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TMI Blog2016 (4) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... inclusive one and it includes 'a joint family' and word 'includes' indicates an intention to enlarge the meaning of the words used. The word 'include' is used in contrast from 'means'. The Court also held that the 'person' in Ceiling Act will, unless the context otherwise requires, refer to, a natural human being, any legal entity which is capable of possession of rights and duties, including any company or association of person or individuals (whether incorporated or not) and a Hindu Undivided Family or any other group or unit of persons, the members of which by custom or usage, are joint in estate and residence, are covered. The Court also held that the 'association of persons' or 'body of individuals' are the expressions which are interchangeable at legal connotation. The Apex Court has held that the HUF is a person for the purpose of Gujarat Agricultural Lands Ceiling Act. Section 2(21) of the said Act defined that a 'person' includes a joint family and section 2(16) of the very Act defined that a joint family means Undivided Hindu Family. The Apex Court held that the word 'person' in Ceiling Act will, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases pending before the Court of the learned Chief Judicial Magistrate, Patan. 3. The brief facts leading to filing of the petition are that the respondent No. 1-original complainant is a proprietary firm. The proprietor Shri Kanaiyalal (Kanubhai) Shivlal Shah, resident of Patan, acts as a commission agent and is a trader as well. The petitioner is a Karta of an HUF i.e. Riddhi Siddhi Traders, based at Patan. Because of the requirement of the monetary aspects, for the transaction of the business, the parties had monetary transactions. Various cheques in question were drawn in the name of the firm and were issued by the petitioner as a Karta of Riddhi Siddhi Traders, an HUF. The efficient and predominant plea that has been raised in the present petition is that without impleading Riddhi Siddhi Traders, an HUF, as a party, no criminal complaint can be sustained. Therefore, they have filed present petition seeking following substantial reliefs : 8(A) Your Lordships be please to quash and set aside the criminal case no.4155 of 2015 pending before the Hon.Chief Judicial Magistrate Court, Patan in the interest of justice. 4. Shri D.J. Bhatt, learned counsel appearing with the learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt rendered in a different context in the case of Income-tax Officer, Gorakhpur v. Ram Prasad, reported in (1973) 3 SCC 25 , which provides that the HUF is neither a firm nor an association of persons. They also have sought to rely upon a decision of the Madras High Court in the case of Arpit Jhanwar v. Kamlesh Jain, reported in (2013) 1 CRIMES 51 , in support of his arguments. 6. Having thus heard both the sides and having also considered the material on record, the sole issue that requires to be considered is as to whether the complaints which have been filed without impleading the HUF as party only against the petitioners, as Karta of the HUF, need to be quashed applying the decision of the Apex Court in the case of Aneeta Hada (supra) . 7. Taking firstly the decision in the case of Aneeta Hada (supra ) , the Apex Court has extensively considered the maintainability of the prosecution under section 141 of the Act as to whether the arraying of a company as an accused is imperative to conclude that without arraying the company as an accused, the authorized signatory cannot be prosecuted. The commission of offence by company if is an express condition precedent to attract the vica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term as well as in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words as well as have to be understood in the context. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others 44 it has been laid down that the entire Statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others 45 and Sarabjit Rick Singh v. Union of India 46 . Applying the doctrine of strict construction, we are of the considered opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In Criminal Appeal No. 1483 of 2009, the director of the company is the appellant and in Criminal Appeal No. 1484 of 2009, the company. Both of them have called in question the legal substantiality of the same order passed by the High Court. In the said case, the High Court followed the decision in Sheoratan Agarwal, (AIR 1984 SC 1824) (supra) and, while dealing with the application under Section 482 of the Code of Criminal Procedure at the instance of Avnish Bajaj, the Managing Director of the company, quashed the charges under Sections 292 and 294 of the Indian Penal Code and directed the offences under Section 67 read with Section 85 of the 2000 Act to continue. It is apt to note that the learned single Judge has observed that a prima facie case for the offence under Sections 292(2)(a) and 292(2) (b) of the Indian Penal Code is also made out against the company. 47. Section 85 of the 2000 Act is as under:- 85. Offences by companies- (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in-charge of, and was responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, there was no point in making separate provision for the assessment of Hindu Undivided Family. The Court also held that this conclusion is strengthened by section 25A of the Indian Income-tax Act, 1922, which provides for the assessment of Hindu Undivided Family after its partition. 