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OANALI ISMAILJI SADIKOT Versus STATE OF GUJARAT AND 1

2016 (3) TMI 290 - GUJARAT HIGH COURT

Offense punishable under Section 138 of the Negotiable Instruments Act - Held that:- Legislature has already made it clear that the company includes any body corporate which includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. On this count also, when Section 141 of the Negotiable Instruments Act and explanation thereto does not make any distinction between the company and the partnership firm, there is absolutely no reason to draw s .....

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an accused is imperative for prosecution under Section 141 of the Negotiable Instruments Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under Section 141 of the Negotiable Instruments Act. The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable.

In view of the specific provisions of the Act itself, it is very difficult for t .....

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present case?- Held that:- By virtue of a legal fiction, it cannot be said that on the date of filing of the complaint, the Court was justified in taking cognizance and issue process against the partners in the absence of the legal entity and no fault could be found so far as the legality and validity of the cognizance is concerned. The legal fiction is altogether for a different purpose and it should not be brought in aid of curing a serious defect or infirmity in the complaint or the order tak .....

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sed.

The policy of the Code is that the offence can be taken cognizance of once only and not repeatedly upon discovery of further particulars. In a given case, the complainant may not even know the names and other particulars of the offenders, and it would, therefore, be sufficient for him to lodge a complaint making the persons who are known as the accused. When such a trial proceeds against the known accused, if the evidence led in trial discloses offences committed by other persons .....

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HING) NO. 4536 of 2015 - Dated:- 3-3-2016 - MR. J.B.PARDIWALA, J. FOR THE APPLICANT : MR TUSHAR L SHETH, ADVOCATE FOR THE RESPONDENT: MS HANSA PUNANI, APP CAV JUDGMENT 1 By this writ application under Article 227 of the Constitution of India, the applicant - original complainant has prayed for the following reliefs: 16(A) Your Lordships may be pleased to allow the present petition. (B) Your Lordships may be pleased to issue a writ of certiorari or writ in nature of certiorari or any other approp .....

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Exhibit no.1. (c) Any other and further relief/s as may be deemed just, fit and proper in the facts and circumstances of the present case may kindly be granted in the interest of justice. 2 The facts of this case may be summarized as under: 2.1 The applicant herein filed a complaint being Criminal Case No.222 of 2004 in the Court of the Additional Chief Judicial Magistrate, Gondal, against the respondent No.2 herein for the offence punishable under Section 138 of the Negotiable Instruments Act. .....

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the complaint. 2.4 It appears that the respondents herein and other coaccused preferred the Criminal Miscellaneous Application No.5043 of 2014 for quashing of the proceedings of the Criminal Case No.222 of 2004 principally on the ground that in the absence of a legal entity, they, in their capacity as partners, cannot be prosecuted for the offence punishable under Section 138 of the Act. To put it in other words, the Court could not have taken cognizance upon the complaint and ordered issue of p .....

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terms of Paragraph9( C). Learned APP waives service. Direct Service for rest is permitted. 2.6 It appears that during the pendency of the above referred application, the Criminal Miscellaneous Application (for modification of order) No.10036 of 2014 came to be filed. The said application was disposed of by the learned Single Judge as under: 1. Heard learned advocates appearing for the parties. 2. Learned advocate for the applicant has relied upon the decision rendered by the Hon ble Supreme Cou .....

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bservations, present application stands disposed of. Rule made absolute. Direct service is permitted. 2.7 On the strength of the order passed by the learned Single Judge referred to above dated 23rd January, 2015, the applicant - original complainant preferred an application Exhibit : 53 in the Criminal Case No.222 of 2004 with a prayer that he may be permitted to implead the partnership firm being a legal entity as an accused in the complaint and trial Court shall take cognizance and issue proc .....

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icle 227 of the Constitution of India. 3 Mr. Tushar L. Sheth, the learned counsel appearing for the applicant vehemently submitted that the learned Magistrate committed a serious error in rejecting the application Exhibit : 53. He submitted that the application filed under Section 319 of the Cr.P.C. to implead the partnership firm being a legal body is maintainable. He submitted that assuming for the moment that at the relevant point of time, the partnership firm was not impleaded as an accused, .....

