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Sec.138 ,sec.141 N.I.Act – Partnership Firm – issued cheque – cheque bounced – firm not made as accused – fatal to the prosecution – firm registration form filed by accused can be considered even at preliminary stage against the general rule no document filed by accused can be considered – non issue of reply notice is not fatal for receiving the document filed by accused – complaint was quashed as not maintainable = Smt. Bommidipati Madhavi….Petitioner/accused The State of Andhra Pradesh rep.by Public Prosecutor, High Court of A.P., Hyderabad and another….Respondents = published in judis.nic.in/judis_andhra/filename=10600

Sec.138 ,sec.141 N.I.Act – Partnership Firm – issued cheque – cheque bounced – firm not made as accused – fatal to the prosecution –  firm registration form  filed by accused can be considered even at preliminary stage against the general rule no document filed by accused can be considered – non issue of reply notice is not fatal for receiving the document filed by accused – complaint was quashed as not maintainable =

On repeated demands, the

petitioner is alleged to have issued a cheque bearing No.000174, dated

10.11.2011 in favour of the 2nd respondent drawn on Union Bank of India,

Chandram Palem, Madhurawada, Visakhapatnam in discharge of the said debt.

The   

said cheque when presented was returned with an endorsement “insufficient

funds”. After complying with the statutory requirements, the present complaint

came to be filed before the Court of Chief Metropolitan Magistrate, at

Bheemunipatnam, Visakhapatnam district and the same was taken on file as  

C.C.No.170 of 2012. =

the

goods were supplied to a partnership firm  and initiation of proceedings without

making the firm as an accused is bad in law.  =

 

whether the firm is a necessary party when the cheque was issued on behalf of firm ?

When once it is established,  that it is a partnership

firm and the cheque was issued by the managing partner of a firm, arraying the

firm as an accused is necessary.

In view of the judgment of the Apex Court in

Aneeta Hada’s case, wherein a three judge Bench of the Apex Court, while

overruling the view taken 

in Sheoratan Agarwal v. State of M.P.6, and clarifying judgment in Anil Hada v. Indian Acylic Ltd7

held that for maintaining a

prosecution under Section 141 of the Act, arraying of a company as an accused is

imperative and other categories of offenders can only be brought in the drag-net

on the touchstone of vicarious liability as stipulated in the provisions.

 

whether the documents filed by the accused can be looked into  for consideration ?

in Harshendra Kumar D. v. Rebatilata

Koley8 

wherein the Apex Court held that

“while exercising inherent jurisdiction

under Section 482 of the Cr.P.C. or revisional jurisdiction under Section 397 of

the Cr.P.C. where a complaint is sought to be quashed, it is not proper for the

High Court to consider the defence of the accused or embark upon an enquiry in

respect of merits of the accusations.  

However, in an appropriate case, if on

the face of the documents – which are beyond suspicion or doubt – placed by the

accused, the accusations against him cannot stand, it would be travesty of

justice if the accused is relegated to trial and is asked to prove his defence

before the trial Court

In such a matter, for promotion of justice or to prevent

injustice or abuse of process, the High Court may look into the materials which

has a significant bearing on the matter at a prima facie stage”

It was also a

case where the resignation of the appellant, as a director of the company, was

accepted and was duly reflected in the Resolution.  

Thereafter, the Company

informed the same to the Registrar of Companies in prescribed form (Form 32).

The Apex Court relied upon Form 32 and quashed the proceedings. 

As stated above  

the situation in the present case is some what identical to the Judgment of the

Apex Court referred to above.  

The contents of the acknowledgment of

registration of firms were not disputed by the counsel for the respondent except

stating that the said document can be used as a defence by the accused.  Though

a counter was filed by the respondent, the genuinity and authenticity of the

said document is not disputed.  

In view of the above findings, it would be

travesty of justice if the petitioner is subjected to the rigmorale of the

trial. Ergo, the proceedings  against the petitioner need to be terminated.

HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR

CRIMINAL PETITION No.9065 OF 2012

10-10-2013

Smt. Bommidipati Madhavi….Petitioner/accused

The State of Andhra Pradesh rep.by Public Prosecutor, High Court of A.P.,
Hyderabad and another….Respondents

Counsel for Petitioner/accused:Sri E.Venkata Reddy

Counsel for Respondent No.1 : Public Prosecutor
Counsel for Respondent No.2 : Sri G.Ram Gopal

<GIST:

>HEAD NOTE:

?Cases referred:

1) (2002) 5 SCC 661
2) 1992 Supp (1) SCC 335
3) 1997(2) SCC 699
4) (2011) 5 SCC 708; (2011) 2 SCC (Crl) 764
5) (2008) 17 SCC 147
6) (1984) 4 SCC 352
7) (2000) 1 SCC 1
8) 2011(3) SCC 351

HONOURABLE SRI JUSTICE C. PRAVEEN KUMAR

CRIMINAL PETITION No.9065 OF 2012

ORDER:

This Criminal Petition, under Section 482 of Criminal Procedure Code, 1973
(for short ‘the Cr.P.C.’), is filed by the petitioner – accused who is
proprietress of M/s. Sai Santhosh Constructions ( for short ‘the firm’), seeking
to quash the proceedings in C.C.No.170 of 2012 on the file of the Metropolitan
Magistrate, Bheemunipatnam, Visakhapatnam district, initiated by the 2nd
respondent – complainant who is proprietor of Vasundara Enterprises against the
petitioner for an offence punishable under Section 138 of Negotiable Instruments
Act, 1881 (for short ‘the Act’).

2. The allegations in the private complaint filed by the 2nd respondent are as
under:-

The petitioner approached the 2nd respondent, who is a wholesale dealer, for
supply of steel and cement etc., on credit basis. The request of the petitioner
was accepted and steel and cement worth of Rs.5,19,600/- was supplied to the
petitioner from 11.09.2009 to 01.03.2010. It is alleged that the petitioner paid
Rs.1,53,565/-(Rupees one lakh fifty three thousand five hundred and sixty three
only) and the balance amount of Rs.3,66,035/-(Rupees three lakhs sixty six
thousand and thirty five only) was still due. On repeated demands, the
petitioner is alleged to have issued a cheque bearing No.000174, dated
10.11.2011 in favour of the 2nd respondent drawn on Union Bank of India,
Chandram Palem, Madhurawada, Visakhapatnam in discharge of the said debt. The
said cheque when presented was returned with an endorsement “insufficient
funds”. After complying with the statutory requirements, the present complaint
came to be filed before the Court of Chief Metropolitan Magistrate, at
Bheemunipatnam, Visakhapatnam district and the same was taken on file as
C.C.No.170 of 2012.

3. Heard the learned counsel for the petitioner, the learned counsel for the 2nd
respondent, learned Public Prosecutor for the 1st respondent and perused the
material on record.

4. The only ground raised by the learned counsel for the petitioner is that the
goods were supplied to a partnership firm and initiation of proceedings without
making the firm as an accused is bad in law. In support of his contention, he
placed reliance on the judgment of the Apex Court in Aneeta Hada v. Godfather
Travels & Tours Private Limited1

5. On the other hand, the learned counsel for the
2nd respondent would submit that since the complainant is a proprietary concern,
making the proprietary concern as an accused would not arise. His main argument
appears to be that in the absence of any reply to a notice, issued by him,
wherein the petitioner was portrayed as a sole proprietress of Sai Santosh
Constructions, it cannot, now, be contended that it is a partnership firm. Since
the issues involved herein are disputed questions of fact, he submits that the
same have to be established during the course of trial.

6. Before examining the rival contentions, it is necessary to refer to the scope
of interference by this Court under Section 482 of Cr.P.C. The law laid down by
the apex Court in State of Haryana v. Bhajanlal2 which has been followed in
several other judgments of Supreme Court is that interference is permissible :-
(a) where the allegations made in the First Information Report or the complaint,
even if they are taken at their face value and accepted in their entirety do not
prima facie constitute any offence or make out a case against the accused;
(b) where the allegations in the First Information Report and other materials,
if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying
an investigation by police officers under Section 156(1) of the Code except
under an order of a Magistrate within the purview of Section 155(2) of the Code;
(c) where the uncontroverted allegations made in the FIR or ‘complaint and the
evidence collected in support of the same do not disclose the commission of any
offence and make out a case against the accused;
(d) where the allegations in the FIR do not constitute a cognizable offence but
constitute only a non-cognizable offence, no investigation is permitted by a
police officer without an order of a Magistrate as contemplated under Section
155(2) of the Code;
(e) where the allegations made in the FIR or complaint are so absurd and
inherently improbable on the basis of which no prudent person can ever reach a
just conclusion that there is sufficient ground for proceeding against the
accused;
(f) where there is an express legal bar engrafted in any of the provisions of
the Code or the concerned Act (under which a criminal proceeding is instituted)
to the institution and continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act, providing efficacious
redress for the grievance of the aggrieved party;
(g) where a criminal proceeding is manifestly attended with mala fide and/or
where the proceeding is maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him due to private
and personal grudge.
In State of Karnataka v. L.Muniswamy3, the Apex Court held as under;-
Considerations, justifying the exercise of inherent powers for securing the ends
of justice vary from case to case and the a jurisdiction as a wholesome as the
one conferred by Section 482 of Cr.P.C. ought not to be encased within the
strait-jacket of a rigid formula.