9. The Madras High Court in the case of Arpit Jhanwar (supra) was dealing with a matter arising out of section 138 of the Negotiable Instruments Act raising the issue whether the term ' company ' includes the association of individuals. It held and observed that the term ' association of individuals ' means a group of persons who have become coowners by their own volition with a common purpose. If the coownership is not by volition nor do they have any common purpose then, the coowners will not constitute an Association of Individuals in terms of section 141 of the Act. In a HUF, the members do not become coowners by their own volition and there is also no common purpose in their coownership. As has been held by the Hon'ble Supreme Court, each member of the HUF can act in regard to his or her share without any request or obligation to the other owners. They do not automatically be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body of individuals whether incorporated or not. The said general legal definition is, however, either modified or restricted or expanded in different statutes with reference to the object of the enactment or the context in which it is used. For instance, the definition of the word person in the Income Tax Act, is very wide and includes an individual, a Hindu Undivided Family, a company, a firm, an association of persons or body of individuals whether incorporated or not, a local authority and every other artificial juridical person. At the other extreme is the Citizenship Act, Section 2(f) of which reads thus: Person does not include any company or association or body of individuals whether incorporated or not. Similarly, the definition under Section 2(g) of the Representation of People Act, 1950, is person does not include a body of persons. 12. In South Gujarat Roofing Tiles Manufactures Association and another v. The State of Gujarat and another , (1976) 4 SCC 601, the Hon'ble Supreme Court has held that though the word include is generally used in interpretation clauses as a word of enlargement, in some cases the context might suggest a different intention . When the libe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Again, more or less, a similar question arose for consideration before the Hon ble Supreme Court in Ramanlal Bhailal Patel v. State of Gujarat (cited supra). That was a case relating to Gujarat Agricultural Lands Ceiling Act, 1960. In the said Act, the term person is defined in Section 2(21) of the Act which states that a person includes a joint family. Section 2(16) of Gujarat Agricultural Lands Ceiling Act defines the term joint family meaning thereby a Undivided Hindu Family and in the case of other persons a group or unit the members of which by custom or usage are joint in estate or residence. After having made a comparison of the General Clauses Act and Section 2 (21) and (16) of the Gujarat Agricultural Lands Ceiling Act, the Hon ble Supreme Court has held as follows: The inclusive definition of person in the Ceiling Act, in the absence of any exclusion, would have the same meaning assigned to the word in the General Clauses Act, and in addition, a joint family as defined. Thus, the word person in the Ceiling Act will, unless the context otherwise requires, refer to : (i) a natural human being; (ii) any legal entity which is capable of possessing rights and duties, incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of a person. Emphasis supplied) 18. This dictum laid down by the Hon ble Supreme Court categorically answers the question involved in the instant cases. As we have seen, as per Section 141 of the Act, the term company includes an Association of Individuals. Here, the term Association of Individuals means, as has been held by the Hon ble Supreme Court, a group of persons who have become coowners by their own volition with a common purpose. If the coownership is not by volition nor do they have any common purpose then, the coowners will not constitute an Association of Individuals in terms of Section 141 of the Act. In a HUF, the members do not become coowners by their own volition and there is also no common purpose in their coownership. As has been held by the Hon ble Supreme Court, each member of the HUF can act in regard to his or her share without any request or obligation to the other owners. They do not automatically become an Association of persons/body of individuals. Thus, the law laid down by the Hon ble Supreme Court squarely applies to the Negotiable Instruments Act, for the purpose of understanding the definition of the term company and thus, a HUF can not be a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... divided Family comes under the definition of Company found in Section 141 of the Negotiable Instruments Act, 1881, and has held as follows: 10. As per section 141, if the person committing an offence punishable under Section 138 happens to be a company then, every person, who at the time of commission of offence was in charge of and responsible to the company for the conduct of its business, as well as the Company shall be deemed to have committed the offence. Sub-Clause (2) of the Section provides that a director of the Company, even if he does not come under the category of persons liable under subclause (1) shall be deemed to have committed the offence, if it is proved that the offence has been committed with his consent or connivance or is attributable to neglect on his part. As per the Explanation appended to Section 141, partners are equated to a Company and its Directors. The definition of Company includes the companies incorporated, partnership firms and other association of individuals. The pertinent question that arises here is whether an Hindu Undivided Family comes under the definition of Company found in Section 141 of the Negotiable Instruments Act, 1881. 