitioners and lodged the complaint against the Company, Joint Managing Director, Managing Director and all the Directors. The Magistrate has taken cognizance and directed to issue notice to the petitioners which order is questioned in this petition. 3. Heard. 4. The learned Counsel for the petitioners in support of his arguments placed reliance on a catena of decisions which came to be rendered under Section 10 of Essential Commodities Act, Section 17(4) of the Prevention of Food Adulteration Act and Section 141 of the Negotiable Instruments Act. 5. In the case of Sham Sunder and Others v State of Haryana, their Lordships of the Supreme Court had an occasion to deal with a case in which a complaint was lodged against the company, its Directors and Managers. In those circumstances th....
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....on cognizance against them cannot be taken. 8. Similarly, this Court has considered Section 29 of the Payment of Bonus Act wherein it is held that the prosecution lies against the partners without impleading the firm as an accused. Complaint against alleged partner arraigned as accused was incharge of and responsible for conduct of business at the time of the commission of the offence. These judgments came to be delivered with reference to Section 10 of the Essential Commodities Act and Section 29 of the Payment of Bonus Act which are similar to Section 141 of the Negotiable Instruments Act which reads: "Section 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 incharge 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 his knowledge, or that he....
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....in charge of and was responsible to the Company for the conduct of its business. Hence in the absence of such disclosure cognizance against them cannot be taken. 10. Their Lordships of the Supreme Court in R. Banerjee and Others v H.D. Dubey and Others, held while discussing the prosecution of Directors under Section 17(4) of the Prevention of Food Adulteration Act that where the allegations set out in the complaint do not constitute any offence, no process can be issued against the co-accused other than the Company and the nominated person and the High Court would be justified in exercising its inherent jurisdiction under Section 482 of the Cr. P.C., 1973, to quash the order passed by the Magistrate taking cognizance of the offence against such co-accused. In Banovarilal Tibrewalla v State of Assam and Another, the Gauhati High Court has held that complaint not disclosing that the partner was incharge of the conduct of business of the firm and no nomination in Form VIII is filed, the prosecution of such partner is illegal under the Prevention of Food Adulteration Act. 11. He also placed reliance on a decision in Saj Flight Services (Private) Limited v P.T. Gopala Raja, wherein t....
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.... stated that they have connived to cheat the complainant or any negligence or active part is played by them in issuing the cheque. It is not a question of policy of the company involved in this complaint. On the other hand, the dispute is only in regard to the dishonour of the cheque issued by the 1st petitioner signed by the 3rd petitioner in their business transaction. Therefore, the learned Counsel for the petitioners submitted that this petition as far as petitioners 1 and 3 are concerned is not pressed. However, there is some allegation in regard to the agreement entered into between the parties and the same was signed by the 2nd petitioner on behalf of the 1st petitioner from which transaction this cheque came to be issued. Under those circumstances, I am of the considered view that the 2nd petitioner also is a necessary party in this proceedings. 15. Coming to petitioners 4 to 8 there is absolutely no allegation made against them and they are arraigned as accused persons only because they are the partners of the 1st petitioner. However, the learned Counsel for the respondent contended that allegations are found in the notice issued by the respondent as contemplated under th....