Bombay High Court
Shishir Agarwal vs Brescon Partners Llp And Anr on 6 February, 2024
Author: M. S. Karnik
Bench: M. S. Karnik
2024:BHC-AS:8344
Urmila Ingale 17-WP-5267-22.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 5267 OF 2022
SHISHIR AGARWAL .. PETITIONER
VS.
BRESCON PARTNERS LLP AND ANR ..RESPONDENTS
Mr. Subodh Desai i/b Mr. Kartik Garg, for the Petitioner.
Mr. Aditya Mehta, for Respondent No.1.
Ms. S. D. Shinde, APP for the State- Respondent No.2.
CORAM : M. S. KARNIK, J.
DATE : FEBRUARY 06, 2024
JUDGMENT :
1. Heard learned counsel for the petitioner, learned
counsel for the respondent no.1 and learned APP for the
State.
2. The challenge in this petition is to an order dated
09/03/2020 passed by the Metropolitan Magistrate, 58 th
Court, Bandra, Mumbai issuing process against the
petitioner. The order issuing process was challenged by the
petitioner by way of Criminal Revision Application No. 143 of
2021. The Criminal Revision Application was dismissed by
the Sessions Court on 23/10/2021. The order dated
23/10/2021 passed by the Sessions Court dismissing the
Criminal Revision Application is also under challenge.
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3. Learned counsel for the respondent no.1 raised a
preliminary objection that the present petition suffers from
delay and laches. It is submitted that process was issued by
the trial Court in March 2020. The Revision was filed in
October 2021. The Revision was dismissed on 23/10/2021.
The present Writ Petition was filed on 20/11/2022 almost
after 13 months. The delay is explained in paragraph 11 of
the writ petition. Responding to this explanation, learned
counsel for the respondent no.1 submits that when the
petitioner is stated to be indisposed and claimed to be in
Kolkata, the petitioner was in fact attending the proceedings
in some other criminal cases in Mumbai. It is therefore
contended that the explanation is not at all satisfactory. I
am not inclined to uphold the objection of learned counsel
for the respondent no.1 as I find that the writ petition does
not suffer from delay and laches. No prejudice is caused to
the respondent no.1 if the revisional Court's order is
challenged at this juncture. It is the petitioner who is facing
a criminal prosecution and hence I proceeded to examine
the petition on merits.
4. So far as the merits are concerned, suffice it to
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observe that 4 cheques in question which are subject matter
of the offence amounting to Rs. 17,67,50,000/- have been
issued from a joint account maintained by the petitioner and
his father- Ashok Agarwal. The cheques are admittedly
signed only by the petitioner's father i.e. Ashok Kumar
Agarwal. The account in question was a joint account in
the name of the petitioner and his father.
5. In 1Aparna A. Shah Vs. Sheth Developers Private
Limited and anr., the Hon'ble Supreme Court has in the
context of the person who can be prosecuted under section
138, in paragraphs 27 & 28 has observed thus :
"27. In the light of the above discussion, we hold that
under Section 138 of the Act, it is only the drawer of
the cheque who can be prosecuted. In the case on
hand, admittedly, the appellant is not a drawer of the
cheque and she has not signed the same. A copy of
the cheque was brought to our notice, though it
contains the name of the appellant and her husband,
the fact remains that her husband alone had put his
signature. In addition to the same, a bare reading of
the complaint as also the affidavit of examination-in-
chief of the complainant and a bare look at the
cheque would show that the appellant has not signed
the cheque.
28. We also hold that under Section 138 of the NI Act,
in case of issuance of cheque from joint accounts, a
joint account-holder cannot be prosecuted unless the
cheque has been signed by each and every person
who is a joint account-holder. The said principle is an
exception to Section 141 of the NI Act which would
have no application in the case on hand. The
1 (2023) 8 Supreme Court Cases 71
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proceedings filed under Section 138 cannot be used
as arm-twisting tactics to recover the amount
allegedly due from the appellant. It cannot be said
that the complainant has no remedy against the
appellant but certainly not under Section 138. The
culpability attached to the dishonour of a cheque
can, in no case "except in case of Section 141 of the
NI Act" be extended to those on whose behalf the
cheque is issued. This Court reiterates that it is only
the drawer of the cheque who can be made an
accused in any proceeding under Section 138 of the
Act. Even the High Court has specifically recorded
the stand of the appellant that she was not the
signatory of the cheque but rejected the contention
that the amount was not due and payable by her
solely on the ground that the trial is in progress. It is
to be noted that only after issuance of process, a
person can approach the High Court seeking
quashing of the same on various grounds available to
him. Accordingly, the High Court was clearly wrong in
holding that the prayer of the appellant cannot even
be considered. Further, the High Court itself has
directed the Magistrate to carry out the process of
admission/denial of documents. In such
circumstances, it cannot be concluded that the trial
is in advanced stage."
