Allowed

Balakrishna Prabhu v. Mrs.v.Indira & Another

Kerala HC9 Nov 2023Crl.Rev.Pet/38/2007

Case brief

AI extract

What is this about?

The High Court of Kerala allowed four criminal revision petitions filed by an accused under Section 141 of the Negotiable Instruments Act. Setting aside prior convictions, the Court held that prosecution under S. 141 requires the impugned firm to be arraigned as the primary accused, rejecting arguments based on Anil Hada which was overruled in Aneeta Hada.

What did the court decide?

Petitioner stands acquitted and set at liberty; conviction and sentence under Section 138 of the NI Act are set aside; bail bond discharged.

Balakrishna Prabhu Vs Mrs.v.Indira & Another — Money Laundering | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE VIJU ABRAHAM

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THURSDAY, THE 9TH DAY OF NOVEMBER 2023 / 18TH KARTHIKA, 1945

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CRL.REV.PET NO. 36 OF 2007

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AGAINST THE JUDGMENT IN CRA 430/2005 OF ADDITIONAL SESSIONS COURT (ADHOC-

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I) ERNAKULAM

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AGAINST THE JUDGMENT IN CC 650/2002 OF JUDICIAL FIRST CLASS MAGISTRATE

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COURT -II, KOCHI

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REVISION PETITIONER/APPELLANT/ACCUSED NO.2:

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S. BALAKRISHNA PRABHU
C.C.NO.IV/980, NORTH CHERLAI, KOCHI-2.

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BY ADV SRI.S.RAJEEV

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RESPONDENTS/RESPONDENTS/COMPLAINANT & STATE:

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1MRS.V.INDIRA, W/O.RATNAKARA PRABHU
RESIDING AT C.C.NO.VIII/2073, ARPITHAM,
PRIYADARSHINI BLOCK, GUJARATHI ROAD, KOCHI-2,
REPRESENTED BY POWER OF ATTORNEY HOLDER,
MR. R.VENUGOPALA PRABHU, AGED 25 YEARS,
S/O.RATNAKARA PRABHU.

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2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

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R1 BY ADV.SRI.PHILIP T.VARGHESE R2 BY PP SRI.RENJIT GEORGE

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THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON
09.11.2023, ALONG WITH Crl.Rev.Pet.38/2007 AND CONNECTED CASES, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:

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¶19

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE VIJU ABRAHAM

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THURSDAY, THE 9TH DAY OF NOVEMBER 2023 / 18TH KARTHIKA, 1945

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CRL.REV.PET NO. 37 OF 2007

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AGAINST THE JUDGMENT IN CRA 432/2005 OF ADDITIONAL SESSIONS
COURT (ADHOC-I) ERNAKULAM

¶26

AGAINST THE JUDGMENT IN CC 647/2002 OF JUDICIAL FIRST CLASS
MAGISTRATE COURT -II, KOCHI

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REVISION PETITIONER/APPELLANT/ACCUSED NO.2:

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S. BALAKRISHNA PRABHU
C.C.NO.IV/980, NORTH CHERLAI, KOCHI-2.

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BY ADV SRI.S.RAJEEV

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RESPONDENTS/RESPONDENTS/COMPLAINANT & STATE:

¶31

1MRS.V.INDIRA, W/O.RATNAKARA PRABHU
RESIDING AT C.C.NO.VIII/2073, ARPITHAM,
PRIYADARSHINI BLOCK, GUJARATHI ROAD, KOCHI-2,
REPRESENTED BY POWER OF ATTORNEY HOLDER,
MR. R.VENUGOPALA PRABHU, AGED 25 YEARS,
S/O.RATNAKARA PRABHU.

¶32

2STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA, ERNAKULAM.

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R1 BY ADV.SRI.PHILIP T.VARGHESE
R2 BY PP SRI.RENJIT GEORGE

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THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON

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09.11.2023, ALONG WITH Crl.Rev.Pet.38/2007 AND CONNECTED CASES,

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THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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¶38

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE VIJU ABRAHAM

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THURSDAY, THE 9TH DAY OF NOVEMBER 2023 / 18TH KARTHIKA, 1945

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CRL.REV.PET NO. 38 OF 2007

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AGAINST THE JUDGMENT IN CRA 433/2005 OF ADDITIONAL SESSIONS

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COURT (ADHOC-I) ERNAKULAM

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AGAINST THE JUDGMENT IN CC 649/2002 OF JUDICIAL FIRST CLASS

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MAGISTRATE COURT -II, KOCHI

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REVISION PETITIONER/APPELLANT/ACCUSED NO.2:

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S. BALAKRISHNA PRABHU
C.C.NO.IV/980, NORTH CHERLAI, KOCHI-2.

