Gujarat High Court
Hiteshkumar Pulin Gupta vs Prakashbahi Prajapati on 22 December, 2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 105 of 2017
With
CRIMINAL MISC.APPLICATION (FOR ADDITIONAL EVIDENCE) NO. 1 of
2023
In R/CRIMINAL APPEAL NO. 105 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE NISHA M. THAKORE
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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HITESHKUMAR PULIN GUPTA
Versus
PRAKASHBAHI PRAJAPATI & 1 other(s)
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Appearance:
ADITYA R GUNDECHA(8869) for the Appellant(s) No. 1
MR NARENDRA L JAIN(5647) for the Appellant(s) No. 1
MR.RAJESH B SONI(2632) for the Opponent(s)/Respondent(s) No. 1
MS MONALI BHATT APP for the Respondent No.2.
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CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 22/12/2023
ORAL JUDGMENT
1. Present appeal is under Section 378 of the Code of Criminal
Procedure, challenging judgment and order dated 22.12.2016
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passed by the learned Principal Senior Civil Judge and Additional
Chief Judicial Magistrate First Class, Kalol, in Criminal Case
No.2525 of 2015. By the said judgment and order, the learned
Magistrate proceeded to record the acquittal of the present
respondent - original accused thereby dismissing the complaint
preferred by the present appellant under Section 138 of the
Negotiable Instruments Act.
2. Brief facts of the complaint as contended by the original
complainant is that :
2.1 The complainant - Hiteshkumar Pulin Gupta claims to be a
partner of M/s. Ramanand Plastics. It is the case of the
complainant that said the partnership firm is engaged in the
business of selling woven fabrics and had come in contact with the
respondent - accused M/s. Jerum Plastics, who is represented
through his authorized person Mr. Prakash Prajapati.
2.2 According to the complainant, the respondent - accused had
purchased the goods worth Rs.2,59,29,527/- and till 12.08.2014
had paid an amount of Rs. 2,40,50,000/-. Thus, the outstanding
amount of Rs.32,99,415/- with interest was to be realized from the
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respondent.
2.3 It is further contended that the two cheques bearing
Nos.005366 dated 11.03.2015 and 005365 dated 25.06.2015 each
of an amount of Rs.5 Lakhs were handed over against such
outstanding amount by the respondent - accused, which was
drawn in the name of the complainant firm. According to the
complainant, the cheque bearing No.005356 was presented for
realization after the same was returned back on the ground of
insufficient funds. The memo of such return of cheque was issued
by the bank dated 29.06.2015.
2.4 Similarly, the cheque bearing No.005366 dated 11.06.2015
was deposited with the concerned bank on 12.06.2015, which had
also returned with an endorsement of bank "funds insufficient". The
memo of the returned cheque was issued by the bank on
25.06.2015.
2.5 In such circumstances, the complainant was constrained to
issue legal notice on 02.06.2015 addressed to the respondent firm,
raising demand for a cheque amount of Rs.10 Lakhs. According to
the complainant, the said notice was duly served upon the
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respondent - accused on 04.07.2015, however, the same was
neither responded nor the outstanding was repaid.
2.6 This led the original complainant to lodge the complaint under
Section 138 of the Negotiable Instruments Act, before the learned
Principal Senior Civil Judge and Additional Judicial Magistrate First
Class, Kalol, on 04.09.2015, which was registered as Criminal
Case No.2525 of 2015.
3. Upon registration of the aforesaid Criminal Case, verification of
the complainant was recorded on 04.09.2015 and having
considered the prima facie case of the complainant, the learned
Magistrate had proceeded to issue summons upon the respondent
- accused. Original complainant had appeared before the learned
Magistrate and his plea was recorded. The summary trial was
conducted by the learned Magistrate. During the course of trial,
various documentary and oral evidence was produced on record
by the original complainant. At Exhibit 36, the purshish was filed by
the original complainant closing its right to produce further
evidence. Ultimately, further statement under Section 313 of the
Code of Criminal Procedure, wherein specific defense was raised
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by the accused by submitting that the cheque in question were in
fact handed over to one Manish Sharma as security cheque and
the same have been misused by the complainant as well as Mr.