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sly liable for the offence punishable under Section 138 of the Act in the absence of the partnership firm before the Court. 4 Mr. Sheth further submitted that the matter deserves to be considered from a different angle. He submitted that a partnership firm is not a legal entity or juristic person. A partnership is merely an association of persons for carrying on the business of partnership and in law the firm s name is compendious of describing the partner. Mr. Sheth submitted that the prohibiti .....

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nce of the offence. He submitted that under Subsection (1) to Section 319 of the Cr. P.C., the Court is given power to proceed against any other person who appears to have committed any offence for which such person could be tried together with the accused already arraigned in the case. 5 Mr. Sheth submitted that the partners have already been arraigned as accused in the complaint. The Magistrate has already taken cognizance and ordered issue of process. In such circumstances, there should not b .....

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trong reliance on the following decisions: (1) V. Subramaniuam v. Rajesh Raghuvandra Rao [(2009) 5 SCC 608] (2) Munshi Ram v. Municipal Committee, Chheharta [(1979) 3 SCC 83] (3) Comptroller and Auditor General v. Kamlesh Vadilal Mehta [(2003) 2 SCC 349] (4) Bacha F. Guzdar, Bombay v. Commissioner of Income Tax, Bombay [[1955 AIR SC 74] (5) A Kerala High Court decision of a learned Single Judge (K.T. Thomas, J., as His Lordship then was) in the case of Plywood House v. Wood Craft Products Limite .....

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I) Is the prosecution of the partners of a firm, by virtue of Section 141 of the Act, maintainable in the absence of the partnership firm being impleaded or arraigned as an accused? (III) When the complaint under Section 138 of the Act has the initial defect in its sustainability, can such defect be cured by amending the proceedings by virtue of an application under Section 319 of the Cr. P.C.? • FIRST QUESTION: 9 Before I proceed to answer the first question, let me look into the decisions .....

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of the assessment contending that construed in light of the definition given in Section 2(40) of the Punjab General Clauses Act, the term person occurring in Section 6(1)(b) of the Punjab Municipal Act, 1911, included a firm and since the trade carried on by the firm was one, the tax could be levied on the firm, and not on the partners individually. On such premises, it was pleaded that the Municipal Committee in levying the tax on the individual partners had exceeded its statutory powers under .....

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cipal Act material for the purpose of deciding the case which reads as under: Subject to any general or special orders which the State Government may make in this behalf, and the rules, any committee may, from time to time for the purposes of this Act, and in the manner directed by this Act, impose in the whole or any part of the municipality any of the following taxes, namely: (1) (a) .............. (i) to (iii) .......... (b) a tax on persons practising any profession or art or carrying on any .....

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sion persons undoubtedly includes natural persons. The class of such taxable persons has been indicated by the Legislature with reference to their occupational activity. Thus, in order to be authorised, a tax under clause (b) of Section 61 (1) must satisfy two conditions: First, it must be a tax on persons . Second, such persons must be practicing any profession or art or carrying on any trade or calling in the municipality. 16. There can be no dispute that the appellants are person and, as such .....

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in Section 4 of the Indian Partnership Act, 1932, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them for the benefit of all. The section further makes it clear that a firm or partnership is not a legal entity separate and distinct from the partners. Firm is only a compendious description of the individuals who compose the firm. The crucial words in the definition of partnership are those that have been underlined. They hold the key .....

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o hold that each of the six partners is not carrying on a trade or calling within the purview of clause (b) of Section 61 (1) of the Municipal Act. At the most, it can be said that each of these six persons is severally as well as collectively carrying on a trade in the Municipality. There is nothing in the language of Section 61 or the scheme of the Municipal Act which warrants the construction that persons who are carrying on a trade in association or partnership with each other cannot be indi .....

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lectively carrying on a trade in the municipality cannot be taxed individually, would be to read into the statute words which are not there. There are no words in clause (b) or elsewhere in the statute which, expressly or by necessary implication, exclude or exempt persons carrying on a trade collectively in the municipality from being taxed as individuals. To attract liability to a tax under this clause, it is sufficient that the person concerned is carrying on a trade in the municipality, irre .....

