Gujarat High Court
Jyotsnaben Sureshbhai Rathi vs Shri Ganesh Khand Sahakari Mandli Ltd. ... on 1 July, 2025
Author: Nirzar S. Desai
Bench: Nirzar S. Desai
NEUTRAL CITATION
R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 22282 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIRZAR S. DESAI
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Approved for Reporting Yes No
Yes
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JYOTSNABEN SURESHBHAI RATHI
Versus
SHRI GANESH KHAND SAHAKARI MANDLI LTD. THROUGH
JAYDEEPSINH YOGENDRASINH MAHARAULJI & ANR.
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Appearance:
MR RJ GOSWAMI(1102) for the Applicant(s) No. 1
MR ZUBIN F BHARDA(159) for the Respondent(s) No. 1
MR RONAK RAVAL ADDITIONAL PUBLIC PROSECUTOR for the
Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE NIRZAR S. DESAI
Date : 01/07/2025
ORAL JUDGMENT
1. Heard learned advocate Mr. Rajesh Goswami appearing for the applicant, learned advocate Mr. Zubin F. Bharda appearing for the respondent No.1. and learned Additional Public Prosecutor Page 1 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined Mr. Ronak Raval appearing for the respondent No.2 - State.
2. By way of this petition, the applicant has prayed for quashing and setting aside the Criminal Case No. 782 of 2022 pending before the Court of learned Judicial Magistrate First Class, Valiya, District : Bharuch for the offence under Section 138 of Negotiable Instruments Act, 1882.
3. The Co-ordinate Bench of this Court vide order dated 7.12.2022 observed that there is no averment in the complaint to the effect that the present applicant was in charge and/or responsible for day to day affairs of the partnership firm and considering the above fact by taking into consideration the provisions of Section 141 of Negotiable Instruments Act, the Co-ordinate Bench vide order dated 7.12.2022 had issued rule and granted interim relief in terms of paragraph No.9(c) in favour of the present applicant and the same is in operation till Page 2 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined today.
4. Today when the matter was called out, the matter was taken up for final hearing with the consent of both learned advocates appearing for the parties.
5. Brief facts as stated in the petition are as under:-
6. That the applicant is partner in Mahesh Enterprise, a partnership firm along with her husband i.e. Sureshbhai Kishanlal Rathi and she was taken as partner in the firm. After father- in-law of the applicant has expired and from the said date the applicant became the partner of the firm along with her husband viz. Sureshbhai Kishanlal Rathi. Husband of the applicant Sureshbhai Kishanlal Rathi was in the business of sugar and there were regular business transaction with the complainant since last many years and therefore on account of dispute, the security cheques given to the complainant were Page 3 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined misused. According to the applicant, one of the cheque bearing No. 003127 drawn on HDFC Bank, Shahibaug, Ahmedabad for an amount of Rs. 5,08,68,644/- was given to the complainant before three years drawn on HDFC Bank. The same was signed by the husband of the applicant i.e accused No.2 and the same was deposited on 25.04.2022 and was dishonored on 27.04.2022 with an endorsement of "insufficient fund" and therefore, after following due procedure prescribed under the Negotiable Instruments Act, 1882, the complainant filed a private complaint before the learned Judicial Magistrate First Class, Valiya which was registered as Criminal Case No. 782 of 2022 wherein the partnership firm viz. Mahesh Enterprise was shown as accused No.1, husband of the applicant Sureshbhai Kishanlal Rathi was shown as accused No.2 and the present applicant was shown as accused No.3. The learned Judicial Magistrate First Class took the cognizance of the offence and issued process against all the accused vide order dated Page 4 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined 23.06.2022 for offence under Section 138 of the Negotiable Instruments Act and no process under Section 141 of the Negotiable Instruments Act was issued. The applicants are duly appearing in that proceedings. However, the present petition is preferred by accused No.3 i.e. wife of the managing partner of the partnership firm Mahesh Enterprise i.e. Sureshbhai Kishanlal Rathi who according to the applicant is neither the signatory of the cheque nor is associated with day to day affairs of the firm or in charge of the firm.
7. Learned advocate Mr. Rajesh Goswami appearing for the applicants submitted before the Court that the present applicant is a housewife and though she is a partner in the partnership firm, she has neither signed the cheque and therefore, she is not a signatory to the cheque nor she is associated with day to day affairs of the Company.
