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2017 (4) TMI 874

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..... gotiable Instruments Act are not attracted in this case in view of Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act. - CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE FIR/ORDER) NO. 19545 of 2016 With CRIMINAL MISC.APPLICATION NO. 19548 of 2016 - - - Dated:- 11-4-2017 - MR. J.B.PARDIWALA, J. FOR THE APPLICANT : MR NISHITH P THAKKAR, ADVOCATE, MS ASHA D TIWARI, ADVOCATE FOR THE RESPONDENT : MR ASIM PANDYA, ADVOCATE WITH MR. JAYESH C PATEL, ADVOCATE, MS NISHA THAKORE, APP ORAL JUDGMENT 1 Rule returnable forthwith. Ms. Thakore, the learned Additional Public Prosecutor wavies service of notice of rule for and on behalf of the respondent State of Gujarat. Mr. Asim Pandya, the learned counsel waives service of notice of rule for and on behalf of the complainant. 2 By these two applications under Section 482 of the Code of Criminal Procedure, 1973, the applicant original accused No.3 seeks to invoke the inherent powers of this Court, praying for quashing of the proceedings of the Criminal Cases Nos.1076 of 2015 and 1075 of 2015 respectively pending in the Court of the learned Judicial Magistrate First Class, Dhanera, District: Ba .....

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..... ed? II. 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 relied upon by the learned counsel in that regard. In Munshi Ram (supra) , the appellants before the Supreme Court were partners of a firm, Bharat Industries, Chheharta. By a Notification, 15th May, 1946, the Chheharta Municipal Committee levied a profession tax under Section 61(1)(b) of the Punjab Municipal Act, 1911. The appellants filed a suit for permanent injunction restraining the defendant committee from realizing the profession tax demanded by it. The appellants challenged the validity 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) o .....

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..... the first condition. Even the learned counsel for the appellants has candidly conceded that the individual partners are also persons within the meaning of the said clause (b). Controversy thus becomes narrowed down into the issue: Whether persons collectively doing business in partnership in the municipality, fulfill the second condition? That is to say, do such persons carry on any trade or calling in the municipality within the contemplation of clause (b)? 18. 'Partnership' as defined 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 to the question posed above. They show that the business is carried on by all or any of the partners. In the instant case, admittedly, all the plaintiffappellants are carrying on .....

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..... e 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 1962-63. Acquisition of ownership is a condition precedent to avail of the development rebate under S. 33(1) of the Act.It is now fairly clear from the statement of facts that the old and the new partnership firms are separately registered under the Act and the old one was doing its business at Calcutta and the new one at Purnea. They have been separately being assessed as independent assessable entities. Only the new firm alone was reconstituted consisting of the two partners of the old firm M/s. 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 Ind .....

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..... ed, the respondent filed a writ application under Article 226 of the Constitution of India challenging the exclusion of the proprietary concerns from their empanelment as being discriminatory, arbitrary and violative of Article 14 of the Constitution. The learned Single Judge of this High Court allowed the writ petition. The Letters Patent Appeal before the Division 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 Chartered Accountants. Once a person is qualified, experienced and efficient, it is difficult to understand how he could be discriminated against only for the reason that he has chosen to act alone in the professional career and has not been able to form a partnership firm. The efficiency, as pointed out by the High Court, springs f .....

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..... es 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 arose of a suit filed before the Bombay City Civil Court instituted by the appellant praying for dissolution of an unregistered partnership firm between the appellant and the respondent. In that suit, a defence was taken that the suit was not maintainable in view of Subsection (2A) of Section 69 of the Indian Partnership Act, 1932. The Bombay City Civil Court took the view that Subsection (2A), which was introduced by the Maharastra Amendment to Section 69 of the Act, was unconstitutional being violative 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 .....

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..... rector of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution 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 against and punished accordingly. Explanation. For the purposes of this section. (a) company means any body corporation and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 16 Subsection (1) of Section 141 of the Act provides that if a person committing an offence under the section is a company, every person who, at the time of .....