6. Relevant to the controversy in the present case is also
a decision of the Hon'ble Supreme Court in 2Alka Khandu
Avhad Vs. Amar Syamprasad Mishra and anr. In
paragraph 9, Their Lordships explained the conditions which
are required to be satisfied before the person is prosecuted
for the offence punishable under section 138 of the
Negotiable Instruments Act, 1881 ("NI Act", for short). In
paragraph 10, it is observed that if a person who might have
2 (2021) 4 Supreme Court Cases 675
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been liable to pay the debt jointly, cannot be prosecuted
unless the bank account is jointly maintained and he was a
signatory to the cheque. Paragraphs 9, 10, 11 and 12
makes a profitable reading and hence reproduced :
"9. On a fair reading of Section 138 of the NI Act,
before a person can be prosecuted, the following
conditions are required to be satisfied:
9.1. That the cheque is drawn by a person and on an
account maintained by him with a banker.
9.2. For the 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.
9.3 The said cheque is returned by the bank unpaid,
either because of the amount of money standing to
the credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be
paid from that account.
10. Therefore, a person who is the signatory to the
cheque and the cheque is drawn by that person on an
account maintained by him and the cheque has been
issued for the discharge, in whole or in part, of any
debt or other liability and the said cheque has been
returned by the bank unpaid, such person can be said
to have committed an offence. Section 138 of the NI
Act does not speak about the joint liability. Even in
case of a joint liability, in case of individual persons, a
person other than a person who has drawn the cheque
on an account maintained by him, cannot be
prosecuted for the offence under Section 138 of the NI
Act. A person might have been jointly liable to pay the
debt, but if such a person who might have been liable
to pay the debt jointly, cannot be prosecuted unless
the bank account is jointly maintained and that he was
a signatory to the cheque.
11. Now, so far as the case on behalf of the original
complainant that the appellant herein-original Accused
2 can be convicted with the aid of Section 141 of the
NI Act is concerned, the aforesaid has no substance.
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12. Section 141 of the NI Act is relating to the offence
by companies and it cannot be made applicable to the
individuals. The learned counsel appearing on behalf
of the original complainant has submitted that
"company" means any body corporate and includes, a
firm or other association of individuals and therefore in
case of a joint liability of two or more persons it will fall
within "other association of individuals" and therefore
with the aid of Section 141 of the NI Act, the appellant
who is jointly liable to pay the debt, can be
prosecuted. The aforesaid cannot be accepted. Two
private individuals cannot be said to be "other
association of individuals". Therefore, there is no
question of invoking Section 141 of the NI Act against
the appellant, as the liability is the individual liability
(may be a joint liabilities), but cannot be said to be the
offence committed by a company or by it corporate or
firm or other associations of individuals. The appellant
herein is neither a Director nor a partner in any firm
who has issued the cheque. Therefore, even the
appellant cannot be convicted with the aid of Section
141 of the NI Act. Therefore, the High Court has
committed a grave error in not quashing the complaint
against the appellant for the offence punishable under
Section 138 read with Section 141 of the NI Act. The
criminal complaint filed against the appellant for the
offence punishable under Section 138 read with
Section 141 of the NI Act, therefore, can be said to be
abuse of process of law and therefore the same is
required to be quashed and set aside."
7. Learned counsel for the respondent no.1 made a
strenuous effort to contend that the aforesaid decisions are
distinguishable on facts as they do not deal with a situation
where cheques are issued as a consequence of a
Memorandum of Understanding ("MoU", for short) executed
between the parties acknowledging the debt. My attention
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is invited to the MoU dated 31/01/2019 between the present
respondent no.1 on one hand and the petitioner as well the
signatory of the cheque-Shri Ashok Agarwal on the other.
Learned counsel submitted that the recitals clearly indicate
that the petitioner as well as his father signed the
agreement in their capacity as Directors, authorised
representatives and partners. It is submitted that the
cheques are issued pursuant to the obligation which is
created on the partners by virtue of the said MoU. Inviting
my attention to clause (h) of the said MoU, it is submitted
that the parties agreed that towards payment of the unpaid
sum, the party of the first part also issued cheques for
payment for the unpaid sum, on assurance to the party of
the second part that the cheques will be honoured as set
out in Annexure 'A' to the MoU. Learned counsel therefore
submitted that the execution of the MoU is a factor which
distinguishes the decisions relied upon in support of the
petitioner's case.
8. In my opinion, the submission of learned counsel for
the respondent no.1 cannot be accepted. The consequence
of the joint account holder not being a signatory to the
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cheques has been dealt with and clearly explained in
Aparna A. Shah (supra) as well as in Alka Khandu Avhad
(supra). The answer to the submissions of learned counsel
for the respondent no.1 is in paragraph 12 of Alka Khandu
Avhad (supra).
9. It is not disputed that the petitioner is not the
signatory to the cheques and account in question was a
joint account of the petitioner and his father who signed the
cheques. As per MoU, the petitioner may be jointly liable to
pay the debt. The consequences of the MoU will follow upon
its enforcement in appropriate proceedings. The petitioner
however cannot be prosecuted under section 138 of NI Act
as the bank account though jointly maintained, the
petitioner was not a signatory to the cheques.
10. In the light of what is observed hereinabove, the
petition succeeds. Accordingly, the writ petition is allowed
in terms of prayer clause (a) so far as the petitioner is
concerned.
(M. S. KARNIK, J.)
Signed by: Urmila P. Ingale
Designation: PS To Honourable Judge
Date: 21/02/2024 18:54:33