Sharma. It was further submitted that there did not exist any
relation with the complainant and no transactions as alleged have
ever been entered with the complainant. The parties were directed
to place their written statement at Exhibit 61 and 63 before the
learned Magistrate. Considering overall evidence, which has come
on record and the submissions made by the learned advocates
appearing for the respective parties, the learned Magistrate
noticed the fact that the complaint was presented on behalf of the
partnership firm in absence of any documents with regard to
registration of partnership firm, had found that the complaint is not
maintainable in the eyes of law. The learned Magistrate has mainly
taken into consideration the bar provided under Section 69(2) of
the Partnership Act and various authorities on the legal point of
maintainability of proceedings at the instance of an unregistered
firm. The reliance was placed upon the judgment of the Bombay
High Court in the case of Sai Accumulator Vs. M/s. Shetty
Brothers, 2016 SCC OnLine Bom 2287 as well as judgment of
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the Hon'ble Supreme Court in the case of A.C. Narayana Vs.
State of Maharashtra, 2013 (1) CTC 560. Consequently, the
learned Magistrate has also examined the defense raised by the
respondent - accused with regard to misuse of cheques. Learned
Magistrate has by impugned judgment and order dated 22.12.2016
has arrived at conclusion that the complaint was not maintainable
and even otherwise the complainant has failed to prove its case
beyond reasonable doubt, has recorded acquittal of the
respondent - accused. Hence, this appeal at the instance of the
original complainant against the order of acquittal under Section
378 of the Cr.P.C.
4. The appeal was preferred before this Court under section 378(4)
of the Code of Criminal Procedure, along with application seeking
leave to appeal being Criminal Misc. Application No.774 of 2017.
This Court by order dated 13.01.2017 has granted leave to appeal
and the appeal was admitted.
5. Mr. Narendra Jain, learned advocate has appeared on behalf of
the appellant - original complainant and Mr. Rajesh Soni, learned
advocate for the respondent No.1 - original accused, has assisted
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the Court. Learned advocates appearing on behalf of the
respective parties were heard at length and the matter was kept for
orders.
6. Mr. Jain, learned advocate, has invited attention of this Court to
the grounds taken into consideration by the learned Magistrate
while dismissing the complaint, which is on the issue of
maintainability of the complaint at the instance of an unregistered
partnership firm. He, at the outset, has referred to Exhibit 60
produced on record, which is true copy of the partnership deed of
the original complainant firm and has submitted that the learned
trial Court committed serious error in recording finding that there is
no documentary evidence produced showing that the signatory of
the complaint has been given authority by the firm to pursue the
complaint. He submitted that the examination of the aforesaid
document at Exhibit 60 clearly spelled out the authority given to
the signatory of the complaint to pursue the legal matters and even
otherwise, the appellant being one of the partners of the firm, in
light of principle of the Partnership Act, even in absence of any
expressed authority on behalf of the firm, the partner can always
pursue the proceedings in his capacity as an agent to protect the
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interest of the firm. He further submitted that the learned trial Court
committed serious error in relying upon the judgment of the
Bombay High Court in the case of Sai Accumulator. The attention
of this Court was invited to another decision of the Bombay High
Court in the case of Narendra S/o. Amarnathji Kalda Vs.
Balbirsingh S/o. Motisingh Chawhan reported in 2020 Crimes
(HC)-1-443. By referring to the relevant paras , the learned
advocate submitted that in fact the judgment in the case of Sai
Accumulator is no longer good law inasmuch as noticing the
contradictory view expressed by two Benches of Andhra Pradesh
High Court in the cases of Amit Desai Vs. M/s. Shine Enterprises
and Sai Accumulator, the larger Bench of Andhra Pradesh High
Court in the case of A.V. Ramanaiah Vs. M. Shekhara 2007 SCC
OnLine AP 1261 had overruled the view taken by Andhra Pradesh
High Court in the case of Amit Desai by holding that the bar
contained under Section 69 of the Act would not get attracted for
initiating action by or against an unregistered partnership firm for
the offense committed under Section 138 of the Negotiable
Instruments Act. He, therefore, urged this Court to reverse the
order of acquittal.
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7. Mr. Jain, learned advocate, has further made submissions on
merits of the case by referring to the scheme of Negotiable
Instruments Act. It was urged that though the statutory notice was
served upon the respondent - accused, no reply was given to such
notice, no dispute was raised with regard to the partnership deed
though specific assertion with regard to registered partnership firm
was made. The attention of this Court was invited to the cross-
examination of the original complainant, wherein specific assertion
with regard to the goods being purchased and the delivery to the
respondents accused were made. No formal denial has emerged
on record as against such assertion. No question was raised with
regard to the status of partnership firm. In fact, it has transpired on
record that the complainant has appeared as partner of the firm.
