Binu vs State Of Kerala

P.G. Ajithkumar, J

The petitioner stands convicted and sentenced for an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The conviction and sentence were confirmed by the appellate court, and the same are under challenge in this revision filed under Section 397 read with Section 401 of the Code of Criminal Procedure, 1973 (Code).

Heard the learned counsel for the petitioner, the learned Public Prosecutor and the learned counsel for the 2nd respondent.

The 2nd respondent filed the complaint. The allegations against the petitioner were that the cheque he issued in discharge of a debt of Rs.2,28,000/- to the 2nd respondent, when presented for encashment, was returned unpaid and a notice demanding payment was given, but the petitioner did not oblige. On the said accusation trial was held. PW1 was examined and Exts.P1 to P20 were marked. The petitioner, when questioned under Section 313 (i)(b) of the Code, denied the incriminating circumstances against him in evidence. He further stated that he joined the chitty since an amount of Rs.3,50,000/- was owed by him and he had paid all the installments of the chitty. But on account of some dispute regarding interest, the cheque given by the petitioner as security was misused for initiating the prosecution.

The trial court after considering the evidence on record and the rival contentions held that the guilt of the petitioner was proved beyond doubt. The appellate court followed the suit.

The petitioner would now contend that the prosecution was bad in law since the partnership firm on behalf of which Ext.P1 cheque was issued has not been arraigned as an accused. Although a few other contentions also are set forth, the learned counsel for the petitioner, at the time of hearing, pursued only that the prosecution suffers from the infirmity of non impleading of the firm which is a necessary requirement in view of the provisions of Section 141 of the NI Act.

The learned counsel for the petitioner would submit that Ext.P1 is a cheque drawn in an account maintained by M/s.Ganga Marbles and Granites which evidently is a partnership firm. The agreements, Exts.P9 to P16 were executed by the petitioner in the capacity of the managing partner of M/s.Ganga Marbles. The petitioner is prosecuted also as managing partner of M/s.Ganga Marbles. Thus the entire evidence on record showed that the offence was committed by the partnership firm but the firm was not made an accused. The learned counsel placed reliance on the decisions of the Apex Court in Aneeta Hada v. Godfather Travels & Tours Pvt.Ltd [2012 Crl.L.J 2525]; Himanshu v. B. Shivamurthy and Another [2019 (3) SCC 797]; Pawan Kumar Goel v. State of U.P [2022 SCC OnLine SC 1598] and S.P.Mani and Mohan Dairy v. Dr.Snehalatha Elangovan [AIR 2022 SC 4883], and of this Court in Babu v. State of Kerala [2017 (4) KLT 33 (C No.34) in order to contend that for want of impleading the firm the prosecution is vitiated.

In Aneeta Hada, the Apex Court held that for maintaining a prosecution for the offence under Section 138 r/w 141 of the NI Act , arraigning of the company as an accused is imperative. In view of explanations (a) and (b) to Section 141, a partnership firm is on the same footing as that of a company and a partner of a firm stands similar to a director of a company. Therefore, in a case where the offence was committed by a partnership firm, the partner can be prosecuted only if the partnership firm is also made an accused. This principle has been followed in the aforementioned subsequent decisions by the Apex Court. Following the said principle, this Court in Babu (supra) held that in order to maintain a prosecution against a partner for the offence under Section 138 of the NI Act committed by the firm, the partnership firm shall also be arraigned as an accused.

That takes us to the question, whether the person accused of in this case is the partnership firm or the petitioner in his personal capacity. As stated, Ext.P1 is a cheque drawn in the account maintained in the name of M/s.Ganga Marbles and Granites. In Exts.P9 to P16 agreements, relating to the chitty transaction, admittedly, in connection with which only Ext.P1 was issued, was executed by the petitioner describing him as managing partner of M/s.Ganga Marbles. It is not recited that he was executing the agreement for and on behalf of the firm. Pointing out that fact the learned counsel for the 2nd respondent submitted that the petitioner in his personal capacity subscribed the chitty and received the price. It is accordingly contended that the petitioner cannot be allowed to take a different stand now that the transaction was between the 2nd respondent and the partnership firm.

If Exts.P9 to P16 are alone the documents casting liability on the petitioner, the said contention of the learned counsel for the 2nd respondent could be said sound. But the basic ingredient to constitute an offence under Section 138 of the NI Act is the issuance of a cheque drawn by the accused in an account maintained by him. Only if a cheque drawn by a person on an account maintained by him with a banker is dishonoured and the payment is defaulted, there can be a prosecution against that person. Therefore the person drawing the cheque shall be the accused. When Ext.P1 was drawn in an account maintained in the name of the partnership firm, the person drawing Ext.P1 can only be the partnership firm. Therefore the person committed the offence for the reason of dishonour of Ext.P1 cheque is the partnership firm. In that view of the matter, it can only be said that the person accused of the offence alleged in this case is the partnership firm. Therefore for a successful prosecution the provisions of Section 141 of NI Act are to be complied with. The law laid down in the aforesaid decisions gets application and hence the prosecution without the partnership firm as an accused is not maintainable.

Accordingly, I hold that the judgments of conviction and sentence rendered by the courts below are liable to be set aside. This revision petition is allowed. Conviction and sentence of the petitioner are set aside.