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TMI Blog2022 (6) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, for example for a firm minimum two partners are required, if one partner is retired either by resignation or by death, the firm becomes a proprietorship. Therefore, merely the petitioner running a firm in the name of N.D.S. CO., but it is not a legal entity and it cannot be placed on par with the companies which is registered under the Companies Act - A partnership firm is not a separate legal entity distinct from its partner it is merely a collective name given to the individuals composing it and even as per the definition of the Indian Partnership Act, as person who have entered into partnership with one another called individually partners and collectively a firm and the name under which their business is. If an offence committed by the firm, is also an offence committed by the partners, it cannot be bifurcated as partners and the firm - the Trial Court, rightly took the cognizance against the petitioner for the offence punishable under section 240(3) of Companies Act. Criminal petition dismissed. - Criminal Petition No. 2136 of 2016 - - - Dated:- 19-5-2022 - K. Natarajan , J. For the Appellant : Kiran S. Javali, Senior Advocate for Chandrashekara K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself signed the Audit Report as per Section 229 of Companies Act and as per 240 of Companies Act, it is the duty of all the Officers, employees and Agents of the Company and where the affairs of any other body corporate are investigated by the virtue of Section 239 of Companies Act, they have to furnish the details requested by the investigating agency, in view of the powers of this Section 239 of Companies Act. Therefore, the petitioner has been appointed as Auditor with eligibility criteria of Chartered Accountant, he is responsible person to submit the information to the investigating agency, failure to furnish the information, he has to be prosecuted. Therefore, the petitioner is liable to be prosecuted for the offence punishable under Section 240 (3) of Companies Act, 1956. Therefore the special counsel prayed for dismissal. 5. The learned counsel for the petitioner, in support of his arguments relied upon the following judgments: 1. Central Bureau of Investigation, Hyderabad Vs. K. Narayana Rao reported in (2012) 9 SCC 512. 2. Sunil Bharti Mittal Vs. Central Bureau of Investigation reported in (2015) 4 SCC 609. 3. Rafel Del Riyo Vs. The State of Karnatak thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is statutory appointment under the Companies Act, some rights and duties also prescribed under the Companies Act and as per section 239 of Companies Act, the investigating authority requires some information and the auditor is bound to submit the information as per Section 240 of Companies Act. Admittedly the respondent issued notice to the petitioner three times and he has not answered and submitted any information sought by the respondent and petitioner also failed to appear in respect of the notice issued by the respondent. On the other hand the petitioner has given reply on 06.07.2011 stating that since he is not employed in Mega City (Bangalore), Developers and Builders Ltd., as auditor therefore the reply to the notice as per Section 242 of Companies Act will not be attracted. 10. The learned senior counsel relied upon judgment of Hon'ble Supreme Court Aneeta Hada's case stated supra where the Hon'ble Supreme Court while considering Section 141 of the Negotiable Instruments Act, where he has held that without making Company as accused the Director or the Managing Directors or authorized signatories, the penal provisions will not attract. The judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g N.D.S. Co., is not a company registered under the company's act, where the company is a legal entity having its Managing Director, Director and others shareholders but the petitioner-N.D.S. Co., is a firm. Admittedly the Mega City (Bangalore), Developers by their resolution have appointed the firm of the petitioner as it's Auditor and admittedly for appointing an Auditor the eligibility criteria is Chartered Accountant. The firm though appointed as a Chartered Accountant the proviso of Section 226 reveals the person who is in charge in India as a partners have signed the audit reports . Therefore, for all practical purpose, the petitioner is the partner of the firm and admittedly he has signed the audit reports as partner of the firm. It is well settled that the literal meaning of the firm and the partner is that, collectively it is a 'firm' and individually called as a partner. Therefore a partner and a firm cannot be bifurcated separately. It is not like a legal entity under the Companies Act. It is like a proprietorship business where the proprietor and proprietorship are one and the same. Likewise the petitioner is a Chartered Accountant who is eligible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not from the status. Section 18-the partner is an agent of the firm for the purpose of business of the firm. Section 25- Liability of a partner for acts of the firm.-Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner . Section 26- Liability of the firm for wrongful acts of a partner.-Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefore to the same extent as the partner. Therefore if an offence committed by the firm, is also an offence committed by the partners, it cannot be bifurcated as partners and the firm. Therefore, in my considered opinion, the judgment relied by the counsel for the petitioner is not applicable to the case on hand and therefore the criminal proceeding cannot be quashed against him. Therefore, the Trial Court, rightly took the cognizance against the petitioner for the offence punishable under section 240(3) of Companies Act. Accordingly, the criminal peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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