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m the partners. 10 In Mahabir Cold Storage (supra), the appeal before the Supreme Court was filed by the appellant - assessee against the judgment of the Division Bench, Patna made in the Tax Case answering in favour of the Revenue and against the Assessee. In the said case, the assessee was a registered partnership firm. In para 11, the Court observed as under: 11. The crucial question, therefore, is whether the appellant is the owner of the machinery and plant in the relevant assessment year 1 .....

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Prayagchand Hanumanmal and Periwal and Co. (P.) Ltd. Prayagchand and Hanumanmal individually are entitled to 25 per cent shares each for the profits in the appellant firm and Periwal and Co. (P.) Ltd. has 50 per cent shares of profit. Under the Indian Partnership Act, 1932 the partnership firm registered thereunder is neither a person nor a legal entity. It is merely acollective name for the individual members of the partnership. A firm as such cannot be a partner in another firm though its par .....

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. Thus it is clear that the appellant assessee is a new identity under the Act. It is not a successor in interest of the old firm as per the provisions of the Act. The question then is whether the assessee is entitled to development rebate under S. 33(1) of the Act. (Under S. 10(1)(vib) of the repealed Act). Section 33(1) gives right to development rebate only to the owner who has acquired the ship or installed the machinery or plant. The necessary implication is that the assessee who claims dev .....

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r being brought on the panel for audit work of government companies and concerns. The audit work of the government and public undertakings was assigned to only those Chartered Accountant firms which were enrolled on the panel maintained by the appellant. The appellant through an advertisement invited applications from the firms of the Chartered Accountants for the purpose of empanelment for audit of the government companies. The respondent therein had submitted an application for enrollment on t .....

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ion Bench was also dismissed. The Comptroller and Auditor General preferred an appeal before the Supreme Court. The Supreme Court, while dismissing the appeal, observed in para 9 as under: 9. The appellant insists that it is only a smaller group of Chartered Accountants firms that would be eligible for being brought on the panel for audit of public sector undertakings or Government concerns. The audit work of public sector undertaking, no doubt, is to be done by the qualified and efficient Chart .....

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ns in a firm alone. A single individual as an auditor in a proprietary concern can have such characteristics and professional acumen by himself and also through the assistance of experienced auditor who could be in his services as efficient as any partnership firm. It is often seen in many cases that some of the partners of the partnership firm are sleeping partners with no professional duties to discharge. A partnership concern is not a legal entity like company; it is a group of individual par .....

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ern. It is, therefore, evident that the appellant himself erroneously assumed that the partnership firms are more efficient than the proprietary concern in the matter of audit of accounts of the public sector undertakings or of the Government concerns. 12 In Bacha F. Guzdar (supra), the argument before the Supreme Court was that the possession of the shareholders in a company was analogous to that of partners inter se . While holding the analogy is wholly inaccurate, the Supreme Court observed, .....

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page 234, the law regarding the attributes of shares is thus stated : A share is a right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and in its winding up. The shares or other interest of any member in a company are personal estate transferable in the manner provided by its articles, and are not of the nature of real estate". 13 In V. Subramaniam (supra), the appeal before the Supreme Court aro .....

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lative of Articles 14 and 19(1)(g) of the Constitution of India. The Bombay City Civil Court made a reference in that regard to the High Court under Section 113 of the Code of Civil Procedure. The High Court, held that Subsection (2A) of Section 69 was not unconstitutional. The appeal came up before the Supreme Court. After noticing Section 69(1) and (2) of the Partnership Act as well as Subsection (2A) introduced by the Maharashtra Amendment 1984, the Court observed in paras 14 and 17 as under: .....

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p firm, whether registered or unregistered, is not a distinct legal entity, and hence the property of the firm really belongs to the partners of the firm. Subsection (2A) virtually deprives a partner in an unregistered firm from recovery of his share in the property of the firm or from seeking dissolution of the firm. 14 What is discernible from a conspectus of the authorities referred to above is that a partnership firm, unlike a company registered under the Indian Companies Act, is not a disti .....

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ion 141 of the Act reads as under: 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 subsection shall render any pe .....

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rosecution under this Chapter.] (2) Notwithstanding anything contained in subsection (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary 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 aga .....