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BY ADV SRI.S.RAJEEV

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RESPONDENTS/RESPONDENTS/COMPLAINANT & STATE:

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1 MRS.V.INDIRA, W/O.RATNAKARA PRABHU

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RESIDING AT C.C.NO.VIII/2073, ARPITHAM,
PRIYADARSHINI BLOCK, GUJARATHI ROAD, KOCHI-2,
REPRESENTED BY POWER OF ATTORNEY HOLDER,
MR. R.VENUGOPALA PRABHU, AGED 25 YEARS,
S/O.RATNAKARA PRABHU.

¶54

2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

¶55

R1 BY ADV.SRI.PHILIP T.VARGHESE
R2 BY PP SRI.RENJIT GEORGE

¶56

THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD
ON 09.11.2023, ALONG WITH Crl.Rev.Pet.36/2007 AND CONNECTED
CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶57

¶58

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶60

PRESENT

¶61

THE HONOURABLE MR.JUSTICE VIJU ABRAHAM

¶62

THURSDAY, THE 9TH DAY OF NOVEMBER 2023 / 18TH KARTHIKA, 1945

¶63

CRL.REV.PET NO. 39 OF 2007

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AGAINST THE JUDGMENT IN CRA 429/2005 OF ADDITIONAL SESSIONS

¶65

COURT (ADHOC-I) ERNAKULAM

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AGAINST THE JUDGMENT IN CC 648/2002 OF JUDICIAL FIRST CLASS

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MAGISTRATE COURT -II, KOCHI

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REVISION PETITIONER/APPELLANT/ACCUSED NO.2:

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S. BALAKRISHNA PRABHU
C.C.NO.IV/980, NORTH CHERLAI, KOCHI-2.

¶70

BY ADV SRI.S.RAJEEV

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RESPONDENTS/RESPONDENTS/COMPLAINANT & STATE:

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1 MRS.V.INDIRA, W/O.RATNAKARA PRABHU

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RESIDING AT C.C.NO.VIII/2073, ARPITHAM,
PRIYADARSHINI BLOCK, GUJARATHI ROAD, KOCHI-2,
REPRESENTED BY POWER OF ATTORNEY HOLDER,
MR. R.VENUGOPALA PRABHU, AGED 25 YEARS,
S/O.RATNAKARA PRABHU.

¶74

2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

¶75

R1 BY ADV.SRI.PHILIP T.VARGHESE
R2 BY PP SRI.RENJIT GEORGE

¶76

THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD
ON 09.11.2023, ALONG WITH Crl.Rev.Pet.38/2007 AND CONNECTED
CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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‘CR’

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VIJU ABRAHAM, J.

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................................................................. Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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................................................................. Dated this the 9^th day of November, 2023

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ORDER

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Parties and the contentions raised in these criminal revision petitions are the same and therefore all these cases are heard and disposed of together.

¶85

Revision petitioner in these cases is the 2^nd accused in C.C.Nos.650 of 2002, 647 of 2002, 649 of 2002 and 648 of 2002 on the file of the Judicial First Class Magistrate Court-II, Kochi, alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (in short, “NI Act”). In C.C.No.650 of 2002, the complaint was filed by the 1^st respondent on the basis of the allegation that accused 1 and 2 who were Managing Partner and Partner of M/s.Swathi Garments borrowed an amount of Rs.2,00,000/- and to clear the liability, four cheques were issued for the said amount and on presentation of the cheques, they were dishonoured for want of sufficient funds. Though a lawyer notice was issued demanding payment, the accused failed to make the payment and hence the complaint alleging offence punishable under Section 138 of the NI Act was filed. In C.C.Nos.647 of 2002, 649 of 2002 and 648 of 2002 the allegation is the same.

¶86

Only the revision petitioner/2nd accused appeared before the trial

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Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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court and the 1^st accused was absconding. Therefore, the case against the 1^st accused was split up and only the revision petitioner/2nd accused faced trial. All the cases were tried jointly and evidence was recorded in C.C. No. 647 of 2002. During the trial, the power of attorney holder of the complainant was examined as PW1 and marked Exts.P1 to P30. The trial court on appreciation of the evidence adduced, held the revision petitioner/2nd accused guilty of the offence punishable under Section 138 of the NI Act and thus convicted and sentenced him to undergo simple imprisonment and to pay compensation and in default, the accused was directed to undergo simple imprisonment for a further period. Aggrieved by the conviction and sentence, the revision petitioner has filed criminal appeals as Crl.Appeal Nos.430 of 2005, 432 of 2005, 433 of 2005 and 429 of 2005 before the Additional Sessions Court (Adhoc-I), Ernakulam. Appellate Court as per the common judgment dated 15.02.2006 confirmed the conviction but modified the sentence by reducing the substantive sentence till rising of the court and increasing the compensation amount, with a default sentence.