The accused had not raised any question with regard to the
account being maintained by the partnership firm. In light of such
evidence having emerged on record, the learned advocate
submitted that the learned trial Court ought not to have accepted
the defense raised by the respondent - accused with regard to the
status of partnership firm and the existence of legally enforceable
debt.
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8. In light of the aforesaid submissions being made by the learned
advocate for the original complainant, further reliance was placed
on the application seeking production of additional evidence, which
has been moved by the appellant - original complainant. By such
application, the appellant has sought permission of this Court at
the appeal stage to produce a document at Annexure A, which is a
true copy of the registration of form in prescribed Form G dated
05.10.2012. By referring to the aforesaid document, learned
advocate has submitted that necessary application was submitted
before the Registrar of Firm, Mehsana Division. The extract of
Form G reflects the name of the appellant firm at Sr. No.5, which
relates to the date 01.07.2020. The reliance was placed on the
judgment of the Hon'ble Supreme Court in the case of Rajeshwar
Prasad Mishra Vs. State of West Bengal reported in 1965 SC 1887
to submit that discretionary powers are confer upon the Appellate
Court to allow such application of production of evidence, which
may otherwise help in clarifying the entire factual matrix. It was
further submitted that in absence of a dispute being raised with
regard to status of partnership firm being registered, there was no
occasion for the appellant to produce such a document before the
learned Magistrate. He, therefore, urged this Court to accept such
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additional evidence, which otherwise addresses the root cause of
the issue involved.
9. The aforesaid submissions of the learned advocate for the
complainant have been vehemently objected by Mr. Rajesh Soni,
learned advocate for the respondent No.2 - original accused. At
the outset, the learned advocate has raised a dispute with regard
to the service of statutory notice served upon the respondent No.2
- original accused. The attention of this Court was invited to the
details of the address reflected in the cause title. He has further
referred to the cross-examination of the complainant, wherein he
had admitted that the signature of the respondent Prakashbhai
does not appear on Exhibit 21 postal acknowledgement slip of the
statutory legal notice. He further submitted that in cross-
examination, the complainant has admitted that first notice upon
Jerum Plastics was sent at the address with details i.e. Shivam
Weigh Bridge, Mehsana, where plot No. mentioned by the
complainant in cross-examination, referred to the plot No.220 or
202 by referring to the aforesaid consideration in details of the
address. Learned advocate has disputed the service of legal notice
and non-compliance of the mandatory provisions of Section 138(b)
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of the Act and therefore, he urged this Court not to interfere in the
present appeal recording acquittal of the respondent - accused.
10. It was further contended that the complainant cannot be
treated as holder in due course. Learned advocate has referred to
the documents placed on record i.e. disputed cheque which was
drawn in the name of "Ramanand Plastics" as against the name,
which appear in the cause title of the original complaint
"Hiteshkumar Pulin Gupta", a partner of "Ramanand Plastics". The
averments made in the original complaint were read before the
Court to contend that no pleadings are to the effect of the original
complainant Hiteshkumar Pulin Gupta being authorized person to
lodge the complaint on behalf of the partnership firm Ramanand
Plastics. The terms and conditions of the partnership deed
produced at Exhibit 60 were also read before the Court, more
particularly, clause 17.0 with subject "Restrictions". Learned
advocate has submitted that in fact, it was agreed between the
partners that none of the partners shall, without consent of other
partners, institute any proceedings in any Court of law in the name
and on behalf of the partnership firm. He therefore, submitted that
in absence of any averments or any authority letter issued in the
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name of Hiteshkumar Pulin Gupta permitting him to prosecute the
complaint on behalf of the partnership firm Ramanand Plastics, no
error can be found with the approach of the learned Magistrate
recording acquittal in absence of any evidence brought on record
with regard to the registration of partnership firm. According to the
learned advocate, the learned Magistrate has rightly ignored the
aforesaid partnership deed though brought on record at Exhibit 6.
