HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.08 OF 2020
ORDER:
1. This Criminal Petition is filed to quash the proceedings against the petitioner/Accused in C.C.No.5 of 2019 on the file of X Special Magistrate, Erramanzil, Hyderabad for the offences under Sections 138 and 142 of the Negotiable Instruments Act, 1861 (for short, 'the Act').
2. The petitioner is being prosecuted by the 2nd respondent/complainant for the offence under Section 138 of the Act. The case of the complainant is that the petitioner herein approached her for financial assistance and an amount of Rs.15.00 lakhs hand loan was advanced. The said loan was acknowledged and the petitioner agreed to pay 18% interest per annum. A cheque No.118414 dated 07.05.2018 was issued for Rs.10.00 lakhs in the name of Shobha Rani N.H/2nd respondent/complainant. On presentation, the same was returned unpaid, for which reason, notice was issued. Having received notice, since the petitioners failed to make the payment covered by the cheque, present complaint was filed. 2
3. Learned counsel appearing for the petitioner would submit that the cheque was issued by the firm proprietary concern namely Aditya Marine. Since the petitioner is partner of the firm, the prosecution without making the firm as an accused, cannot be maintained. Learned counsel relied on the judgment of High Court of Madras in Criminal O.P.No.13147 of 2015, dated 23.07.2019 in the case of Rangabashyam and another v. Ramesh. In the said judgment, the Madras High Court held that under Section 141 of the Act, the partners or the Directors or the persons in charge of the company would be made vicariously liable and it has to be shown that they are responsible for the day to day affairs of the business. Unless the company or the partnership firm is made as an accused, the prosecution cannot be maintained against the other persons. The above said proposition is not in dispute. In the event of a company or a partnership firm issues a cheque, the signatory of the cheque and the persons responsible for the conduct of day to day affairs of the firm/company would be vicariously liable under Section 141 of the Act. The provision makes the company or firm liable and the persons responsible 3 vicariously liable. In the absence of company/firm being made as an accused, the question of prosecuting the persons in- charge of such company/firm does not arise.
4. The cheque in question was issued by the proprietor of Aditya Marine and signed A1/N.V.Bharathi as a Proprietor/authorized signatory.
5. In the case of proprietary concern, an individual or a person would be the proprietor and the proprietary concern would be identified on the basis of the proprietor. There would be no other persons in a proprietary concern to be made vicariously liable under Section 141 of the Act.
6. Since the firm or the proprietor are seen as one entity, even in the absence of a proprietary concern being made as an accused in a prosecution under Section 138 of the Act, it has no bearing on the prosecution of the proprietor.
7. The Hon'ble Supreme Court in the case of Raghu Lakshminarayanan v. Fine Tubes1 while dealing with a 1 (2007) 5 Supreme Court Cases 103 4 similar situation held that the proprietary concern stands absolutely on a different footing. A person carrying on business in the name of the business concern being a proprietor would be solely responsible for the conduct of its affairs. A proprietary concern cannot be company or a partnership firm, as such, the question of proceeding against the proprietor within the meaning of Section 141 of the Act does not arise.
8. For the aforementioned reasons, not making the proprietary concern as a party is of no consequence.
10. In the result, there are no merits in the petition and the same is accordingly dismissed. Consequently, miscellaneous applications, if any, shall stand closed.
__________________ K.SURENDER, J Date:13.03.2023 kvs 5 HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION No.8 OF 2020 Date: 13.03.2023.
kvs