8. Learned advocate Mr. Rajesh Goswami further Page 5 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined pointed out from the notice given under Section 138 of the Negotiable Instruments Act as also from the criminal complaint being Criminal Case No. 782 of 2022 and by taking the Court to the averments made in the notice as well as complaint, that there is no averment made in the notice or complaint stating that the applicant is engaged in day to day affairs of the Company or she is in charge of the Company. Learned advocate Mr. Rajesh Goswami therefore submitted that in view of specific provisions of Section 141 of Negotiable Instruments Act, the applicant could not have been arraigned as an accused in the complaint under Section 138 of Negotiable Instruments Act and therefore issuance of process against the present applicant in absence of there being any specific averment to the extent that the present applicant was in charge of the Company or was associated with day to day affairs of the Company at the time when the offence was committed, the order issuing process against the present applicant itself is Page 6 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined misconceived and therefore entire proceedings qua present applicant are required to be quashed and set aside. Learned advocate Mr. Rajesh Goswami relief upon a decision of the Hon'ble Supreme Court in case of Siby Thomas Versus Somany Ceramics Limited reported in (2024) 1 SCC 348 and by relying upon paragraph Nos.12 and 18 of the aforesaid decision learned advocate Mr. Rajesh Goswami submitted that in absence of there being any specific averment anywhere in the complaint that the appellant was in-charge of the conduct of the business of the Company at the relevant time when the offence was committed, the present applicant ought not to have been arraigned as an accused in the aforesaid complaint and therefore, despite the fact that there is nothing averred in the complaint about the role of present applicant to the effect that she was either in charge of the Company or was actively involved in the day to day affairs of the company in light of decision of Siby Thomas (Supra), the same would be Page 7 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined applicable squarely in the facts of the case and therefore, the complaint is required to be quashed and set aside qua the present applicant.
9. Learned advocate Mr. Zubin Bharda appearing for the respondent No.1 - original complainant relied upon a partnership agreement allegedly executed between the accused No.2 and 3 of the complaint i.e. Sureshkumar Kishanlal Rathi and present applicant Jyotsnaben Sureshkumar Rathi and by relying upon the same and more particularly, by relying upon clause related to Partners' Remuneration, learned advocate Mr. Zubin Bharda pointed out that the partnership agreement provides that both the partners of the agreement shall act as working partners and therefore it cannot be said that the present applicant was not having any control or say in the day to day affairs over the company. However, learned advocate Mr. Bharda despite trying his best could not point out from the complaint that there were any averment in the Page 8 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined complaint or even notice to the effect that the present applicant can be said to be in charge of the company or was involved in day to day affairs of the company or that the present applicant was signatory to the cheque.
10. However, on the basis of the partnership agreement, learned advocate Mr. Zubin Bharda prayed for dismissal of the present petition.
11. No other submissions were made by either of the learned councils appearing for the respective parties nor any decision was cited except the decision in case of Siby Thomas (Supra) cited by learned advocate Mr. Rajesh Goswami.
12. I have heard learned advocates appearing for the respective parties and perused the record. Controversy as can be seen from the submissions made by learned advocates for the parties is in very narrow compass in the present petition. The only issue that the Court is Page 9 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined required to adjudicate is that in absence of there being any averment about the fact that the accused person is actively involved in the day to day affairs of the company or that he is in charge of the company, whether a complaint under Section 138 of the Negotiable Instruments Act, 1882 would be maintainable against that particular accused person or not, who is not even signatory to the cheque.
13. Learned advocate Mr. Rajesh Goswami has relied upon Section 141 of the Negotiable Instruments Act and as the entire case of learned advocate Mr. Rajesh Goswami appearing for the applicant is based on Section 141 of the Negotiable Instruments Act, the same is reproduced as under :-
"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 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 Page 10 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined 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 had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director 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 sub-section (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 corporate and includes a firm or other association of individuals; and
(b)"director", in relation to a firm, Page 11 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined means a partner in the firm."
14. The reading of Section 141 of the Negotiable Instruments Act indicates that the said section is about the offence by the companies and the same specifically states that the person who at the time of commission of offence was in charge of or was responsible to the company for the conduct of the business of the company in that case the person is liable to to be proceeded against and punished in respect of offence under Section 138 of the Negotiable Instruments Act. By relying upon the aforesaid Section, it was submitted that as there are no averments in the complaint about the fact that the present applicant is associated with the day to day affairs of the company or was in charge of the company, she ought not have been arraigned as an accused and therefore, the provisions of Section 141 of the Negotiable Instruments Act, 1882 is required to be considered in light of the decision cited by Page 12 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined learned advocate Mr. Rajesh Goswami appearing for the applicant.
