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2017 (2) TMI 927 - HC - Indian LawsProsecution of the 'Karta' of HUF when cheque issued by the HUF got dishonored - whether an H.U.F. will constitute an “association of individuals” according to the term “company” as explained in Section 141 of the N.I. Act - legal entity - Liability of authorized signatory to be prosecuted under Section 138 of the Negotiable Instruments Act - Held that:- A H.U.F. will not constitute an “association of individuals” within the meaning of Section of 141 of the N.I. Act. A H.U.F. is not a legal entity distinct and separate from that of the members who constitute it. although the H.U.F. in the case at hand may be engaged in a business and is running a firm in the name of M.S. Traders and may be having a common purpose, yet what is missing is the element of free will and volition. A mere combination of individuals will not constitute an “association of individuals” . To make it as an “association of individuals”, in terms of Section 141 of the N.I. Act, it is absolutely necessary that the combination of individuals must be on their own free will and volition. Secondly, it is also necessary that such combination of individuals must be with a common purpose. There may be a common purpose to be carried forward by an H.U.F., but an individual becomes a member of the H.U.F., not on his own free will and volition, but by status and birth. The principles laid down by the Supreme Court in the case of Aneeta Hada (2012 (5) TMI 83 - SUPREME COURT OF INDIA ) will not apply in the case of a H.U.F. - Decided against the petitioner.
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