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usiness 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. The offender in section 138 of the Act is the drawer of the cheque. He alone would have been the offender thereunder if the Act did not contain other provisions. It is because of section 141 of the Act that penal liability under section 138 is cast on other persons connected with the company. Three categories of persons can be discerned .....

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proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence, he shall not be liable to punishment under this section. Subsection (2) further provides that where any offence under this Act has been committed by a company and it is provided that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of .....

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1 provides for the constructive liability. It postulates that a person, in charge of and responsible to the company, in the context of the business of the company, shall also be deemed guilty of the offence. The drawer can be a company, a firm or an association of individuals, but only those directors, partners, or officers can be held responsible for the offence punishable under Section 138 of the Act, who are responsible to the company - firm for the conduct of its business. 18 The Legislature .....

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director , in relation to a firm means a partner in the firm . The term other association of individuals should not be understood to refer even to informal understanding between the individuals. It has to be understood in the context of body corporate and partnership firms. The principal of ejusdem generis gets attracted in such a case. Therefore, a sole proprietary concern is not a company within the meaning of company as defined under the explanation to Section 141 of the Act. 19 The Explanati .....

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e commission of the offence, was in charge of the affairs of the firm or responsible to it for the conduct of its business. There is nothing in the provision which indicates that in every complaint involving the dishonour of a cheque issued by a firm both the firm as well as its partners have to be compulsorily impleaded. In other words a complaint in which only the firm is made an accused and the partners are not would not be bad in law for that reason. Clearly that is not the intention of the .....

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under Section 138 Negotiable Instruments Act only against the firm. The complainant may choose not to proceed against the individual partners as accused either because he is not aware as to who are the partners or is not interested in proceeding against the partners apart from the firm. 21 It is now well settled that an Explanation added to a statutory provision is not a substantive provision in any sense of the term but as the plain meaning of the word itself shows it is merely meant to explain .....

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effect of an Explanation thus : Sometimes an explanation is appended to stress upon a particular thing which ordinarily would not appear clearly from the provisions of the section. The proper function of an explanation is to make plain or elucidate what is enacted in the substantive provision and not to add or subtract from it. Thus an explanation does not either restrict or extend the enacting part; it does not enlarge or narrow down the scope of the original section that it is supposed to expl .....

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vision.... The construction of the explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used. An explanation must be interpreted according to its own tenor. 24 The principles laid down by the aforesaid authors are fully supported by various authorities of the Supreme Court. In Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Commercial Tax Officer [(1961) 1 SCR 902 : (AIR 1961 SC 315)], a Constitution .....

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ith and clear up any ambiguity in the main section. It should not be so construed as to widen the ambit of the section. 26 In Hiralal Rattanlal etc. v. State of U.P. [(AIR 1973 SC 1034)], the Supreme Court observed thus : On the basis, of the language of the Explanation this Court held that it did not widen the scope of clause (c). But from what has been said in the case, it is clear that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect .....

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en called an Explanation, we must construe it according to its plain language and not on any a priori considerations. 28 Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to pr .....

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y right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. The first question is answered accordingly in the affirmative. • SECOND QUESTION: 29 In the case of Aneeta Hada v. Godfather Travels & Tours Private Limited [(2012) 5 SCC 661], the question that arose for disposal of the Supreme Court was whether an authorized signatory of a company would be liable for prosecution under Section .....

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cerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant. 58. Applying the doctrine of strict constructi .....

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at the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion 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 brou .....

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eated to be restricted to its own facts as has been explained by us hereinabove. 30 Thus, it has been laid down in unequivocal words in the aforesaid decision that for maintaining the prosecution against the director under Section 141 of the Negotiable Instruments Act, arraigning of a company as an accused is imperative. In view of explanation to Section 141 of the Negotiable Instruments Act referred to above, this legal position needs to be automatically made applicable in case of prosecution a .....

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ruments Act deals with the vicarious liability. In paras 58 and 59 of the said judgment, referred above, the Supreme Court has referred to the wordings in Section 141 of the Negotiable Instruments Act and observed that commission 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 .....

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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 respectibility. 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 arriving at its conclusion was the vicarious liability which the directors or .....

