2021 (10) TMI 293 - HC - Indian Laws

Dishonor of Cheque - unregistered Partnership - maintainability of complaint under Section 138 read with 141 of the Negotiable Instruments Act, 1881 - HELD THAT - In the case in hand, the learned Magistrate while issuing the process, has personally verified the complaint; perused the documents filed alongwith it and after taking into consideration the statement of Complainant on oath and upon hearing, learned Advocate for the Complainant at length held that there were sufficient grounds for proceeding against the accused. It shows that the learned Magistrate has not only verified the complaint and heard the Complainants Advocates, but also perused the documents filed alongwith the complaint for obtaining satisfaction as to sufficiency of ground for proceeding under Section 202. Though the accused Nos. 1, 2 and 3 were residing at a place beyond the territorial jurisdiction of the learned Magistrate, and although he did not postpone the issuance of process, order issue process shows that learned Magistrate has obtained requisite satisfaction, from the documents available on record as to sufficiency of the grounds for proceeding under Section 202 against the accused. In view of this matter the impugned order in Criminal Revision Application No. 79/2019 is quashed and set aside. The issue process order passed by the learned Magistrate on 16th January, 2019 is upheld - Impugned order is quashed and set aside - Application allowed.

Issues Involved:
1. Maintainability of complaint by an unregistered partnership firm under Section 138 of the Negotiable Instruments Act.
2. Examination of the complainant upon oath before issuing process.
3. Compliance with Section 202 of the Code of Criminal Procedure when the accused resides outside the jurisdiction of the Magistrate.
4. Inclusion of Ms. Sunita Burkule as an accused despite being informed she was not responsible for the firm's transactions.

Detailed Analysis:

1. Maintainability of Complaint by an Unregistered Partnership Firm:
The court examined whether a prosecution under Section 138 of the Negotiable Instruments Act is barred by Section 69(2) of the Indian Partnership Act, 1932. It was noted that a Division Bench in the case of *Narendra Amarnathji Kalda vs. Balbirsingh Motisingh Chawhan* concluded that such prosecution is not barred by Section 69(2). This judgment was not brought to the notice of the Sessions Court, leading to an incorrect ruling that the complaint was not maintainable.

2. Examination of the Complainant Upon Oath:
The Sessions Court's finding that the Magistrate issued the process without examining the complainant upon oath was factually incorrect. The verification dated 22nd November 2018 showed that the complainant was examined on oath. The Full Bench in *Rajesh Chalke vs. State of Maharashtra* held that after the addition of Section 145 to the N.I. Act, it is at the Magistrate's discretion to call upon the complainant for examination on oath. The Magistrate in this case had indeed examined the complainant on oath, perused documents, and heard the advocate before issuing the process, thus the Sessions Court's finding was set aside.

3. Compliance with Section 202 of the Code of Criminal Procedure:
The court addressed whether it is mandatory to postpone the issue of process and hold an inquiry or investigation when the accused resides outside the Magistrate's jurisdiction. Section 202 of the Code mandates such an inquiry. However, judgments in *Bansilal S. Kabra vs. Global Trade Finance Ltd.*, *Dr. Rajul Ketan Raj vs. Reliance Capital Ltd.*, and *Girish Dharmchand Chordiya vs. Neeta Sachin Chandak* were cited to argue that the object of the N.I. Act would be defeated if such inquiries were mandatory for Section 138 complaints. The Supreme Court in *Vijay Dhanuka vs. Najima Mamtaj* and *Birla Corporation Limited vs. Adventz Investments and Holdings Limited* noted that the inquiry under Section 202 cannot be dispensed with, but the Magistrate can derive requisite satisfaction from the materials on record. The court found that the Magistrate had obtained such satisfaction from the documents and thus upheld the issuance of process.

4. Inclusion of Ms. Sunita Burkule as an Accused:
Despite being informed that Ms. Sunita Burkule was not responsible for the firm's transactions, she was still arraigned as an accused. The complainant later stated that they did not wish to proceed against her. Consequently, the process issued against Ms. Sunita Burkule was quashed, and the complainant was directed to pay ?50,000 as costs to her for the inconvenience caused.

Conclusion:
The High Court quashed the Sessions Court's order setting aside the process issuance and upheld the Magistrate's order dated 16th January 2019. The application was allowed, and the process against Ms. Sunita Burkule was quashed with costs awarded to her. The rule was made absolute in these terms, and the application was disposed of.

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