Gujarat High Court
Gangaram Hiralal Adwani vs State Of Gujarat on 11 December, 2023
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R/CR.MA/9685/2017 ORDER DATED: 11/12/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 9685 of 2017
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GANGARAM HIRALAL ADWANI
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
MR PREMAL S RACHH(3297) for the Applicant(s) No. 1
MR DHAWAN JAYSWAL APP for the Respondent(s) No. 1
RULE SERVED BY DS for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 11/12/2023
ORAL ORDER
1. By this application under Section 482 of the Code of
Criminal Procedure, 1973, the applicant - original accused seeks
to invoke the inherent powers of this Court praying for quashing
of the proceedings of Criminal Case No.7051 of 2013 pending
before the Court of the learned Judicial Magistrate, First Class,
Rajkot arising from a complaint filed under Section 138 of the
Negotiable Instruments Act.
2. Short facts of the present case are that the complaint
came to be filed by the complainant inter alia stating that the
present applicant being a partner of the firm namely G. S.
Finance, who is mainly engaged in the business of providing
financial assistance to the customers against whom the
complaint filed by the complainant relating to the fact that the
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the applicant had issued the cheque bearing no.499478 dated
01.04.2013 for an amount of Rs.5,00,000/- in favour of the
respondent no.2 on 01.04.2013. The said cheque was deposited
by respondent no.2 in his account with Karor Vaishya Bank,
Rajkot Branch, which came to be dishonoured with an
endorsement "funds insufficient" and, therefore, the respondent
no.2 issued statutory notice and initiated proceedings under
Section 138 of the Negotiable Instruments Act which is
culminated into Criminal Case No.7051 of 2013. The said
proceedings is under challenge in this application.
3. Heard Mr.Premal Rachh, learned advocate appearing for
the applicant and Mr.Dhawan Jayswal, learned Additional Public
Prosecutor for the respondent - State of Gujarat. Though served,
respondent no.2 has chosen not to appear before the Court.
4. Mr.Rachh, learned advocate has submitted that the
applicant has been arraigned as an accused in the complaint in
the capacity of the partner of the G. S. Finance and the
complaint filed under Section 138 of the Negotiable Instruments
Act is not maintainable. He has submitted that in the present
proceedings the partnership firm is not joined as accused and
the transaction was entered into by the partnership firm and the
cheque was issued in the name of the partnership firm and the
bank account is also maintained in the name of the partnership
firm. He has submitted that respondent no.2 has signed the
voucher inter alia stating that he has received back the amount
of cheque in cash from the firm and the cheque issued by the
firm towards security is misplaced by him and the same will be
returned back as and when found. He has submitted that the
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ingredients of Section 138 of the Negotiable Instruments Act are
not attributed and therefore the complaint is filed with mala fide
intention and the same is sheer abuse of process of law. He has
submitted that the present application deserves to be allowed
and the impugned complaint deserves to be quashed and set
aside.
5. Mr.Jayswal, learned Additional Public Prosecutor has
submitted that the complaint is filed under the provisions of the
Negotiable Instruments Act and in view of the decisions of the
Hon'ble Supreme Court and the impugned order passed by the
Coordinate Bench of this Court, appropriate order may be
passed.
6. Earlier, the accused no.2 and 3 had preferred Criminal
Misc. Application No.17132 of 2016 for quashing the proceedings
of Criminal Case No.7051 of 2013. This Court (Coram: Hon'ble
Mr.Justice J. N. Pardiwala) vide order dated 11.04.2017 allowed
the application and quashed the proceedings of Criminal Case
No.7051 of 2013 in view of the decision of the Hon'ble Supreme
Court of India in the case of Aneeta Hada Vs. M/s. Godfather
Travels and Tours Pvt. Ltd reported in AIR 2012 SC 2795.
Now, so far as the present application is concerned, it is filed by
the present applicant - original accused no.1 inter alia
contending that the complaint filed against the partner/s of the
firm without joining the partnership firm as an accused is not
maintainable and hence, the present criminal proceedings is bad
in law in view of the aforesaid decision of the Hon'ble Supreme
Court. The said view is reaffirmed by the Hon'ble Supreme Court
in the case of Dilip Hariramani Vs. Bank of Baroda reported
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in AIR 2022 SC 2258, wherein the Hon'ble Supreme Court has
held and observed in paragraph n.13 as under:-
"13. The judgment in Dayle De'souza v. Government of
India through Deputy Chief Labour Commissioner (C) and
Another, answered the question of whether a director or a
partner can be prosecuted without the company being
prosecuted. Reference in this regard was made to the
views expressed by this Court in State of Madras v. C.V.
Parekh and Another on the one hand and the divergent
view expressed in Sheoratan Agarwal and Another v. State
of Madhya Pradesh and Anil Hada v. Indian Acrylic Ltd. This
controversy was settled by a three Judge Bench of this
Court in Aneeta Hada (supra), in which, interpreting and
expounding the difference between the primary/substantial
liability and vicarious liability under Section 141 of the NI
Act, it has held:
"51. We have already opined that the decision in
Sheoratan Agarwal runs counter to the ratio laid down in
C.V. Parekh which is by a larger Bench and hence, is a
binding precedent. On the aforesaid ratiocination, the
decision in Anil Hada has to be treated as not laying down
the correct law as far as it states that the Director or any
other officer can be prosecuted without impleadment of the
company. Needless to emphasise, the matter would stand
on a different footing where there is some legal
impediment and the doctrine of lex non cogit ad
impossibilia gets attracted.
xx xx xx
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 brought in the drag-net on the touchstone of
vicarious liability as the same has been stipulated in the
provision itself. We say so on the basis of the ratio laid
down in C.V. Parekh which is a three-Judge Bench decision.
Thus, the view expressed in Sheoratan Agarwal does not
correctly lay down the law and, accordingly, is hereby
overruled. The decision in Anil Hada is overruled with the
qualifier as stated in para 51. The decision in Modi Distillery
has to be treated to be restricted to its own facts as has
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been explained by us hereinabove."
7. In view of the aforesaid facts and the circumstances of the
case and the decisions of the Hon'ble Supreme Court of India and
the impugned order passed by the Coordinate Bench of this
Court, the present application deserves to be allowed. Hence, the
present application is allowed. The proceedings of the Criminal
Case No.7051 of 2013 pending before the Court of the learned
Judicial Magistrate, First Class, Rajkot and all other consequential
proceedings are hereby ordered to be quashed so far as the
applicant is concerned.
8. Rule is made absolute to the aforesaid extent. Direct
service is permitted.
(HEMANT M. PRACHCHHAK,J)
V.R. PANCHAL
