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2016 (3) TMI 290 - HC - Indian LawsOffense punishable under Section 138 of the Negotiable Instruments Act - Held that - Legislature has already made it clear that the company includes any body corporate which includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. On this count also, when Section 141 of the Negotiable Instruments Act and explanation thereto does not make any distinction between the company and the partnership firm, there is absolutely no reason to draw such distinction while making applicable the law laid down by the Apex Court in Aneeta Hada (2012 (5) TMI 83 - SUPREME COURT OF INDIA ) to the partnership firm merely because in that judgment the Apex Court was considering the eventuality of nonjoining of the company. The basic premise of holding either the director or the partner liable for prosecution being the same that of the vicarious liability. Therefore, once the company is held to be an essential party and that arraigning of a company as an accused is imperative for prosecution under Section 141 of the Negotiable Instruments Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under Section 141 of the Negotiable Instruments Act. The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable. In view of the specific provisions of the Act itself, it is very difficult for the Court to take a view that a partnership firm for the purpose of Section 138 read with Section 141 of the Act is not a legal entity, and therefore, it need not be made an accused in the complaint. The decisions relied upon by the learned counsel appearing for the petitioner are of no avail in any manner. Power to proceed against other persons appearing to be guilty of offence - Will the situation be saved by virtue of Section 319 of the Cr.P.C., which is sought to be invoked in the present case?- Held that - By virtue of a legal fiction, it cannot be said that on the date of filing of the complaint, the Court was justified in taking cognizance and issue process against the partners in the absence of the legal entity and no fault could be found so far as the legality and validity of the cognizance is concerned. The legal fiction is altogether for a different purpose and it should not be brought in aid of curing a serious defect or infirmity in the complaint or the order taking cognizance. When Subsection (4)(b) of Section 319 of the Code says that it will be presumed that the newly added person had been an accused person when the Court took cognizance of the complaint upon which the inquiry or trial was commenced, the same indicates that the Court is not empowered to take cognizance of any fresh offence if any accused is impleaded by invoking Section 319 and the newly added accused could be tried only for the offence already taken cognizance against the other accused. The policy of the Code is that the offence can be taken cognizance of once only and not repeatedly upon discovery of further particulars. In a given case, the complainant may not even know the names and other particulars of the offenders, and it would, therefore, be sufficient for him to lodge a complaint making the persons who are known as the accused. When such a trial proceeds against the known accused, if the evidence led in trial discloses offences committed by other persons who could be tried along with the accused, then there need not be a fresh complaint and fresh order of cognizance against those persons. I reiterate that the complaint was liable to be dismissed on the very first day of its presentation and no process could have been issued against the partners in the absence of the partnership firm. Thus that the application under Section 319 of the Cr.P.C. is not maintainable, and the Court below rightly rejected the same.
Issues Involved:
1. Whether a partnership firm is a legal entity like a company concerning the offence punishable under Section 138 of the Negotiable Instruments Act. 2. Is the prosecution of the partners of a firm, by virtue of Section 141 of the Act, maintainable in the absence of the partnership firm being impleaded or arraigned as an accused? 3. Can the initial defect in the sustainability of a complaint under Section 138 of the Act be cured by amending the proceedings through an application under Section 319 of the Cr.P.C.? Comprehensive, Issue-Wise Detailed Analysis: 1. Whether a partnership firm is a legal entity like a company concerning the offence punishable under Section 138 of the Negotiable Instruments Act: The court examined various precedents to determine whether a partnership firm is a legal entity. In Munshi Ram v. Municipal Committee, Chheharta, Mahabir Cold Storage v. Commissioner of Income Tax, Patna, and Comptroller and Auditor General v. Kamlesh Vadilal Mehta, it was established that a partnership firm is not a distinct legal entity separate from its partners. The firm is merely a compendium of its partners. However, the court noted that the position of a partnership firm under Section 138 read with Section 141 of the Negotiable Instruments Act is different. Section 141 includes a firm within the definition of a "company" and establishes that both the firm and its partners can be held liable for offences under Section 138. Thus, the court concluded that a partnership firm could be treated as a legal entity for the purposes of Section 138 of the Act. 2. Is the prosecution of the partners of a firm, by virtue of Section 141 of the Act, maintainable in the absence of the partnership firm being impleaded or arraigned as an accused? The court referred to Aneeta Hada v. Godfather Travels & Tours Private Limited, where it was held that for maintaining prosecution under Section 141, arraigning the company as an accused is imperative. Applying this principle to partnership firms, the court concluded that for maintaining prosecution against the partners under Section 141, arraigning the partnership firm as an accused is also imperative. The partners are liable due to their vicarious liability, and without the firm being an accused, the prosecution against the partners alone is not maintainable. 3. Can the initial defect in the sustainability of a complaint under Section 138 of the Act be cured by amending the proceedings through an application under Section 319 of the Cr.P.C.? The court analyzed Section 319 of the Cr.P.C., which allows a court to proceed against any person not being the accused if evidence during the trial suggests their involvement. However, the court emphasized that Section 319 cannot be used to cure the initial defect in the complaint. The complaint must be maintainable from the outset. The court held that the application under Section 319 to implead the partnership firm after twelve years was not maintainable. The defect in the complaint, i.e., the absence of the partnership firm as an accused, could not be cured through Section 319, as it would amount to a substantive amendment, which is not permissible. The court cited Suryanarayan v. Anchor Marine Service and Anandan v. Arivazhagan to support its conclusion that initial defects in the complaint cannot be rectified by subsequent amendments under Section 319. Conclusion: The court rejected the application, holding that the initial defect in the complaint could not be cured by amending the proceedings through Section 319 of the Cr.P.C. The prosecution against the partners alone, without the partnership firm being an accused, was not maintainable.
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