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Utpal Kriplani Proprietor v/s M/s. The Computer Super Market Through sole proprietor Shri Pawan Agarwal & Others

    Criminal Misc. Petition No. 935 of 2017

    Decided On, 16 May 2017

    At, High Court of Rajasthan Jodhpur Bench

    By, THE HONOURABLE MR. JUSTICE VINIT KUMAR MATHUR

    For the Petitioner: Arpit Bhoot, Advocate. For the Respondents: Amit Maheshwari, Advocate.



Judgment Text

Vinit Kumar Mathur, J.

1. The present Criminal Misc. Petition has been preferred for quashing the order dated 26.11.2016 passed by learned Special Metropolitan Magistrate (N.I. Act) No.6, Jodhpur and the order dated 01.03.2017 passed by learned Sessions Court, Jodhpur Metropolitan in a revision petition preferred by the petitioner.

2. Briefly, the facts in the matter are that the respondent No.1 was having a business relationship with the petitioner and during the course of their business transaction a complaint was filed by the respondent under Section 138 Negotiable Instruments Act, 1881, praying therein that a cheque bearing No.241215 of an amount of Rs.38,500/- has been dishonoured and, therefore, the complainant-respondent should be awarded an amount double the amount mentioned in the cheque and the petitioner should be appropriately punished. During the pendency of this complaint, the petitioner moved an application before the learned trial court for quashing the complaint on the ground that the proprietor firm namely: M/s. Quantum I.T. Solutions, 17-1, Choupasani Housing Board, Jodhpur has not been made a party respondent in the matter and unless the proprietor firm is arrayed as party respondent, the complaint of the respondent is not maintainable as the business was being undertaken between the proprietorship firm i.e. M/s. Quantum I.T. Solutions and M/s. The Computer Super Market. This application was opposed by the complainant stating that the proprietorship firm is not a legal entity separately and the provisions of Section 141 of N.I. Act will not be applicable in the case of a proprietorship firm.

3. Learned trial court vide order dated 26.11.2016 rejected the application filed by the petitioner. The petitioner preferred a revision petition against the order dated 26.11.2016 and the same was also rejected vide order dated 01.03.2017 passed by learned Sessions Judge, Jodhpur Metropolitan. The contentions which were made by the petitioner before the learned trial court were reiterated in the revision petition also.

4. Aggrieved by these orders dated 01.03.2017 and 26.11.2016 the petitioner preferred the present misc. petition before this court and has submitted that the learned courts below have failed to appreciate that unless the firm M/s. Quantum I.T. Solutions is arrayed respondent in the matter or is made a party in the complaint petition, the complaint itself is not maintainable. He further submits that the cheque was issued on behalf of the firm as the firm was having a business transaction with the complainant concerned i.e. M/s. The Computer Super Market, therefore, unless the firm which has made the payment is not proceeded with by making party respondent in the matter, the complaint itself cannot be proceeded and is liable to be rejected on this ground alone.

5. Mr. Arpit Bhoot, learned counsel for the petitioner has vehemently argued that the cheque which has been filed along with the complaint is of proprietorship firm and in the whole complaint, there is not even a whisper or averment about the firm having given any cheque to the complainant. Mr. Bhoot strongly relied upon Section 141 N.I. Act, submits that the explanation to Section 141 is very clear and a 'Company' means any body corporate and includes a firm or other association of individuals and 'Director', in relation to a firm, means a partner in the firm, therefore, unless the firm is prosecuted against, there is no question of proceeding against Utpal Kriplani that is petitioner, the sole proprietor of the proprietorship firm. He has further relied upon the explanation to Section 138 N.I. Act.