7. In Sushil Suri v. Central Buearo of Investigation4, the Apex Court considered
the scope and ambit of inherent jurisdiction of the High Court and made the
following observations in para 16 of the report which is as under:-
“16. Section 482 Cr.P.C. itself envisages three circumstances under which the
inherent jurisdiction may be exercised by the High Court, namely i) to give
effect to an order under Cr.P.C.; (ii) to prevent an abuse of the process of
Court; and (iii) to otherwise secure the ends of justice. It is trite that
although the power possessed by the High Court under the said provision is very
wide but it is not unbridled. It has to be exercised sparingly, carefully and
cautiously, ex debito justitiae to do real and substantial justice for which
alone the court exists. Nevertheless, it is neither feasible nor desirable to
lay down any inflexible rule which would govern the exercise of inherent
jurisdiction of the Court. Yet, in numerous cases, this Court has laid down
certain broad principles which may be borne in mind while exercising
jurisdiction under Section 482 Cr.P.C. Though it is emphasized that exercise of
inherent powers would depend on the facts and circumstances of each case, but
the common thread which runs through all the decisions on the subject is that
the Court would be justified in invoking its inherent jurisdiction where the
allegations made in the complaint or charge-sheet, as the case may be, taken at
their face value and accepted in their entirety, do not constitute the offence
alleged.”
8. Keeping in view the principles of law laid down by the Apex Court with regard
to the scope and power of High Court under Section 482 of Cr.P.C., I proceed to
deal with the matter.

9. Now the question that arise for determination is whether the petitioner is
a proprietress of a firm or a managing partner of a partnership firm?
10. Before proceeding further, it would be relevant to extract Section 138(c) of
the Act which reads as under:-
Provided that nothing contained in this Section shall apply unless:-
(c) the drawer of such cheque fails to make the payment of the said amount of
money to the payee or, as the case may be, to the holder in due course of the
cheque within fifteen days of the receipt of the said notice.

A reading of the said provision would disclose that nothing in the Section shall
apply unless the drawer of the cheque fails to make the payment of the said
amount of money to the payee or, as the case may be, to the holder in due
course of the cheque within 15 days of the receipt of the said notice.
11. The material, which is filed along with the complaint, i.e. the cheque
bearing No.000174, dated 10.11.2011 and the 69 bills would show that the cheque
was issued by the petitioner in favour of the 2nd respondent drawn on Union Bank
of India, Chandram Palem, Madhurawada, Visakhapatnam as an authorized signatory
of Sai Santhosh Constructions and the 9 bills show purchase of the material by
Sai Santhosh Constructions.

12. Therefore, the cheque in dispute, was issued by the petitioner as an
authorized signatory of Sri Sai Santhosh Constructions. In order to
substantiate the said plea namely, that the cheque was issued by the petitioner
as a partner of the firm, the learned counsel for the petitioner mainly relied
upon the original of acknowledgment of Registration of firm, wherein it is
mentioned that the petitioner was running the business in the name of Sai
Santhosh Constructions, Ratna Residency, P.M. Palem, Visakhapatnam and the same
was entered in the Registrar of Firms as S.No.730/2007 at Visakhapatnam. Along
with the acknowledgment of registration of firms, the petitioner also placed on
record the original partnership deed entered into between the petitioner and her
husband. The certificate of registration of firm would also discloses that the
Registrar of firms, Andhra Pradesh, acknowledges the receipt of the statement
prescribed under Section 58(1) of Indian Partnership Act.
13. At this stage, the learned counsel for the respondent objected for
looking into the said document by contending that the plea taken by the
petitioner would be her defence which the petitioner can avail of during the
course of trial and the same cannot be accepted at this stage. In support of
his contention, he relied upon a Judgment of the Apex Court in Malwa Cotton and
Spinning Mills Limited vs. Visa Singh Sidhu and others5. It was a case where
Form 32 which has been filed to show that the accused therein resigned from the
Directorship of the company prior to the issuance of the cheque, was not taken
into consideration by the Apex Court, though the said document was issued by the
Registrar of Companies. But a perusal of the said Judgment would disclose that
Form 32 was not looked into because of some factual disputes i.e., 1) the effect
of delayed presentation before the Registrar of Companies, 2) Whether the
respondent No.1 had intimated to the respondent company, 3) Whether there was
any resolution accepting the resignation. Since the issues involved in the said
case were disputed questions of fact, the Apex Court refused to consider Form 32
though the contents of which are not in dispute.

