Gujarat High Court
Sugandh Multipurpose Company Thro Its ... vs State Of Gujarat on 4 February, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 19296 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
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Approved for Reporting Yes No
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SUGANDH MULTIPURPOSE COMPANY THRO ITS PROPRIETOR BHATT
YOGENDRABHAI CHIMANBHAI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR NIRAV C SANGHAVI(5950) for the Applicant(s) No. 1
MANAN V PATEL(8059) for the Respondent(s) No. 2
MR KRISHNARAJSINH D CHAUHAN(10648) for the Respondent(s)
No. 2
MR SOAHAM JOSHI, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
Date : 04/02/2025
ORAL JUDGMENT
1. Rule. Learned APP waives service of notice of
Rule for the respondent No. 1 - State.
2. By way of this application, applicant seeks to
invoke inherent jurisdiction of this Court under
Section 482 of the Code of Criminal Procedure, 1973
('Code' for short) for quashing of the proceedings of
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Criminal Case No.7016 of 2018 pending before learned
Chief Judicial Magistrate First Class, Gandhinagar
instituted by the respondent No.2 - original
complainant against the applicant herein under
Section 138 of the Negotiable Instruments Act, 1881.
3. The case of the complainant can be summarized as
under:
3.1. It is the case of the complainant that applicant
herein is one of the proprietors of a partnership
firm viz. Sugandh Multipurpose Company. The said
company has floated one scheme. The complainant has
invested in the said scheme and ultimately he was
fortunate enough to get first prize in the said
scheme and as a reward a cheque of Rs.1 lakh has been
given to him by the applicant with an assurance that
as and when the said cheque is deposited in the Bank,
the same would be honoured. Therefore, the
complainant has deposited the said cheque which is
returned with an endorsement of the bank 'funds
insufficient'. Therefore, complainant has served an
advocate notice to the applicant, which was duly
served to the applicant. However, even after service
of notice, the applicant fails to pay the said amount
to the complainant. Therefore, complainant was
constrained to register compliant against the
applicant.
3.2. The verification of the complainant was recorded
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and after verifying and scrutinizing all the
materials supplied by the complainant along with the
complaint, the Court concerned jumped to the
conclusion that prima facie cognizable offence is
made out. Therefore, learned 5th Additional Chief
Judicial Magistrate, Gandhinagar passed an order
dated 24.10.2018, whereby, process under Section 204
of the Cr.P.C. came to be issued against the
applicant for the offence punishable under Section
138 of the NI Act. Hence, the applicant has filed the
present application.
4. Heard learned advocate Mr. Nirav Sanghavi for
the applicant, learned APP Mr. Soaham Joshi for
respondent No.1 - State. Though learned advocate Mr.
Manav Mehta has filed his appearance on behalf of
respondent No.2 - original complainant, none appears
on his behalf when the matter is taken up for
hearing.
5. Learned advocate Mr. Nirav Sanghavi for the
applicant submits that as soon as the applicant came
to know about issuance of process by the learned
Court concerned, he immediately approached before
this Court. He further submits that applicant is one
of the partners/proprietors of Sugandh Multipurpose
Company and said company has floated one scheme and
number of persons have invested their amounts in the
said scheme. He further submits that in fact the said
company was run and managed by four partners and they
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executed partnership deed on 14.03.2012. On the
strength of the said deed, all the four partners were
carrying on business of partnership firm viz. Sugandh
Multipurpose Company up to close of business hours on
25.04.2012. However, on 26.04.2012, one of the
partners viz. Shaktibhai Savjibhai Vansfodi came to
be retired and therefore on 26.04.2012 retirement
deed was executed and since then remaining three
partners are carrying on business of partnership
firm. The applicant is one of the partners of the
said partnership firm.
6. Learned advocate Mr. Sanghavi submits that the
complainant has filed the compliant against the
applicant only without joining the partnership firm
and other partners of the firm. It is well settled
that the petitioner, who is one of the partners of
the partnership firm, cannot be convicted and/or held
vicariously liable in absence of non-joining of the
partnership firm as an accused. In support of his
submission, has placed reliance upon the decision of
the Hon'ble Apex Court in the case of Dilip
Hariramani v. Bank of Baroda rendered in Criminal
Appeal No.767 of 2022. He further submits that if
this Court would make cursory glance upon the cheque
issued by the partnership firm, in that event, it
would be found out that cheque is signed by two
partners. However, the complainant has not filed the
complaint against other partners. He has referred to
Section 141 of the N. I. Act and submitted that if
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the person committing an offence under Section 138 is
a company, in that case, 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
accordingly. Thus, if the complainant fails to join
the partnership firm as well as other partners of the
firm, in that event, the prosecution launched against
the accused person/s is required to be quashed. He
further submits that admittedly the cheque which is
issued by the company is signed by two persons and
said fact can be found out from the cheque itself
wherein signature of one Mr. M. A. Patel is clearly
visible. Hence, the prosecution launched by the
respondent No.2 - complainant against the applicant
is required to be quashed.