23. Before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the HUF is dishonoured, the sons of the Karta would be held liable for prosecution for the offence punishable under section 138 of the Act read with section 141 of the Act as they should be equated to the Directors of a company by virtue of the explanation found in section 141 of the Act. The Madras High Court did not agree with the said proposition and held that such a blanket proposition, according to the Madras High Court, without a qualification that such cheque should have been issued in respect of an account maintained in the name of the HUF in order to hold the members of the HUF liable for dishonour of such cheque equating them with a Director of a company, would make it nearly impossible to be accepted. The Court further held that even assuming that an HUF can be brought under the definition of 'company' as per the exception found in section 141 of the Act, if the cheque in question is not issued in respect of an account maintained in the name of the HUF, such HUF or the other members of the HUF cannot be held liable for dishonour of such cheque. In the matter before the Madras High Court, it was a case of the accused that the cheque was issued by the first acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be beneficial to regurgitate the relevant paragraphs of the decision in the case of Alladi Narsimha Rao (supra ), which read as under : 14. There is no specification in the Explanation (a) to Section 141 of the Act as to whether the words other association of individuals should be in relation to a business enterprise or a business deal. The intendment of these words can be gathered by examining in which context those words were employed. In order to have clear picture of this aspect, it is also necessary to examine in what context the words company and firm are employed in the Section. These words associate with business enterprises. Thereby when the words association of individuals are employed in the Explanation as per the legislative intendment those words should be taken to have same connotation with the other words subject to their ambit. This emphasizes that the very same words cannot be taken as meant just an association of individuals formed for any other purpose also in the present context. 15. The MoU was executed between all the accused on one hand and the complainant on the other with reference to the payment of rents for the buildings. Can that be termed as bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude club, trust, HUF business, etc. It shall have to be construed ejusdem generis alongwith other expressions company or firm . Therefore, a joint family business must be deemed as a juristic person like a company or firm. When it is specifically alleged that the respondent Nos. 1 and 2 are the joint proprietors/owners of the business of M/s New Sheetal Traders, which is a joint family business of themselves and their son Sheetal, prima facie, they are covered under Section 141 of the Negotiable Instruments Act in view of the Explanation appended thereto. 10. In Baskar v. Muthuswamy (2001) 106 Comp Cas 489, a Bench of Madras High Court held that where there were positive allegations in the complaint that the accused was partner of the firm, but he denied his such status on strength of extracts from Register of Firms, it was improper to go into evidence at the premature stage. It was held that the true state of affairs could only be gone into at the stage of trial. Hence, the Bench of Madras High Court declined to quash the process issued against the accused. It is also well settled in view of Nair (K.P.G.) v. Jindal Menthol India Ltd. (2001) 104 Comp Cas 290 that the words of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup or unit of persons, the members of which by custom or usage, are joint in estate and residence, are covered. The Court also held that the 'association of persons' or 'body of individuals' are the expressions which are interchangeable at legal connotation. It would be profitable to reproduce the relevant observations of the said decision, which read as under : 20. The terms 'association of persons' and 'body of individuals' (which are interchangeable) have a legal connotation and refer to an entity having rights and duties. They are not to be understood literally. For example, if half a dozen people are travelling in a car or a boat, or standing in a bus stop, they may be a group of persons or a 'body of individuals' in the literal sense. But they are not an association of persons/body of individuals in the legal sense. When a calamity occurs or a disaster strikes, and a band of volunteers or doctors meet at the site and associate or cooperate with each other for providing relief to victims, and not doing anything for their own benefit, they may literally be an association of persons, but they are not 'an association of persons/ body o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of persons/ body of individuals'. When different persons buy undivided shares in a plot of land and engage a common developer to construct an apartment building, with individual ownership in regard to respective apartment and joint ownership of common areas, the coowners of the plot of land, do not become an 'association of persons/ body of individuals', in the absence of a deeming provision in a statute or an agreement. Similarly, when two or more persons merely purchase a property, under a common sale deed, without any agreement to have a common or joint venture, they will not become an 'association of persons/body of individuals'. Mere purchase under a common deed without anything more, will not convert a coownership into a joint enterprise. Thus when there are ten coowners of a property, they are ten persons and not a 'body of individuals' to be treated as a 'single person'. But if the coowners proceed further and enter into an arrangement or agreement to have a joint enterprise or venture to produce a common result for their benefit, then the coowners may answer the definition of a 'person'. 