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..... ectors, 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 has thought fit to provide an explanation in Section 141 of the Act and the plain reading of the expression company as used in Subclause (a) of the explanation appended to Section 141 of the Act shows that it is an inclusive of any body corporate or other association of individuals. Though the heading of Section 141 of the Act reads offences by companies; according to the explanation to that Section, company means any body corporate and includes a firm or other association of individuals and 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 .....

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..... which it explains, but only makes the meaning clear beyond dispute. 22 Swarup in 'Legislation and Interpretation' very aptly sums up the scope and 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 explain.......... The Explanation must be interpreted according to its own tenor; that it is meant to explain and not vice versa . 23 Bindra in 'Interpretation of Statutes' (5th Edn.) at page 67 states thus : An explanation does not enlarge the scope of the original section that it is supposed to explain. It is axiomatic that an explanation only explains and does not expand or add to the scope of the original section.... The purpose of an explanation is, however, not to limit the scope of the main provision. .....

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..... lf, (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 provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory 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. 8 Let me test the argument of Mr. Pandya from a different angle. Let me assume for the moment that the partnership firm is not a legal entity, and therefore, it is not necessary to arraign the partnership firm as an accused in the complainant. If that be s .....

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..... banking can be regulated by the Government of India and the Reserve Bank of India. Although the above argument advanced by the learned counsel for the complainant, at the first blush, appears to be attractive, yet if examined closely, cannot be accepted on the face of Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, which reads as under: Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within the period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. 12 From the above proviso, it is clear that the provisions of Section 138 of the Negotiable Instruments Act are enacted taking into consideration the currency of cheques for a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general banking practice and stipulates that the cheque should be presented for encashment either within the period of six months or within the period of va .....

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..... . 14 A learned Single Judge of this Court in the case of Arunbhai Nilkantharai vs. Jayaben Prahladbhai [2000 Cri. L.J. 1152] had an occasion to consider almost an identical issue. In the said case, it was contended on behalf of the complainant that what should the payee of the cheque do if the cheque is returned holding that the validity period had expired. In the said case, an argument was canvassed that there may be a delay on the part of the collecting bank in sending the cheque to the paying bank though it had been within the period of validity, or because of the delay on the part of the postal authority, the cheque might reach the paying bank after the expiry of the period of validity or six months, as the case may be, the holder of the cheque, in such circumstances, would be helpless. The learned Single Judge rejected the contention observing as under: 10...The contention must fail. In that case initiation of criminal action is view of nonfulfilment of the requirements of Sec. 138 of the Act would certainly be barred, but it will be open to the payee to initiate the civil action filing the suit for the recovery of the cheque amount subject to the law of limitatio .....

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..... as empowered under Art. 283(2) of the Constitution and promulgated by the Governor of Kerala by notification No. 54282 dated 641983. 6. As per List 1 which is styled as Union List in 7th Schedule of the Constitution, all the items mentioned therein fall within the exclusive jurisdiction of the Union of India and item 45 in the list I of Schedule 7 is Banking and entry 46 therein is Bill of Exchange, Cheques etc. Therefore, the counsel for the appellant argued that banking comes within the exclusive jurisdiction of the Government of India and the same can be regulated only by the Government of India and Reserve Bank of India. 7. The counsel for the appellant further argued that the Treasury Code is intended for transactions in Government money only and not for banking business for the public and if the Treasuries conduct banking business the entire rules and regulations regarding bank including those rules applicable to cheques etc. contained in the Negotiable Instruments Act and the Banking Practice should be followed by the Treasuries. According to him, though the Treasury can regulate the period of validity of cheques, it will bind only the Treasuries and persons who .....

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..... ess- (a) the cheque has been presented to the bank within the period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. From the above proviso, it is clear that the provisions of S. 138 of the Negotiable Instruments Act are enacted taking into consideration of the currency of cheques for a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general banking practice and stipulates that the cheque should be presented for encashment either within the period of six months or within the period of validity of the cheque, whichever is earlier. Hence a cheque which is issued with the reduced validity period has to be presented for encashment within the expiry of that period so as to attract the provisions of S. 138 of the Negotiable Instruments Act. Therefore, the argument advanced by the counsel for the appellant that the Treasury Code promulgated by the Governor of Kerala should be subject to the provisions of the Negotiable Instru .....

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