TaxTMI 
TaxTMI 
2012 (6) TMI 933
X X X X Extracts X X X X
X X X X Extracts X X X X
....hese petitions have been heard together and they are disposed of by means of this common order. 2. The respondent instituted prosecution in all these cases alleging that the petitioner along with the other accused committed offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as "the Act"). The petitioner is the second accused in all these cases. 3. According to the case of the complainant, there is a Hindu Undivided Family known as "Prahladray I. Jhanwar HUF" in which the first accused is the Kartha and the petitioner herein is a member. According to the further allegations, the first accused, in the capacity of the Kartha of the HUF, entered into an agency agreement with the respondent on 30.06.2009. In respect of the said agency, the HUF became liable to pay a sum of Rs. 85 lakhs. In discharge of the said liability of the HUF, the first accused issued the cheques in question to the respondent. All the cheques were presented for collection and they were returned unpaid as 'sufficient fund was not available in the account'. Thereafter, the respondent issued legal notices and since the demand for payment was not complied with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. So, we have to seek recourse to the General Clauses Act. In Section 3(42) of the General Clauses Act, 1897, the term "person" is defined as follows:- 3 (42) "person" shall include any company or association or body of individuals, whether incorporated or not; 7. This provision is precisely in pari materia to Section 11 of IPC. The definition of the term 'person' made both in Section 3(42) of The General Clauses Act and Section 11 of IPC is not exhaustive. It is hardly a definition. It is undoubtedly inclusive. The indication of the intention of the Legislature is to give wider sense so as to mean not only natural persons but to include artificial or juridical persons also, provided, such artificial or juridical person is a legal entity. For instance, an idol is a juridical person capable of owning property and is, therefore, a "person". But, a proprietary concern is not a legal entity and so, it is not a person in terms of Section 11 of IPC. Similarly, a Hindu Undivided Family is a legal entity capable of owning property and, therefore, undoubtedly, such a HUF is a person as defined in Section 3 (42) of The General Clauses Act and Section 11 of IPC. Therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....retary, 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 purpose 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. 9. In the instant cases, as we have already seen, the complainant wants to rope in a member of the HUF by taking recourse to Section 141 of the Negotiable Instruments Act. In other words, according to him, a HUF is a company as defined in Section 141 of the Act. He claims that a HUF is an "Association of Individuals" as expressed in the explanation (a) to Section 141 of the Act 10. The explanation (a) to Section 141 of the Act, would go to indicate that it is indisputably an inclusive definition. The use of the word "includes" would normally indicate the intention of the legislature to enlarge the meaning of the word used in the statute. As has been held by the Hon'ble Supreme Court in Ramanlal Bhailal Patel v. State of Gujar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court has held that "though the word "include" is generally used in interpretation clauses as a word of enlargement, in some cases the context might suggest a different intention". When the liberty of the subject is involved having penal consequences, then, the word 'include' should receive strict interpretation and not liberal interpretation. Therefore, it should be interpreted having reference to the context of the Act. Admittedly, the term "company" includes an Association of Individuals. Had it been the intention of the Parliament to bring in a HUF within the meaning of the term "company", as it has been done in the other enactments, like The Income Tax Act, it would have specifically included the same in express terms in this Act also. The very fact that it has not been done so would only reflect the intention of the Parliament not to include a HUF as a company in terms of Section 141 of the Act. 12. With this back ground, now, we have to analyse as to whether the expression "Association of Individuals" as explained in Section 141 of the Act will include a HUF so as to be called as a "company" in terms of Section 141 of the Act. 13. A similar question arose for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... General Clauses Act, and in addition, a "joint family" as defined. Thus, the word "person" in the Ceiling Act will, unless the context otherwise requires, refer to: (i) a natural human being; (ii) any legal entity which is capable of possessing rights and duties, including any company or association of persons or body of individuals (whether incorporated or not); and (iii) a Hindu Undivided Family or any other group or unit of persons, the members of which by custom or usage, are joint in estate and residence. 15. Thus, in the above judgements, since there is a specific inclusion of HUF into the meaning of the term "person", the Hon'ble Supreme Court held that a HUF is a person for the purpose of the above enactments. As we have already seen, there is no such specific inclusion of the HUF in the definition of the term "company" in the Negotiable Instruments Act. 16. In the same judgement, nextly, the Hon'ble Supreme Court had to consider the question as to whether the co-owners are together a person. 29. Normally, where a group of persons have not become co-owners by their own volition with a common purpose, they cannot be consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the HUF can act in regard to his or her share without any request or obligation to the other owners. They do not automatically become an Association of persons/body of individuals. Thus, the law laid down by the Hon'ble Supreme Court squarely applies to the Negotiable Instruments Act, for the purpose of understanding the definition of the term "company" and thus, a HUF can not be a company in terms of Section 141 of the Act. 18. But, the learned counsel for the petitioner has relied on a judgement of the Andhra Pradesh High Court in Jagadish Rai Agarwal and Ors v State of Andhra Pradesh and Ors (cited supra) wherein a quite contrary view has been taken. This is a case relating to Negotiable Instruments Act. While considering the same question, the Andhra Pradesh High Court has held as follows:- ... Since the dishonoured cheque was issued by the 1st petitioner as Kartha of the HUF, petitioners 2 to 4, being the sons of 1st petitioner and member of HUF, in view of the explanation of Section 141 of the Act, like directors of a company, can be made liable for the offence under Section 138 of the Act. 19. The Bombay High Court has also taken such a view in The Dadas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nivance or is attributable to neglect on his part. As per the Explanation appended to Section 141, partners are equated to a Company and its Directors. The definition of Company includes the companies incorporated, partnership firms and other association of individuals. The pertinent question that arises here is whether an Hindu Undivided Family comes under the definition of Company found in Section 141 of the Negotiable Instruments Act, 1881. 22. Before the learned Judge, the judgement of the Andhra Pradesh High Court in Sri Jagadish Rai Agarwal and Others Vs. State of Andhra Pradesh and Others (cited supra) was cited. Having referred to the same, the learned Judge has observed as follows:- with due respect to the Hon'ble Single Judge of the Andhra Pradesh High Court, this Court is not able to accept such a blanket proposition without a qualification that such cheque should have been issued in respect of an account maintained in the name of the HUF in order to hold the members of the HUF responsible for the dishonour of such cheque equating them with a Director of a company. 23. A close reading of the said judgement of the learned Single Judge of this Court woul....