6. He has also relied upon the judgment delivered in the case of Milind Shiripad Chandurkar v. Kalim M. Khan & Anr.; (2011) 4 SCC 275. The relevant paras of the said judgment is as follows:

"22. In a case of this nature, where the "payee' is a company or a sole proprietary concern, such issue cannot be adjudicated upon taking any guidance from Section 142 of the 1881 Act but the case shall be governed by the general law i.e. the Companies Act, 1956 or by Civil law where an individual carries on business in the name or style other than his own name. In such a situation, he can sue in his own name and not in the trading name, though other can sue him in the trading name. So far as Section 142 is concerned, a complaint shall be maintainable in the name of the "payee", proprietary concern itself or in the name of the proprietor of the said concern."

7. This judgment is not applicable in the present case, as it specifically deals with Section 142 of the N.I. Act and the Company involved therein.

8. Learned counsel for the petitioner has further relied upon the judgment delivered by this Court in Smt. Leela Devi v. Jagdish Raja Juni & Anr.; 2016 ACD 846 (Raj.) wherein a revision petition was filed against the judgment of appellate Court and in this matter the learned trial Court as well as the appellate Court observed that the accused respondent Jagdish was a proprietor of Pankaj Engineering Works had signed the cheque in the capacity of the proprietor of the above firm, whereas the complaint was filed against him in personal capacity and not as a proprietor of the firm. On this ground the dismissal of the complaint was upheld. This Court has also held that since the cheque was signed by the accused Jagdish as proprietor, therefore, it was desirable that the complaint should have been filed against him as proprietor of the firm and not in his individual capacity. In this view of the matter, the fact of this case are totally different and the same is also not applicable in the facts of the present case.

9. Opposing the contentions of the petitioner, Mr. Amit Maheshwari, learned counsel for the respondent submits that there is no application of Section 141 in the present case as Section 141 clearly applies in case of the companies and Section 141 of N.I. Act applies only if an offence under Section 138 of N.I. Act is committed by a company or a partnership firm or association of individuals. Whereas, in the present case, it is an admitted position that the petitioner(accused) Mr. Utpal Kriplani is the sole proprietor of the firm M/s. Quantum I.T. Solutions a proprietorship concern. He further submits that in the complaint petition itself at the top two words are written which are:-

'TAMIL'

10. Therefore, where ever the word 'TAMIL' is used in the complaint it refers to the Utpal Kriplani, the sole proprietor of a partnership firm M/s. Quantum I.T. Solutions and the firm itself. He further submits that the cheque bears the signature of Utpal Kriplani with rubber stamp of the firm M/s. Quantum I.T. Solutions, therefore, there cannot be an iota of doubt that Utpal Kriplani being the sole proprietor of Quantum I.T. Solutions has not submitted a cheque of Rs.38,500/- to the complainant for some business transaction entered into both the parties.

11. Heard learned counsel for both the parties at length.

12. In Manisha Koushik Bhowmik v. Carol Petroleum Pvt. Ltd. & Anr.; 2016(3) Civil Court Cases 073 (Bombay), the Bombay High Court has held as under:-

"12. It is settled position in law that the concept of various liability introduced in Negotiable Instruments Act is attracted only against the Directors, Partners or other persons in charge and control of the business of the company, or otherwise responsible for its affairs. Section 141 of Negotiable Instruments Act, not covers within its ambit, the proprietary concern. The proprietary concern is not a juristic person so as to attract the concept of vicarious liability. The concept of vicarious liability is attracted only in the case of juristic person, such as the company registered under the provisions of the Companies Act, 1956 or the partnership firm registered under the provisions Partnership Act, 1932 or association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. The proprietary concern stands absolutely on different footing. A person may carry on a business in the name of the business concern being proprietor of such proprietary concern. In such case the proprietor of proprietary concern alone can be held responsible for the conduct of business carried in the name of such proprietary concern. Therefore, Section 141 of Negotiable Instruments Act have no applicability in a case involving the offence committed by a proprietary concern. In this context it is useful to refer Section 141 of Negotiable Instruments Act, which reads as under:

"S.141 Offences by companies. -

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purposes of this section,- (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm."