22. We will now examine whether a gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory recognition, these artificial persons came to own property and enjoy various statutory rights and even some constitutional rights. As the society started growing more and more, there came more number of fictional personalities viz., juristic persons in different names enjoying different kinds of rights and liabilities as recognized under various laws. In the words of the Hon'ble Supreme Court in Shiromani Gurdwara Prabandhak Committee Vs. Som Nath Dass reported in (2000) 4 SCC 146 in paragraph 19: 19. Thus, it is well settled and confirmed by the authorities on jurisprudence and courts of various countries that for a bigger thrust of socio-political-scientific development evolution of a fictional personality to be a juristic person became inevitable. This may be any entity, living, inanimate, objects or things. It may be a religious institution or any such useful unit which may impel the courts to recognise it. This recognition is for subserving the needs and faith of the society. A juristic person, like any other natural person is in law also conferred with rights and obligations and is dealt with in accordance with law. In other words, the entity acts like a natural per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable institution may according to his law express his purpose and endow it and the ruler will give effect to the bounty or at least, protect it so far at any rate as is consistent with his own Dharma or conception or morality. A trust is not required for the purpose; the necessity of a trust in such a case is indeed a peculiarity and a modern peculiarity of the English Law. In early law a gift placed as it was expressed on the altar of God, sufficed it to convey to the Church the lands thus dedicated. It is consistent with the grants having been made to the juridical person symbolised or personified in the idol. 13. The same view was expressed by the Madras High Court in Vidyapurna Tirtha Swami Vs. Vidyanidhi Tirtha Swami and others reported in ILR 27 Mad 435, which reads as follows :- It is to give due effect to such a sentiment, widespread and deeprooted as it has always been, with reference to something not capable of holding property as a natural person, that the laws of most countries have sanctioned the creation of a fictitious person in the matter as is implied in the felicitous observation made in the work already cited Perhaps the oldest of all juristic persons is the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as exhaustive. Applying the doctrine of ejusdem generis and going by the purpose and context, while interpreting the definition clause, it is for the Court to bring in any other similar artificial person into the ambit of the term 'person' as made in Section 3(42) of the General Clauses Act and Section 11 of the I.P.C. It is, of course true, that the term 'Trust' has not been expressly included in Section 2 of the General Clause Act. As we have already noticed, a Trust enjoys various rights and discharges various obligations like that of other institutions enumerated under Section 2(42) of the General Clauses Act, as well as, Section 11 of the Indian Penal Code. Therefore, applying the doctrine of ejusdem generis, I have no hesitation to hold that a Public Charitable Trust falls within the definition of the term 'person' as defined in Section 11 of the Indian Penal Code and Section 3(42) of the General Clauses Act. xxx xxx xxx 34. The judgment of the Andhra Pradesh High Court and Bombay High Court referred to above were also placed before me by the learned Counsel. But, after having scientifically analyzed the provisions of the Act and by having rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Individuals . To make it as an Association of Individuals , in terms of Section 141 of the Act, it is absolutely necessary that the combination of individuals must be on their own volition. Secondly, it is also necessary that such combination of individuals must be with a common purpose. In an HUF, both the above essential requirements are absent inasmuch as an individual becomes a member of the HUF, not on his own volition but by birth. Similarly, there is no common purpose to be carried forward by a HUF. It is for these reasons, I had to hold that a HUF is not a Company in terms of Section 141 of the Negotiable Instruments Act. 15. Keeping the aforementioned ratio in mind, the moot question that is required to be addressed is as to whether the expression ' association of individuals ' as explained in section 141 of the said Act, includes HUF. 16. As discussed hereinbefore, reference of the decision of the Apex Court rendered in the case of Ramanlal Bhailal Patel (supra ) is necessary at this stage. The Apex Court has held that the HUF is a person for the purpose of Gujarat Agricultural Lands Ceiling Act. Section 2(21) of the said Act defined that a 'person' incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they shall include. But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions used. It may be equivalent to 'mean and include' and in that case it may afford an exhaustive explanation of the meaning which for the purposes of the Act must invariably be attached to those words or expressions. Thus, the word include may in certain contexts be a word of limitation. 18. At the same time, the Apex Court in the case of South Gujarat Roofing Tiles Manufactures Association and another v. The State of Gujarat and another, reported in (1976) 4 SCC 601, has held that when the liberty of the subject is involved having penal consequences, then, the word ' include ' should receive strict interpretation and not liberal interpretation. Thus, considering the term in the context of term ' Company ', which includes 'association of individuals , the Parliament also could have included the HUF within the meaning of company which has not been done. Therefore, the expression a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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