Addressing the Court on the second issue of legally enforceable
debt, the learned advocate submitted that noticing any lacuna in
lodging of the complaint and defense of misuse of cheque being
categorically raised by the respondent - accused has rightly
shifted the burden upon the original complainant to prove his case
beyond reasonable doubt. According to the learned advocate, in
absence of non-production of any bill, account book to satisfy the
Court with regard to the existence of alleged transaction
consequently existence of legally enforceable debt, the learned
Magistrate has rightly acquitted the respondent herein original
accused. The learned advocate for the respondent - accused has
relied upon the following authorities:
1. Shankar Finance and Investments Vs. State of Andhra
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Pradesh and Ors. reported in (2008) 8 Supreme Court
Cases 536 (Paras 11 and 16)
2. Engineering Control Vs. Banday Infratech Pvt. Ltd.
unreported decision of High Court of Jammu & Kashmir
and Ladakh at Srinagar (CRMC No.381 of 2018 dated
08.07.2022. (Paras 10 to 16)
3. M/s. New Kruba Jeweller Vs. V. Kanchana, High Court of
judicature at Madras, judgment dated 07.12.2016 in
Criminal Appeal No.6 of 2014 (Paras 43 and 44)
4. M/s. Surendra Steel Rolling Mills Vs. Sh. Sanjiv Kumar,
Punjab-Haryana High Court, dated 17.12.2008 passed in
Criminal Appeal No.343 - DBA of 1994 (Para 14)
5. Krishna Janardhan Bhat Vs. Dattartraya G. Hegde (2008) 4
SCC 54 (Para 33)
11. Lastly, the learned advocate has objected to grant of
application seeking permission of production of additional
documents. It was submitted that the aforesaid documents were
claimed to have been presented before the Registrar of
Partnership Firm in the year 2012, whereas the complaint was
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lodged in the year 2015. In such circumstances, the complainant
was under obligation to produce such documents during the
course of trial. It was for the complainant to be vigilant in the trial
court proceedings and having failed to produce such documents at
the relevant stage, the same may not be permitted to be filled up
lacuna at the appeal stage. By making aforesaid submissions,
learned advocate urged this Court to dismiss the appeal to uphold
the order of acquittal of the respondent - accused.
12. In rejoinder, the learned advocate for the appellant had invited
my attention to various provisions of the Partnership Act to
contend that the statutory provision confers right upon the partner
of the Firm to protect the interest of the Firm and can pursue legal
proceedings. For adjudicating the said issue raised, learned
counsel had referred to the relevant provisions under the
Partnership Act. Sec.2(a), 4, 18, 19, 22 and 25 of Indian Partnership
Act reads as follows;
Sec.2. Definitions:-In this Act, unless there is anything repugnant
in the subject or context,
(a) an "act of a firm" means any act or omission by all the partners,
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or by any partner or agent of the firm which gives rise to a right
enforceable by or against the firm;
Definition of "Partnership" "Partner" "Firm" and "Firm
Name":-
"Partnership" is the relation between persons who have
agreed to share the profits of a business carried on by all or
any of them acting for all.
Persons who have entered into partnership with one another
are called individually, "partners" and collectively "a firm",
and the name under which their business is carried on is
called the "firm-name".
Section 18. Subject to the provisions of this Act, a partner is
the agent of the firm for the purposes of the business of the
firm.
Section 19. Implied Authority Of Partner as Agent Of The
Firm;-
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(1) Subject to the provisions of section 22, the act of a partner
which is done to carry on, in the usual way, business of the
kind carried on by the firm, binds the firm. The authority of a
partner to bind the firm conferred by this section is called his
"implied authority".
(2) In the absence of any usage or custom of trade to the
contrary, the implied authority of a partner does not empower
him to -
(a) submit a dispute relating to the business of the firm to
arbitration,
(b) open a banking account on behalf of the firm in his own
name,
(c) compromise or relinquish any claim or portion of a claim
by the firm,
(d) withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the firm,
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(f) acquire immovable property on behalf of the firm,
(g) transfer immovable property belonging to the firm, or
(h) enter into partnership on behalf of the firm.
Section 22. Mode Of Doing Act To Bind Firm:- In order to bind
a firm, an act or instrument done or executed by a partner or
other person on behalf of the firm shall be done or executed
in the firm-name, or in any other manner expressing or
implying an intention to bind the firm.
Section 25. Liability of a partner for acts of the firm:- Every
partner is liable, jointly with all the other partners and also
severally, for all acts of the firm done while he is a partner.