13. The plain reading of above quoted provision itself spell out that the provision of Section 141 of Negotiable Instruments Act is applicable only if person committing an offence under Section 138 of Negotiable Instruments Act, is a company, or the partnership firm or association of individuals. It has no applicability to cases relating to dishonour of cheques issued by proprietor of proprietary concern."

Similarly Madras High Court in P. Muthuraman v. M/s. Shree Padmavathi Finance (Regd.); 1994 (80) Comp Cas 656 held as under:-

"4. It is clear that if the person committing an offence under Section 138 is a company, every person who, at the time of the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. In this connection it is pertinent to point out the explanation under Section 141 of the Negotiable Instruments Act. The term 'Company' is defined in the explanation to Section 141 to mean (1) any body corporate, and (2) includes a firm, or (3) other associations of individuals, and 'director' in relation to a firms means a partner in the firm. There is thus no mention of any sold proprietary concern under definition of 'Company'. Further other association of individuals will not include a sole proprietary concern as there is only one person and not association of persons. As the sole proprietary concern is not a company within the meaning of Company as defined under explanation to Section 141 of the Negotiable Instruments Act, 1881, sole proprietary concern need not be made as party in the complaint apart from the sole proprietor. In view of the above, the petition is dismissed."

Similar view has been expressed by Hon'ble Karnataka High Court and Andhra Pradesh High Court.

In M/s. Bhagwati Vanaspati Traders v. Senior Superintendent of Post Offices, Merrut 2015(2) Civil Court Cases 437 (S.C.) while dealing with the issue of proprietorship concern has held in paragraph 8 as follows:

"A proprietorship concern is only the business name in which the proprietor of business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the business."

13. It is an admitted position that there was a business relationship between the parties as both parties have fairly admitted that they knew each other quite well and were having regular monetary transactions in furtherance of their business. The factum of cheque having given by the petitioner to the complainant is also on record with the signature of Shri Utpal Kriplani with a rubber stamp of firm Quantum I.T. Solutions, therefore, it can very well be presumed that the petitioner Shri Utpal Kriplani has given a cheque on behalf of the firm i.e. The Quantum I.T. Solutions. It is also a fact that it is a sole proprietorship firm and Shri Utpal Kriplani being only proprietor, therefore, it cannot be doubted that the amount due to the respondent was not paid by the petitioner firm through the sole proprietor in furtherance of his business. I am also not convinced with regard to the contentions that in the complaint nothing has been stated with respect to the firm having issued the cheque as it is categorically mentioned that 'TAMIL' refers to Utpal Kriplani, the sole proprietor of M/s. Quantum I.T. Solutions and when this word 'TAMIL' is used at all the places in the complaint then naturally it refers to the petitioner who is the sole proprietor of a proprietorship firm namely M/s. Quantum I.T. Solutions as well as the firm also.

14. Section 141 of the N.I. Act reads as follows:

"141 Offences by companies. -

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

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence an

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d shall be liable to be proceeded against and punished accordingly. Explanation.-For the purposes of this section,- (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." 15. Section 141 of N.I. Act makes it amply clear that it refers to the company and it has no application in relation to the dishonour of cheque issued by the proprietary concerned. 16. Viewed from another angle the hyper technical approach in the present case is also not warranted when it is admitted that the petitioner and respondents were having a business transaction and a cheque has been issued by the petitioner to the respondent in furtherance of their business. Therefore, the money due to the respondent is liable to be paid by the petitioner and, therefore, a cheque has rightly been issued in favour of respondent complainant and it is a legitimate expectation of the respondent that this instrument i.e. a cheque of Rs.38,500/- will be honoured in his favour. Therefore, I am of the considered opinion that merely because the firm has not been impleaded as party respondent in the matter the complaint is not liable to be rejected in view of detailed discussion. A narrow view of the matter or a hyper technical approach in the present case will also frustrate the purpose of Negotiable Instruments Act, 1881. 17. Therefore, in view of whatever has been stated above, no interference is called for in the orders passed by the learned courts below and I find no force in the present criminal misc. petition, the same is therefore dismissed. No order as to costs. Petition dismissed.
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