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as an accused in the dragnet on the touchstone of vicarious liability, as is done in the case of directors of the company. Therefore, there is no reason at all to draw any distinction in respect of the law to be made applicable to a partnership firm and the company. 34 Moreover, the Legislature has already made it clear that the company includes any body corporate which includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. On this co .....

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le for prosecution being the same that of the vicarious liability. Therefore, once the company is held to be an essential party and that arraigning of a company as an accused is imperative for prosecution under Section 141 of the Negotiable Instruments Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under Section 141 of the Negotiable Instruments Act. The prosecution launched against only one of the partners of the partner .....

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accordingly. 36 The second question is answered accordingly. ● THIRD QUESTION: 37 Before I proceed to answer the third question, I deem fit to quote Sections 138 and 142 of the Act: 138. Dishonour of cheque for insufficiency, etc., of funds in the account Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is ret .....

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the cheque, or with both : Provided that nothing contained in this section shall apply unless( a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, b [within thirty days] of the receipt .....

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of Criminal Procedure, 1973 (2 of 1974),( a) no Court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138 : [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant .....

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of a complaint for an offence under Section 138 of the Act, Section 142 of the Act, which deals with cognizance of offences punishable under Section 138, lays down a necessary precondition i.e. a written complaint by the payee or the holder of the cheque in due course and prescribes a special period of limitation within which the complaints must be filed (clause (b)). Clause (b) of Section 142 read with Clause (a) of the section suggests that a Court shall not take cognizance of an offence punis .....

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in the criminal Court to waive the period of one month prescribed for taking cognizance of the case under the Act and to take cognizance of an offence punishable under Section 138 despite expiry of such period of limitation, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. 39 Limitation under the Section is, however, provided only for filing the complaint and not for taking cognizance or even for issuing the process. The thrust is .....

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used. It is not in dispute that the Magistrate took cognizance upon the complaint in the absence of the legal entity being the principal accused and thought fit to issue process against the Directors by virtue of their vicarious liabilities under Section 141 of the Act. 41 The following are the questions I need to look into: (I) Whether the complaint under Section 138 of the Act the day it was filed was maintainable in law against the partners alone in the absence of the partnership firm being a .....

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o the firm as a legal entity? (IV) If the complainant is permitted to do so, could it not be said that indirectly he is substantially amending the complaint thereby changing the entire complexion of the same which is otherwise not permissible in law. (V) Could it be said that although the cognizance was taken in the year 2004, yet the impleading of the partnership firm, after twelve years, would be in consonance with Section 142(b) of the Act read with Clause (a)? To put it in other words, could .....

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name. 43 Section 319 of the Cr.P.C. reads as under: 319. Power to proceed against other persons appearing to be guilty of offence (1) Where, in the course of any inquiry into, or trial of, an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person could be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed. (2) Where such person is not attending the Court .....

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ct to the provisions of clause (a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced. 44 The objects and reasons of Section 319 of the Cr.P.C. are as under: The Law Commission in its 41st Report observed : 24.80. It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, .....

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ressly provide for that situation. 24.81. Section 351 assumes that the Magistrate proceeding under it has the power of taking cognizance of the new case. It does not, however, say in what manner cognizance is taken by the Magistrate. The modes of taking cognizance are mentioned in section 190, and are apparently exhaustive. The question is, whether against the newly added accused, cognizance will be supposed to have been taken on the Magistrate s own information under S. 190(1)(c), or only in th .....

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t cognizance against the newly added accused should be taken in the same manner as against the other accused. We, therefore, propose to recast S. 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings. It is, of course, necessary (as is already provided) that in such a situation the evidence must be reheard in the presence of the newly added accused. 45 The crucial words in the sect .....

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persons for the offence which he or they appears or appear to have committed and issue process for the purpose. It provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.It naturally deals with a matter arising from the course of the proceeding already initiated. The scope of the section is wide enough to include cases instituted on private complaint. 46 It is therefor .....

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eed against such person for the offence which he appears to have committed. The intention of the Legislature in enacting Section 319 appears to be that if somebody other than the person who is party and facing trial or enquiry is also an accused, he may be summoned on the basis of some evidence available on the record. 47 Thus, having regard to the substantive provision of Section 319 of the Cr.P.C. read in conjunction with the objectives and reasons, Section 319 of the Cr.P.C. authorizes the Co .....