13. The learned counsel therefore submitted that in terms of
Sec.2(a) of the act, an act of the firm also means the act done by a
partner or the agent of the firm. There is no such provision under
the partnership act which expressly bars a partner to act on behalf
of the partnership firm. On the contrary, Section 2(a) of the Indian
Partnership Act, 1932 expressly authorizes the partner to act on
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behalf of the Partnership firm. Under Sec.18 of the said act, the
partner has been bestowed with the character of an agent of the
firm for the purposes of business of the firm. Under Sec.22 of the
said act, in order to bind a firm, an act or instrument done or
executed by a partner or other person on behalf of the firm shall be
done or executed in the firm-name or in any other manner
expressing or implying an intention to bind the firm. Under section
19, Subject to the provisions of Section 22 , the act of a partner
which is done to carry on, in the usual way, business of the kind
carried on by the firm, binds the firm. The authority of a partner to
bind the firm conferred by this section is called his "implied
authority". There are some specific bars and prohibitions to the
implied authority under sub-clauses (a) to (h) of Section 19(2) of the
Act. But there is no bar for a partner to file a complaint U/s.138 of
N.I. Act. Therefore, an individual partner has implied authority to
sign, institute and prosecute the complaints before criminal courts
on behalf of the complainant firm.
14. I have extensively heard the learned advocates appearing for
the respective parties and have closely perused the R & P. The
main issue which falls for consideration of this Court as regards
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maintainability of the complaint at the instance of one of the
partners namely Hiteshkumar Pulin Gupta to lodge the complaint
in his capacity as partner on behalf of the partnership firm is
required to be dealt with in the first point of time. By moving the
application seeking production of additional documents, the
original complainant intends to bring on record the extract of Form
G maintained by the Registrar of firm. On bare perusal of the
aforesaid document, it can be noticed that the name of the
partnership firm - payee - Ramanand Plastics appears in the title
of the Form G. The details of partners of said firm includes the
name of the present complainant - partner i.e. Hiteshkumar Pulin
Gupta at Sr. No.5. The date of joining of the partners of the said
firm is reflected as 01.07.2012. As against that the document,
which is produced on record i.e. partnership deed at Exhibit 60
suggests that partnership firm came into existence by aforesaid
partnership deed on 01.07.2012. The said document is in the
name of "ADDENDUM TO THE PARTNERSHIP DEED", which
seems to have been a notarized document executed before the
Notary on 11.08.2012. The aforesaid document suggests that in all
five partners have been joined to constitute a partnership firm in
the name and style of "Ramanand Plastics". This includes the
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present complainant - Hiteshkumar Pulin Gupta as one of the
partners. The business of the partnership firm relates to
manufacturing and trading of plastics materials like LL/LD/HM/HD
liner bags/rolls, agriculture shade nets used for the purpose of
agro-crops and other similar sets of plastics items, which was
initiated in the name and style of "M/s. Ramanand Plastics". By the
said addendum of the partnership deed, apart from earlier partners
Mahaveerprasad Syonaranyan Chowdhary and Shradha Manish
Sharma, three other partners namely Manish Nandkishor Sharma,
Hiteshkumar Pulin Gupta (original complainant) and Mr. Anil
Sanwarmal Kabra, were also introduced as partners in the said
partnership firm. Reference was made to the manufacture of
HDPE/PP woven sacks and other related items, which were
included in the original deed. Considering the fact that the extract
of registration Form is the core issue involved in the matter in order
to consider the arguments raised by the respective parties with
regard to maintainability of the original complaint as presented
before the learned Magistrate, this Court is of the view that the
interest of justice would be served to allow the production of such
documents at this stage of appeal.