14. The situation on hand is totally different. Though the counsel for
the respondent filed a counter, he did not dispute the authenticity and
genuinity of the acknowledgment of registration of firms which is placed on
record by the counsel for the petitioner. The contents of the acknowledgment of
registration of firms gets corroboration from the documents filed by the 2nd
respondent along with the complaint.

15. As stated earlier, the complaint under Section 138 of the Act, can be
initiated only when the drawer of such cheque fails to make the payment of the
said amount to the payee or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the said notice. The cheque
which is filed along with the complaint would show that the petitioner was an
authorized signatory of a partnership firm.
16. A further objection was raised by the learned counsel for the 2nd
respondent that in the absence of a reply to the statutory notice issued under
the Act, a presumption has to be drawn that the said cheque was issued on behalf
of proprietary concern. It is true that the 2nd respondent issued notice to the
petitioner by describing the petitioner as a sole proprietress of Sai Santosh
Constructions. Though the notice was served on the petitioner, no reply was sent
to the said notice. Merely because the petitioner was shown as a proprietress
and that no reply was given by the petitioner, an adverse inference cannot be
drawn against the petitioner when the documents filed along with the complaint
and the Acknowledgment of Registration of Firms issued by the Registrar of
firms, dated 19.11.2007 establish that Sri Sai Santhosh Constructions was
represented as a partnership firm in the year 2007 itself. Therefore, there is
no irregularity or illegality in petitioner issuing the cheque as an authorized
signatory of the firm. When once it is established, that it is a partnership
firm and the cheque was issued by the managing partner of a firm, arraying the
firm as an accused is necessary. In view of the judgment of the Apex Court in
Aneeta Hada’s case, wherein a three judge Bench of the Apex Court, while
overruling the view taken in Sheoratan Agarwal v. State of M.P.6, and clarifying
judgment in Anil Hada v. Indian Acylic Ltd7, held that for maintaining a
prosecution under Section 141 of the Act, arraying of a company as an accused is
imperative and other categories of offenders can only be brought in the drag-net
on the touchstone of vicarious liability as stipulated in the provisions.
17. The issue as to whether the documents filed by the accused can be
looked into has come up for consideration in Harshendra Kumar D. v. Rebatilata
Koley8 wherein the Apex Court held that “while exercising inherent jurisdiction
under Section 482 of the Cr.P.C. or revisional jurisdiction under Section 397 of
the Cr.P.C. where a complaint is sought to be quashed, it is not proper for the
High Court to consider the defence of the accused or embark upon an enquiry in
respect of merits of the accusations. However, in an appropriate case, if on
the face of the documents – which are beyond suspicion or doubt – placed by the
accused, the accusations against him cannot stand, it would be travesty of
justice if the accused is relegated to trial and is asked to prove his defence
before the trial Court. In such a matter, for promotion of justice or to prevent
injustice or abuse of process, the High Court may look into the materials which
has a significant bearing on the matter at a prima facie stage”. It was also a
case where the resignation of the appellant, as a director of the company, was
accepted and was duly reflected in the Resolution. Thereafter, the Company
informed the same to the Registrar of Companies in prescribed form (Form 32).
The Apex Court relied upon Form 32 and quashed the proceedings. As stated above
the situation in the present case is some what identical to the Judgment of the
Apex Court referred to above. The contents of the acknowledgment of
registration of firms were not disputed by the counsel for the respondent except
stating that the said document can be used as a defence by the accused. Though
a counter was filed by the respondent, the genuinity and authenticity of the
said document is not disputed. In view of the above findings, it would be
travesty of justice if the petitioner is subjected to the rigmorale of the
trial. Ergo, the proceedings against the petitioner need to be terminated.
18. Accordingly, the Criminal Petition is allowed by quashing the
proceedings against the petitioner/accused in C.C.No.170 of 2012 on the file of
the Metropolitan Magistrate, Bheemunipatnam, Visakhapatnam district.
19. Miscellaneous petitions, if any, pending in this Criminal Petition shall
stand closed.

____________________
C.PRAVEEN KUMAR, J
Date:10-10-2013

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