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used have also committed the alleged offence along with the original accused, then only, cognizance can be taken under the provisions of Section 319. 48 Let me give a simple illustration. Take a case where the partnership firm being a legal entity is an accused. The trial Court has taken cognizance and issued process against the partnership firm as a legal entity. In the course of the trial, it comes to the notice of the Court that one of the partners not being accused has committed an offence f .....

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319 of the Cr.P.C. in such a situation. Section 319 of the Cr.P.C. would not save the situation and is actually not meant to take care of such a serious infirmity in the complaint. 50 The best test in the construction of statutes is to see the subjectmatter of the purpose for which a provision of law is enacted. One should always get at its real object and purpose; the importance of the provision of law enacted and its relation to or effect on the general object intended to be secured by its ena .....

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Section 319 of the Cr.P.C. 52 It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a factsituation, the legal maxim sublato fundamento cadit opus meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case. 53 In Badrinath v. State of Tamil Nadu and Ors. [ .....

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upreme Court held that if an order at the initial stage is bad in law, then all further proceedings, consequent thereto, will be non est and have to be necessarily set aside. 55 In C. Albert Morris v. K. Chandrasekaran and Ors., [(2006) 1 SCC 228], the Supreme Court held that a right in law exists only and only when it has a lawful origin. 56 I am of the view that the application under Section 319 of the Cr.P.C. seeking impleadment of the partnership firm as an accused is more in the nature of a .....

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ourt in the case of S.R. Sukumar v. S. Sunaad Raghuram [(2015) 9 SCC 609]. The observation in paras 17 and 18 is the answer to the question whether it is permissible for the Court to allow any amendment in the complaint: 17. Insofar as merits of the contention regarding allowing of amendment application, it is true that there is no specific provision in the Code to amend either a complaint or a petition filed under the provisions of the Code, but the Courts have held that the petitions seeking s .....

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only on the [pic]technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Modi Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in para 2 of the complaint so as to make the controlling company of the industrial unit figure as the concerned .....

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ication for amendment. If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the Court may permit such an amendment to be made. On the contrary, if the amendment sought to be made in the complaint does not relate either to a curable infirmity or the same .....

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eview petitions being filed and heard in open Court. However, with a view to avoid this procedure of no hearing, we find that sometimes applications are filed for clarification, modification or recall etc. not because any such clarification, modification is indeed necessary but because the applicant in reality wants a review and also wants a hearing, thus avoiding listing of the same in chambers by way of circulation. Such applications, if they are in substance review applications deserve to be .....

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unsel appearing for the petitioner placed strong reliance on one decision of the Kerala High Court delivered by Justice K.T. Thomas (as His Lordship then was), in which, His Lordship took the view that by virtue of Section 319 of the Cr.P.C., the partnership firm can be subsequently impleaded in the complaint. Let me look into the judgment closely. It is a short judgment of eight paras. I deem fit to quote the entire judgment: 1. The petitioner is a firm. On the strength of some cheques said to .....

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n accused in the complaints. On November 6, 1992, the complainant filed a petition in each case praying for impleading the firm as additional accused. Though the petitions were stoutly resisted, the Chief Judicial Magistrate before whom the complaints were filed, allowed the petitions by the impugned order. 2. Two main contentions have been advanced by learned counsel for quashing the order. The first is that since there is no provision in the Act for impleading a new accused in the case, the co .....

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ion envisaged in Clause (c) of Section 138 of the Act, and hence the firm cannot be impleaded after the said period. 3. Section 142 of the Act reads as follows : Cognizance of offences.Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), (a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque ; (b) such complaint is made w .....

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er enactment which requires a different mode of trial for such offence. The nonobstante clause in Section 142 of the Act is intended to make it clear that the three matters specified in the section have overriding effect on the provisions of the Code. The clause does not keep the provisions of the Code away from trial or inquiry into the offence under Section 138 of the Act as for all other purposes. All that Section 142 restricts is that for taking cognizance of the offence under Section 138 a .....