7. Learned APP Mr. Soaham Joshi appearing for the
respondent - State has objected present application
with vehemence and submitted that essentially the
dispute is between the complainant and applicant
accused and complainant is represented by learned
advocate Mr. Manan V. Patel. He further submits that
after verifying and scrutinizing the materials
available before the Court, the learned Court
concerned has passed an order of issuance of process
against the applicant and thereby the learned Court
concerned has taken cognizance of the matter and
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therefore by no stretch of imagination it can be said
that an error of law and/or facts could be said to
have been made by the learned Court concerned at the
time of passing the order. Hence, prosecution
launched against the applicant is not required to be
quashed.
8. When the matter is taken up for hearing, none
appears on behalf of respondent No.2 - original
complainant.
9. Having heard the learned advocates appearing for
the parties and having gone through the material
placed on record, it is found out that the applicant
is one of the partners of the partnership firm viz.
Sugandh Multipurpose Company. The said company has
floated one Scheme wherein the original complainant
has invested some money and ultimately he was
fortunate enough to win the prize, as a result of
which, the partners of the company had issued cheque
of Rs.1 lakh to the complainant with an assurance
that as and when the said cheque is presented before
the Bank, the same would be honoured. However, when
the complainant has deposited the said cheque at
first instance, the cheque was not processed by the
concerned Bank on the ground that cheque with
alteration cannot be processed. Thereafter, once
again the complainant contacted the company. At the
relevant point of time, the partners of the
partnership firm told the complainant to deposit the
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cheque after few days. Therefore, once again the
complainant has deposited the said cheque, which was
returned with an endorsement 'Fund insufficient'.
Thereafter, the complainant served notice through his
advocate to the accused person, which was duly served
to them. It is the case of the complainant that in
spite of service of notice, the complainant did not
receive the amount and therefore as a last resort, he
filed compliant against the applicant under Section
138 of the N. I. Act before the learned Court
concerned. The learned Court concerned, after
verifying and appreciating the materials available on
record, thought it fit to issue process against the
applicant. The applicant, therefore, preferred
present application, wherein, this Court has, after
considering the allegations and accusations levelled
against the applicant, granted interim relief in
terms of para 13(C).
10. The question posed for consideration before this
Court is as to whether without launching prosecution
against the partnership firm, the partners of the
partnership firm can be held vicariously liable. For
the purpose of deciding the said issue, I would like
to reproduce Section 141 of the N. I. Act.
"41. 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
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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 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, means a
partner in the firm.
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11. The issue involved in the present matter is
already decided by the Hon'ble Apex Court as well as
other High Courts in catena of decisions. Before
delving into the issue involved in the matter, I
would like to refer to the observations made by the
Hon'ble Apex Court in the case of Dilip Hariramani
(supra), wherein the Hon'ble Apex Court observed and
held as under:
"14. The provisions of Section 141 impose
vicarious liability by deeming fiction which
presupposes and requires the commission of
the offence by the company or firm.
Therefore, unless the company or firm has
committed the offence as a principal
accused, the persons mentioned in sub-
section (1) or (2) would not be liable and
convicted as vicariously liable. Section
141 of the NI Act extends vicarious criminal
liability to officers associated with the
company or firm when one of the twin
requirements of Section 141 has been
satisfied, which person(s) then, by deeming
fiction, is made vicariously liable and
punished. However, such vicarious liability
arises only when the company or firm commits
the offence as the primary offender. This
view has been subsequently followed
in Sharad Kumar Sanghi v. Sangita Rane,
Himanshu v. B. Shivamurthy and Another, and
Hindustan Unilever Limited v. State of
Madhya Pradesh. The exception carved out
in Aneeta Hada (supra), which applies when
there is a legal bar for prosecuting a
company or a firm, is not felicitous for the
present case. No such plea or assertion is
made by the respondent."
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12. Thus, from the observations made by the Hon'ble
Apex Court in the aforesaid decision, the provisions
of Section 141 impose vicarious liability by deeming
fiction which presupposes and requires the commission
of the offence by the company or firm. Therefore,
unless the company or firm has committed the offence
as a principal accused, the persons mentioned in sub-
section (1) or (2) would not be liable and convicted
as vicariously liable. The question of vicarious
liability arises only when the company or firm
commits the offence as the primary offender. In the
instant case, as observed hereinabove, the
complainant has filed complaint against the applicant
only and therefore in the opinion of this Court when
the complainant has not launched prosecution against
the partnership firm as the primary offender, the
question of vicarious liability of the applicant
being one of the partners of the partnership firm
would not arise. It is also pertinent to note that it
is not the case of the respondent No.2 that the
partnership firm itself has ceased to exist or cannot
be prosecuted due to a statutory bar. Therefore, in
the instant case the exception carved out by the
Hon'ble Apex Court in the case of Aneeta Hada v.
Godfather Travels and Tours Private Ltd., reported in
(2012) 5 SCC 661 would not be applicable. Thus, this
Court is of the considered view that without
launching prosecution against the partnership firm,
the partners of the partnership firm cannot be held
vicariously liable as per the provisions of Section
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141 of the N. I. Act.
13. In view of the aforesaid discussion, the
application is allowed. The impugned order dated
24.10.2018 passed by learned 5th Additional Chief
Judicial Magistrate, Gandhinagar below Exh.1
application in Criminal Case No.7016 of 2018 and
proceedings of Criminal Case No.7016 of 2018 are
hereby quashed and set aside. Rule is made absolute.
(DIVYESH A. JOSHI,J)
LAVKUMAR J JANI
