Mahfooz Carpets vs Oriental Rug Manufacturers

J. C. Mishra, J.—This revision has been filed by the accused firm and its alleged partners against the order dated 10th June, 1991 passed by Additional Sessions Judge, Gyanpur allowing the revision preferred against the order dated 5291 passed by the Judicial Magistrate, Gyanpur, dismissing the complaint under Section 203 of the Code of Criminal Procedure and discharging the accused under Sections 138/141/142of the Negotiable Instruments Act (as amended by Act No. 66 of 1988) (for short ''the Act'') and summoning the accusedrevisionist after setting aside the order.

The complainant, Oriental Rug Manufacturers through its proprietor Smt. Badrunnisa (hereinafter called the complainant) filed a complaint against M/s. Mahfooz Carpets, Smt. Asma Begum and Mahfooz Alam on the allegations that accused issued a cheque on 17th March, 1989 but it was dishonoured on 1st May, 1989. The complainant sent a notice on 10th May, 1989 giving opportunity to the accused to pay the amount mentioned in the cheque but with no result. The complainant prayed for punishing the accused under Sections 138/141/142 of the Act.

The learned Magistrate recorded the statements under Sections 200 and 202 Cr. P.C. and after hearing the complainant held that no offence was made out. He held that Section 138 and the following Sections were inserted in the Act by Act No. 66 of 1988 with effect from 1st April, 1989 and as the cheque was issued prior to the insertion of this provision the accused cannot be said to nave committed any offence under this provision. He also held that in absence of evidence of collusion the offence can be said to have been committed by the partners and on this ground as well the accused other than accused Farooq are not liable to be prosecuted. He further observed that according to the evidence adduced by the complainant accused No. 4 alone was looking after the affairs of the firm and he was responsible for the conduct of the business of the firm and as he has died, the other accused cannot be tried. He, therefore, dismissed the complaint.

The complainant, felt aggrieved, preferred revision which was decided by Additional Sessions Judge, Gyanpur. The learned Additional Sessions Judge held that the date of issuance of cheque was hardly of any relevance and as the memo intimating dishonouring of cheque was sent to the complainant on 1st May, 1989, this date is relevant for determining as to when the offence was committed. He held that as the offence punishable under Section 138 of the Act was committed after the enforcement of amending Act 66 of 1988, the accused can be tried for the offences complained. He also held that the firm is liable for the offence under Section 138 of the Act. He, therefore, allowed the revision set aside the order passed by the Magistrate and summoned the accused. Felt aggrieved the accused came up in revision.

List revised. None appeared for the revisionists. Heard Sri R.N. Upadhyay, learned counsel for the O.Ps. 1 and 2 and Sri A.K. Singh, learned Additional Government Advocate.

In the grounds of revision it is alleged that on allegations contained in the complain the accused committed offence on 17 389 and as the amending Act 66 of 1988 came into force w.e.f. 1st April, 1989, the liability could not be fastened on the accused. This contention is untenable,

It is true that Chapter XVII containing Sections 138 to 142 was added by the amending Act 66 of 1988, which came into force w.e.f. 1st April, 1989 and it is equally true that no one can be punished for a offence which was not an offence on the commencement of the Act constitute an offence. The real controversy is as to when the accused committed offence. The issuance of cheque is not an offence. No offence can be said to have been committed by the accused when the accused issued cheque in favour of the complainant firm. The cause of action under the provisos (b) and (c) of Section 138 of the Act for filing complaint will arise only after the giving of notice of demand of the amount of cheque by the payee to the drawer of the cheque and coupled with the failure of the drawer of the cheque to pay that amount within 15 days of the date of service /receipt of notice on or by him V.D. Agarwal v. 1st Addl Munsif Magistrate, (1993) 11 LCD 1108 (All)). At any rate no offence can be said to have been committed prior to the date, when the cheque is dishonoured and the cheque is returned to the complainant unpaid either because of the amount of the money standing to the credit of the account of the drawer is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from the account by an agreement made with the bank. In the case before us by memo dated 1st May, 1989 the complainant came to know that the cheque was dishonoured. Therefore, the cause of action arose after coming into force of the amending Act 66 of 1988 introducing Chapter XVII in the Act. Therefore, the view taken by the learned Additional Sessions Judge cannot be said to be erroneous.

In the grounds of revision it has been alleged that the cheque was issued by late Farooq Ali on behalf of the firm Mahfooz Carpets. As he was incharge and responsible to the firm for the conduct of the business of the firm at the time when the alleged offence was committed he alone could be treated as guilty and proceeded against on that basis. It has, however, been alleged that the revisionist Nos. 2 and 3 are not liable for the offence complained and, therefore, the learned Additional Sessions Judge committed illegality in summoning the accused.

Section 141 of the Act deals with the offences by companies. Explanation to the aforesaid Section provides that �company� means any body corporate and includes a firm or other association of individual and �director�, in relation to a firm, means a partner in the firm. In view of this explanation if Section 141 is read after substituting �firm� in place of �company� it will read as follows.

If the person committing an offence under Section 138 is a firm, every person who, at the time the offence was committed, was in charge of, and was responsible to the firm for the conduct of the business of the firm, as well as the firm, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Under subsection (2) of Section 141 of the Act all the partners are liable for the offence if it is proved that the offence has been committed with their consent or connivance of, or is attributable to, any neglect on their part. Thus if prima fade evidence is given to show that the partner was responsible to the firm for the conduct of the business of the firm or the offence was committed with his consent or connivance, he is liable for the offence punishable under Section 138ofthe Act.

The revisionists have filed copy of the complaint as also the statements of two witnesses, namely, Smt. Badrunnisa and Hidayat Ali. They have stated that accused No. 1 Mahfooz Carpets is a registered firm and Mahfooz and Asma Begum are its partners. Farooq Ali was Manager of the firm. He died on 291289. It is alleged in para 1 of the complaint that the accused Mahfooz Carpets and Mahfooz, accused No. 1 and 2 carried on carpet business under the name and style of the accused No. 1. Thus there is prima facie evidence to indicate that accused 2 and 3 are partners of the firm accused No. 1. There is also evidence to the effect that Mahfooz Carpets had given the complainant carpets for sale in Germany on consignment basis but the carpets were of the inferior quality they were not accepted in the market. There was an agreement that the firm, its Manager and the partners will be liable for loss, if any. Despite this agreement the consignment was not taken by the accused firm nor any payment was made to him. As a consequence the entire consignment was auctioned at the port by Custom Department. The Custom Department demanded a sum of Rs. 7,41,977.71 from Mahfooz Carpets. The firm issued a cheque for the amount demanded on 17th March; 1989, which was dishonoured and returned to the complainant on 1st May, 1989. Thus there is prima facie evidence to indicate that the firm and the partners were responsible for the conduct of the business of the firm and they had agreed to bear losses incurred by the firm in the business. In view of the prima facie evidence to indicate that the accused committed the crime complained, the learned Additional Sessions Judge committed no illegality in summoning the accused.

The revision is dismissed.

Revision dismissed.