2014 (10) TMI 1056 - HC - Indian Laws

Dishonor of Cheque - existence of debt and liability or not - prosecution under Section 138 of Negotiable Instruments Act - liability for act of the partners of the firm - vicarious liability or not - HELD THAT - The settled position of law is that the act of the partners of the firm can well be construed as an act on behalf of all the partners if the circumstances warrants such a conclusion. Also, that the Firm is not presumed, conversely, to be an agent of the individual partner, in the considered opinion of this Court. Every partner is in contemplation of the law the general and accredited agent of the partnership, or as it is some times expressed each partner is praepositus Negotiis Societaties, and may resultantly bind all the other partners by his acts in all matters which are within the ambit and objects of the partnership. As per Section 25 of the Indian Partnership Act, 1932 every partner is liable, jointly with all other partners and also severally for all acts of the Firm done while is a partner. Admittedly, a Firm is not a legal entity. It is only a collective or compendious name for all the partners, as opined by this Court. To put it differently, a Firm does not have any existence away from its partners. Each partner shall be liable as if the 'Debt of the firm has been incurred on its personal liability - The obligation of the Respondent / Accused that at the time of the offence was committed he was not incharge and was not responsible to the Firm for the conduct of the business of the Firm wold arise only when firstly the Appellant / Complainant make proper and necessary averments in the complaint and establishes that fact. As a matter of fact, the mere writing or filing of an acknowledge of the debt by one partner does not necessarily of itself bind its co-partner unless he had Authority, express or imply to do so. Furthermore, the proof of authority from other partner is quite essential and necessary and cannot be presumed. Also that after dissolution, however, express authority must be proved. A partner will have no imply authority to bind the firm unless it can be shown that giving of guarantees is necessary for carrying on the business of the firm in ordinary fashion. When an Negotiable Instrument is regularly drawn by a partner in a trading Firm in a transaction ancillary to form business another partner is not less liable because his name does not appear on the face of the instrument. Without filing a complaint against the partnership firm, filing a complaint against the Respondent / Accused in his individual capacity is per se not maintainable in the eye of Law - Ordinarily, a complaint based on bald / vague averments can only be construed to be a case of utilising the process of Court in an otiose fashion. Also that, in the instant case, though Ex.P1 Cheque appears in the name of the Respondent / Accused as partner for 'Sri Karpaga Vinayagar Jewellery' yet the principal offender viz., Jewellery partnership firm was not arrayed as the principal Accused along with other Partners / Accused, if any. Only when the 'Sri Karpaga Vinayagar Jewellery' (Partnership Firm) was shown to have committed an offence under Section 138 of Negotiable Instruments Act, 1881, the Respondent / Accused can be roped in as an Accused in the capacity as partner of the said Jewellery Firm and then only he along with other partners, if any, can be liable for the dishonour of Ex.P1 Cheque in issue. The Criminal Appeal is dismissed

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act.
2. Requirement to include the partnership firm as an accused.
3. Discharge of presumption under the Negotiable Instruments Act by the accused.
4. Rebuttal evidence by the accused.
5. Legal principles regarding prosecution of partners without prosecuting the firm.

Issue-wise Detailed Analysis:

1. Maintainability of the Complaint under Section 138 of the Negotiable Instruments Act:
The High Court examined whether the complaint filed by the appellant/complainant was maintainable. The trial court had observed that the appellant/complainant admitted that the cheque in question was issued in favor of the partnership firm 'Sri Karpaga Vinayagar Jewellery'. The appellant/complainant did not array the firm as the first accused, nor did he include other partners as accused. As per Section 141(1)(2) of the Negotiable Instruments Act, the case filed solely against the respondent/accused was deemed not maintainable. The trial court held that the appellant/complainant failed to prove the case beyond reasonable doubt, thereby acquitting the respondent/accused under Section 255(1) of Cr.P.C.

2. Requirement to Include the Partnership Firm as an Accused:
The appellant/complainant argued that the trial court erred in not appreciating that the respondent/accused had not discharged the presumption under the Negotiable Instruments Act. The appellant/complainant relied on various judgments to assert that a firm need not be prosecuted while prosecuting a person in charge of the firm. The High Court, however, emphasized that for a complaint under Section 138 to be maintainable, the principal offender (the partnership firm) must be included as an accused. The court cited the decision in Aneeta Hada v. Godfather Travels and Tours Private Limited, which clarified that the company and the persons responsible for its acts are deemed liable for offenses under Section 138.

3. Discharge of Presumption under the Negotiable Instruments Act by the Accused:
The appellant/complainant contended that the trial court failed to recognize that the respondent/accused did not discharge the statutory presumption under the Negotiable Instruments Act. The High Court noted that the trial court had considered the evidence and found that the appellant/complainant did not establish the case beyond a reasonable doubt. The court reiterated that the burden of proof lies on the complainant to make necessary averments and establish the liability of the accused.

4. Rebuttal Evidence by the Accused:
The appellant/complainant argued that the respondent/accused did not lead any rebuttal evidence, and therefore, the trial court should not have acquitted the accused. The High Court observed that the trial court had considered the lack of rebuttal evidence but concluded that the appellant/complainant's failure to include the partnership firm as an accused rendered the complaint not maintainable. The court emphasized the necessity of proper and necessary averments in the complaint to make the accused vicariously liable.

5. Legal Principles Regarding Prosecution of Partners without Prosecuting the Firm:
The appellant/complainant relied on several judgments to argue that partners can be prosecuted without prosecuting the firm. The High Court acknowledged these judgments but emphasized that the principal offender (the partnership firm) must be included as an accused for the complaint to be maintainable. The court referred to the decision in Manoben Ketanbhai Sha v. State of Gujarat, which highlighted the importance of making necessary averments in the complaint to establish the liability of the accused.

Conclusion:
The High Court upheld the trial court's judgment of acquittal, concluding that the appellant/complainant's failure to include the partnership firm as an accused rendered the complaint not maintainable. The court emphasized the necessity of proper averments and the inclusion of the principal offender for a complaint under Section 138 of the Negotiable Instruments Act to be valid. Consequently, the criminal appeal was dismissed.

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