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nder and not of the offence. The prohibition in Section 142 stretches only to the taking of cognizance of any offence. It is now wellsettled that a court takes cognizance only of the offence and not of any offender; It was pointed out by the Supreme Court in Raghubans Dubey v. State of Bihar, AIR 1967 SC 1167, 1169, that once cognizance has been taken by the Magistrate. ... it is his duty to find out who the offenders really are and once he comes to the conclusion that apart from the persons sen .....

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ce of the offence. 7. In the aforesaid context, a reference to Section 319 of the Code, is necessary. Under Subsection (1), the court is given power to proceed against any other person who appears to have committed any offence for which such person could be tried together with the accused already arraigned in the case. Once the court decides to proceed against such other person then Subsection (4) will save the earlier act of taking cognizance of the offence. Subsection (4) says that the case ma .....

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here was no provision in the Negotiable Instruments Act for impleading a new accused in the case, the Court could not have recourse to the general provisions contained in the Cr.P.C. Such submission was canvassed by the accused to oppose an application filed by the complainant for impleading the firm as an additional accused. The submission was rejected on the ground that Section 142 of the Negotiable Instruments Act itself makes it clear that the prosecution proceedings contemplated therein are .....

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bmission canvassed was that the Court was debarred from taking cognizance of the offence against the partnership firm after the expiry of the period of one month from the date of cause of action envisaged in clause (c) of Section 138 of the Act, and therefore, the firm could not be impleaded after the said period. Such submission was negatived on the reasoning that the Court takes cognizance only of the offence and not of any offender. The learned Judge observed that when once cognizance of the .....

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w was altogether different. The law was that even in the absence of a firm, the partner of the firm could be prosecuted. This proposition of law is no longer good after the pronouncement of the Supreme Court in the case of Aneeta Hada (supra), which I have discussed at length while answering the second question. When the cognizance itself is bad, would the position be saved by virtue of Section 319 (4)(b) of the Code. 61 As observed by the Supreme Court in State of Orissa vs. Sudhansu Sekhar Mis .....

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ke, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quot .....

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what it actually decides, and not what logically follows from it. 63 In Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd (2003) 2 SCC 111 (vide para 59), the Supreme Court observed:- It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. 64 The endeavour on the part of the learned counsel appearing for the petitioner in the present case all through out the course of his submissions was that when a pers .....

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irst blush appears to be quite attractive, but if considered closely, the same deserves to be rejected. 66 A deeming fiction is a supposition of law that the thing is true without inquiring whether it be so or not, that it may have the effect of truth so far as it is consistent with justice. A deeming provision is made to include what is obvious or what is uncertain or to impose, for the purpose of statute, an ordinary construction of a word or phrase that would not otherwise prevail but, in eac .....

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cide or believe on considerations; to account, to regard; to adjudge or decide; to conclude upon consideration. (see Major Law Lexicon by P.Ramanatha Aiyar, 4th Edition 2010 Vol.2) 68 In this connection, I deem it necessary to consider few precedents on the true meaning of the word deemed and deeming fiction . 69 In Consolidated Coffee Ltd. v/s. Coffee Board, Bangalore, reported in AIR 1980 SC 1468, the purpose of the word deemed occurring in Section 5(3) of the Central Sales Tax Act, 1956 came .....

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ision. In St. Aubyn and Ors. v/s. Attorney General, 1952 A.C. 15 at p.53 Lord Radcliffe observed thus: The word deemed is used a great deal in modern legislation. Sometimes it is used to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what .....

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Cotton Spinning and Weaving Mills Ltd. v/s. Union of India, AIR 1988 SC 191, M. Venugopal v/s. Divisional Manager, Life Insurance Corporation of India, AIR 1994 SC 1343 and Harish Tandon v/s. Addl. District Magistrate, Allahabad, AIR 1995 SC 676, and came to hold that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the Court has to examine and ascertain as to for what purpose and between which persons such .....

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the purpose for which it is created, or beyond the language of the Section by which it is created... 71 From the aforesaid pronouncements, the principle discernible is that, it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the Court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term deemed has to be read in its context and further the fullest .....