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15. Having held so, the next question which arises for
consideration of this court is as to whether the learned Magistrate
committed any error in dismissing the complaint on the ground of
absence of registration of the partnership as noted earlier. The
learned Magistrate has relied upon the decision of the Bombay
High Court in the case of Sai Accumulator while arriving at such a
conclusion as pointed out by the learned advocate for the original
complainant, had been reexamined by the Bombay High Court in
the case of Narendra (Supra). The Court has ultimately held that
the bar contained under Section 69(2) of the Act, 1932 would not
attract for initiating action by or against an unregistered partnership
firm for the offense committed under Section 138 of the Negotiable
Instruments Act. In the opinion of this Court, the aforesaid
principle laid down by the Bombay High Court is ruled out by the
judgment of the Hon'ble Supreme Court in the case of Sunilbhai
Somabhai Ajmeri Vs. Akasharay Developers reported in 2022
SCC Online SC 114. By the said judgment, the Hon'ble Supreme
Court has clarified the nature of suit filed by the unregistered
partnership firm, which will not bar under Section 69(2) of the
Partnership Act. In the said case, the suit was filed by the
unregistered partnership firm against the respondent developer
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seeking injunction and declaration of the sale deed dated
24.02.2015 as null and void. The respondent therein by relying
upon the Section 69(2) of the Partnership Act moved an
application seeking rejection of the plaint as being barred under
law. The trial Court rejected such an application. However, the
High Court reversed the order of the trial Court and rejected the
plaint. The Court has relied on another decision of the Hon'ble
Supreme Court in the case of Pursottam Vs. Shivraj Fine Art
Litho Works reported in 2007(15) SCC 58, wherein it was held
that the claim and relief sought in the Suit by the firm arose out of
the contract and suit is hit of Section 69(2) of the Act and
therefore, the suit was held not maintainable. Being aggrieved by
the aforesaid decision of this Court, Special Leave Petition was
filed before the Hon'ble Supreme Court by the firm. Thus, the point
for consideration before the Hon'ble Supreme Court was
essentially whether Section 69(2) of the Act barred the suit filed by
the registered firm. The Hon'ble Supreme Court after taking into
consideration Section 69(2) of the Act itself and its earlier
judgment in the cases of Haldiram Bhujiawala and Anr. Vs.
Anand Kumar Deepak Kumar and Anr. : (2000) 3 SCC 250 and
Raptakos Brett & Co. Ltd. Vs. Ganesh Property (1998) 7 SCC
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184, arrived at conclusion that Section 69(2) would be attracted
only when:
1. The contract in question is in existence with third party
2. The contract is entered by the firm in course of business
dealing
3. The contract is entered for enforcement of statutory right
or common law right.
16. Thus, applying the aforesaid enunciation of the principle of law,
when the contract entered by the firm in the course of business
dealing with the interest of a third party, are relevant factors to be
considered with regard to maintainability of proceedings by an
unregistered firm.
17. At this stage, apt would be to revisit the principle of law
enunciated by this Court in the case of Ruturaj Ayurvedic Gruh
Udhyog (Through Respondent No. 2) and Another Versus
Navnitlal and Company Through Devang Manojbhai Gandhi and
Another , 2017 SCC OnLine Guj 2805 : (2017) 2 GLH 312.
This Court had taken into consideration the earlier judgments
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in the case of Sai Accumulator industries (supra) as well as of
the Division Bench of the Kerala High Court in the case of Kerala
Arecanut Stores v. Ramkishore and sons, AIR 1975 Ker 144,
wherein reference was made to various provisions of the Act
regarding rights/obligations arising out of a negotiable instrument
observed that the obligation of the drawer of the cheque as well as
the indorser to the indorsee who is the holder in due course arises
by virtue of statutory provision and there being no privity of
contract between the maker of a cheque and the holder in due
course, any right of action available to such holder is not under any
contract. The Kerala High Court thus held that the complainant is
entitled to sue on his cheque by reason of the right conferred upon
him by the statute. That being so, action under Section 138 is not a
suit by the indorsee to enforce a right arising out of a contract and,
therefore, the bar under Section 69(2) of the Partnership Act will
not operate in such a case.
18. In view of aforesaid legal position and having accepted the
production of additional documents, essentially the extract of
registration of the firm, undoubtedly the firm was registered. There
is no hesitation in holding that the partnership firm "Ramanand
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Plastics" was a registered partnership firm on the date of
transaction alleged i.e. date on which the disputed cheques dated
11.07.2015 and 25.06.2015 were issued. In such circumstances,
the issue of effect of non registration of partnership firms with
regard to the maintainability of the complaint is answered
accordingly.
19. The next question therefore, arises as regards the locus standi
i.e. the maintainability of the complaint at the instance of the
complainant - Hiteshkumar Pulin Gupta in his capacity as partner
of Ramanand Plastics. The learned advocate for the respondent -
original accused has invited attention of this Court to Clause 17 of
the partnership deed, which reads as under:
"CLAUSE 17. RESTRICTIONS
None partner shall without the consent of the other partner will:
1. Indulge in any speculation business.
2. Create any pledge, mortgage, hypothecation, charge, lien or
any sort of encumbrance on the assets of the partnership.