15. In case of Siby Thomas (Supra) while canvassing the case on behalf of the applicant, it was contended that the complaint against the appellant is liable to be quashed owing to the absence of mandatory averments required to be made in terms of Section 141(i) of the Negotiable Instruments Act. While noting the submission of the counsel for the appellant in paragraph No.4, the Hon'ble Supreme Court observed as under :-
"4. The learned counsel appearing for the applicant contended that even if it is taken that the factum of his retirement from the partnership firm on 28.5.2013 was prior to the cheque in question on 21.8.2015 is a matter of evidence, the complaint as against the appellant is liable to be quashed owing to the absence of mandatory averments required to be made in terms of Section 141 (1) of the NI Act, in the complaint. In other words, it is submitted that though the respondent had specified or elaborated the role of some of the accused in the complaint as relates the appellant averments elaborating / specifying his role in the day-to-day affairs of the partnership firm much-less mandatorily required averments for his Page 13 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined prosecution are conspicuously absent in the complaint. To drive home the contentions that the learned counsel for the appellant drew our attention to paragraphs 3 to 6 of the complaint. Learned counsel for the appellant relied on the decisions of this Court in Anita Malhotra v. Apparel Export Promotion Council & Anr.1 and a decision of Two- Judge Bench of this Court in Criminal Appeal No. 879 of 2023 titled Ashok Shewakramani & Ors. v. State of Andhra Pradesh & Anr.2 and connected cases dated 03.08.2023 to buttress the said contentions."
16. Thereafter, in paragraph No.12 of the said decision, the Hon'ble Supreme Court has observed as under :-
"12. Bearing in mind the afore- extracted recitals from the decisions in Gunmala Sales Private Limited's case (supra) and S.P. Mani's case (supra), we have carefully gone through the complaint filed by the respondent. It is not averred anywhere in the complaint that the appellant was in charge of the conduct of the business of the company at the relevant time when the offence was committed. What is stated in the complaint is only that the accused Nos. 2 to 6 being the partners are responsible for the day-
to-day conduct and business of the company. It is also relevant to note that an overall reading of the complaint would not disclose any clear and specific role of the appellant."
17. The Hon'ble Supreme Court after elaborately Page 14 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined discussing the various case laws in paragraph No.18 has observed as under :-
"18.Thus, in the light of the dictum laid down in Ashok Shewakramani's case (supra), it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. A bare perusal of Section 141(1) of the NI Act, would reveal that only that 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 alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished."
18. A conjoint reading of all the aforesaid three paragraphs would indicate that it is mandatory in a complaint to make averments in respect of filing of a complaint against the company or its Director to the extent that a person named in the complaint was responsible for the day to day affairs of the company or he was in charge of day to day affairs of the Page 15 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined company. The requirement to make such averment is mandatory as can be seen from the aforesaid judgment. In the instant case, as learned advocate Mr. Zubin Bharda could not point out either from the complaint or even from the notice that there was any averment to indicate that the present applicant was responsible for day to day affairs of the company or she was in charge of the company, in absence of such mandatory averments, the complaint against the present applicant is required to be quashed and set aside in light of decision of Hon'ble Supreme Court in case of Siby Thomas (Supra) which in the opinion of the Court is squarely applicable in the facts of the case.
19. Accordingly, the present petition is required to be allowed and same is allowed. The Criminal Case No. 782 of 2022 pending before the Court of learned Judicial Magistrate First Class, Valiya, District : Bharuch is hereby quashed and set aside qua present applicant Page 16 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025 NEUTRAL CITATION R/CR.MA/22282/2022 JUDGMENT DATED: 01/07/2025 undefined only. Qua rest of the accused persons, the complaint would stand and same may be proceeded in accordance with law. With the aforesaid observations and directions, the present petition is allowed. Rule made absolute to the above extent. No order as to costs.
(NIRZAR S. DESAI,J) Pallavi Page 17 of 17 Uploaded by PALLAVI PRABHUDAS PANCHAL(HC01403) on Sat Jul 05 2025 Downloaded on : Mon Jul 07 22:07:18 IST 2025