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entity and no fault could be found so far as the legality and validity of the cognizance is concerned. The legal fiction is altogether for a different purpose and it should not be brought in aid of curing a serious defect or infirmity in the complaint or the order taking cognizance. When Subsection (4)(b) of Section 319 of the Code says that it will be presumed that the newly added person had been an accused person when the Court took cognizance of the complaint upon which the inquiry or trial .....

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the offenders, and it would, therefore, be sufficient for him to lodge a complaint making the persons who are known as the accused. When such a trial proceeds against the known accused, if the evidence led in trial discloses offences committed by other persons who could be tried along with the accused, then there need not be a fresh complaint and fresh order of cognizance against those persons. I reiterate that the complaint was liable to be dismissed on the very first day of its presentation a .....

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all be prosecuted along with the others, who were in charge of the company. Therefore, if the company has not been impleaded as an accused in the proceedings, it will not be in compliance with Section 141 of the Negotiable Instruments Act, 1881, and, therefore, the prosecution is not sustainable against the directors or persons in the administration of the company as held in the decisions cited above. 7. Learned counsel for the respondents placed another submission that the complainant is always .....

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evidence that another person also has committed offence and he also should be tried together with the other accused. Learned counsel for the respondent relies upon the decision in U.P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77; AIR 1988 SC 1123, in support of his argument. The decision cited above is about the right of the complainant to set right the technical flaw by amending the complaint. But learned senior counsel for the petitioner, Mr. N. T. Vanamamalai, would conte .....

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roperly described. So, in that case, the company was impleaded as a party but the description of the company was found to be a mistake, and, therefore, the apex court observed that this technical flaw of describing the name of the company can be rectified by amending the complaint. Therefore, that decision will not come in support of the respondent s contention because in this case, the respondent has deliberately omitted to implead the company. According to the learned senior counsel, Mr. Vanam .....

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g the same, no offence is constituted. In other words, the test is that taking the allegations in the complaint, as they are, without adding or subtracting anything, if no offence is made out, then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code. In the above view of the Supreme Court, the maintainability of the proceedings against a particular accused has to be considered without adding or subtracting anything in the c .....

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have any bearing as to the maintainability of the proceedings against other accused. Section 319 of the Code of Criminal Procedure is not intended for curing the infirmity in the proceedings but only to bring all the culprits before the court when their role in the commission of the offence was brought to light only after the evidence before court. Such is not the position in this case. The respondent had deliberately omitted to implead the company in the complaint though Section 141 of the Nego .....

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ned Single Judge of the Madras High Court is quite commendable, and I propose to adopt the same line of reasoning. 75 Suryanarayan (supra) later came to be followed by the Madras High Court in the case of Anandan v. Arivazhagan [1999 (96) Company case 503]. A learned Single Judge observed in paras 7, 8 and 9 as under: 7. It is not in dispute that the cheque was issued by the first petitioner as managing partner of K. S. Muthu Constructions for the liability to the complainant. Learned counsel, M .....

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issued by the managing partner and without impleading the partnership, the partners alone were prosecuted, the complaint is maintainable against the partners alone. Following this decision, the same court in M.O.H. Iqbal v. Uthaman (M) [1995] 82 Comp Cas 726; [1993] MWN 146, also repeated the same view that the complaint against the partners is maintainable without impleading the company under Section 138 of the Negotiable Instruments Act. In Plywood House v. Woodcraft Products Ltd. [1993] MWN .....

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Kerala High Court have not been accepted by this court in a series of decisions and this court has taken a consistent view that a complaint under Section 138 of the Negotiable Instruments Act is not sustainable without complying with the mandatory provision, viz., Section 141 of the Negotiable Instruments Act, without impleading the company or the partnership and when there was defect even in the initial stage in the initiation of the proceedings itself, that cannot be cured by impleading the c .....

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sion in M.O.H. Iqbal v. Utharnan (M) [1995] 82 Comp Cas 726 and this court has not followed the view of the Kerala High Court. Therefore, the respondent is not entitled to contend that the complaint is maintainable even without the partnership K. S. Muthu Constructions. 9. Then coming to the next point with regard to the curable aspect of the defect in the complaint, by invoking Section 319 of the Code of Criminal Procedure, this court, in the above decision, following the view taken by the apex .....

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