3. Borrow or lend money on behalf of/or any in the name of
partnership except in the ordinary course of business
4. Enter into any bond or furnish security for any person or
knowingly cause or suffer to be done in any manner whereby
the partnership interest may be endangered or harmed.
5. Mortgage or charge his/her share in the property or profits of
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the firm.
6. Draw, accept or endorse any bills of exchange or promissory
notes on account of the firm except in the ordinary course of
business of partnership.
7. Settle, compromise, give up or refer to the arbitration any
disputes, claims, demands or suit by or against the
partnership.
8. Institute any proceedings in any court of law in the name of
or on behalf of the partnership
If any party commits any breach of any of the foregoing
stipulation, he / she shall be indemnify other partners from all
losses and expenses on account thereof."
20. Bare reading of Clause 17(g) of the partnership deed suggests
that in case, any proceedings are to be instituted in any Court of
law in the name of or behalf of the partnership firm, the restrictions
are to be on the partner to not to proceed without consent of other
partners. Said clause has to be read as mandatory in as much as it
provides the consequence with regard to the effect of non
compliance of such clause. Clause 17(h) further provides that if
any of the party committed any breach of foregoing stipulations
then he or she shall be indemnifying other partners or loss on
account thereof. At the same time, Clause 17 of the said deed
provides that in case of any question arise with regard to recourse
to be adopted for the conduct of the business or for any of the
question arising in course of partnership business unless
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otherwise agreed, the provisions of the Partnership Act or any
other statutory or amendment, modification or reenactment as in
force shall apply. The aforesaid restrictions incorporated in the
addendum under clause 17 is more or less similar to the express
language of section 19(2) of the Partnership Act which otherwise
provides certain restrictions or prohibitions as regard implied
authority of the partner in view instances to act as agent on behalf
of Firm. Taking note of the aforesaid provisions and specific clause
incorporated in the partnership deed, it was for the complainant to
lead cogent material before the trial Court about holding authority
to pursue the proceedings on behalf of the partnership firm. In light
of the facts as noticed from the record, it would be germane to take
note of the defense raised by the respondent accused as regards
misuse of cheque at the behest of Manish Sharma. It is noticed
that the said Manish Sharma name appears as one of the partners
in the partnership deed ( EXH.60) and in cross examination a very
specific question was led by the counsel of the accused as he
being non available as shifted abroad. The non examination of
said witness leads to an adverse inference against the
complainant's status of being holder in due course. In such
circumstances, in absence of any authority, whether the complaint
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at the instance of a person though being one of the partners, can
be treated as maintainable.
21. This issue can also be examined in light of the provisions of the
Negotiable Instruments Act, more particularly, the term "Payee"
and "the holder" in due course as defined under the Act. As per
Section 7 of the Act, the term "payee" means person named in the
instruments to whom or to whose order the money is by the
instrument directed to be paid. In the present case, the disputed
cheques have been drawn in the name of partnership firm
"Ramanand Plastics". The term "holder in due course" has been
defined under Section 9 of the Act, which means any person, who
for consideration became the possessor of the cheque, if payable
to the payee and for sufficient cause to believe that there does not
exist any defect in the title of the person from whom he derived his
title. In absence of expressed authority, more particularly, the
mandatory clause which has been incorporated in the partnership
deed itself, the complainant cannot be termed as "payee" or
"holder in due course" to maintain such a complaint under Section
138 of the Act.
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22. So far as provisions of Negotiable Instruments Act are
concerned, the complaint is maintainable at the instance of 'payee'
or 'holder in due course' of the disputed cheque. Indisputably, the
disputed cheque was issued in the name of "Ramanand Plastics".
The demand notice has been issued by the complainant in his
capacity as partner of the partnership firm. In such circumstances,
in absence of any expressed authority of the partnership firm, does
not confer any right / authority upon the complainant though being
partner of the firm, to pursue the proceedings or to raise such
demand. Therefore, in the opinion of this Court the complaint is not
maintainable.
23. Having held so, this Court is of the view that the consequential
question of examining the matter on merits does not warrant
further consideration as the complaint itself is not found
maintainable at the instance of the partner of the firm. Hence, the
present Appeal fails and is hereby dismissed. Bailable warrant
issued upon respondent accused stands cancelled. The
application seeking production of additional evidence stands
allowed for the reasons recorded and is accordingly disposed.
(NISHA M. THAKORE,J)
Y.N. VYAS