¶90

In the criminal revision petitions, the revision petitioner raised a contention that the partnership firm that issued the cheque is not made an accused in the said complaint and without the partnership firm being arrayed as an accused, the complaint itself is not maintainable. The learned counsel appearing for the 1st respondent complainant relied on the judgment in Anil Hada v. Indian Acrylic Ltd, (2000) 1 SCC 1 which

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¶92

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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held that the NI Act does not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who falls within the second and third category mentioned in Section 141 of the NI Act.

¶94

Admittedly, the cheque was issued on behalf of a partnership firm and it is alleged in the complaint that accused 1 and 2 who are the Managing Partner and Partner of the firm “M/s.Swathi Garments” issued the cheque.

¶95

On the basis of the same, it is contended by the learned counsel appearing for the revision petitioner that if the amount was borrowed for and on behalf of the firm, the firm ought to have been made a party to the proceedings and in the present case the firm is not arraigned as an accused and therefore contended that for maintaining a prosecution under Section 141 of the NI Act, arraigning of the firm as an accused is imperative.

¶96

The issue to be considered is as to whether a prosecution under Section 141 of the NI Act is maintainable without arraigning the firm as an accused in the complaint. The specific averment in the complaint is that towards the amount due, accused nos. 1 and 2 as Managing Partner and Partner respectively of “M/s.Swathi Garments” had issued the cheques in favour of the complainant. On a perusal of Exts.P2, P9, P16 and P23 cheques, it could be seen that accused nos. 1 and 2 have signed the cheques for M/s.Swathi Garments in their capacity as Managing Partner and Partner. The complainant’s power of attorney holder who was

¶97

¶98

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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examined as PW1 deposed that the cheques issued were that of M/s.Swathi Garments. It is seen that no notice has been issued in the name of the partnership firm nor there is any averment in the complaint that the revision petitioner at the time of commission of the offence was in charge of, and was responsible to the firm for the conduct of the business of the firm, as well as the firm. In this factual backdrop, let me consider whether a complaint is maintainable against the revision petitioner without the partnership firm being arraigned as an accused.

¶100

To consider the issue involved, it is profitable to refer to Section 141

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of the NI Act along with its explanation, which reads as follows:

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“ 141. Offences by companies

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(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:

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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:

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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.

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(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

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¶108

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

¶109

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.

¶110

Explanation : For the purposes of this section,—

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(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.”

¶112

(underline supplied)

¶113

Explanation (a) of Section 141 of the NI Act provides that for the purpose of Section 141 “company” means any body corporate and includes a firm or other association of individuals. Likewise in Explanation (b) to Section 141 of the NI Act, it is further provided that for the purpose of Section 141 “director”, in relation to a firm, means a partner in the firm. A perusal of the above provision, especially the explanation to Section 141 of the NI Act makes it abundantly clear that the person who commits the offence under Section 138 of the NI Act is a company or a firm, the company or the firm as well as every person in charge of and responsible to the company or the firm for the conduct of business of the company or the firm at the time of commission of the offence is deemed to be guilty of the offence. The question as to whether the arraigning of a company as an accused is imperative for maintaining a prosecution under Section 141 of the NI Act was considered by the Apex Court in Aneeta Hada v. Godfather Travels

¶114

& Tours Pvt. Ltd., 2012 (2) KLT 736 (SC) . In the said judgment, the Apex Court also considered the dictum laid down in Anil Hada’ s case

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¶116

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

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cited supra relied on by the first respondent complainant and held in

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paragraphs 37 and 43 as follows:

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“37. We have already opined that the decision in Sheoratan Agarwal (supra) runs counter to the ratio laid down in the case of C.V.Parekh (supra) which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada (supra) has to be treated as not laying down the correct law as far as it states that the director or any other officer can be prosecuted without impleadment of the company. Needless to emphasize, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.

¶120

xxxxx xxxxx xxxxx

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43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under S.141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. .........................”

¶122

(underline supplied)

¶123

So on the basis of the decision of the Apex Court in Aneeta Hada ’s case cited supra, for maintaining a prosecution under Section 138 of the NI Act, a company must be arraigned as an accused in the complaint. Further, the contention of the learned counsel for the 1st respondent complainant based on the judgment in Anil Hada’ s case cited supra cannot be accepted since the said judgment has been overruled in Aneeta Hada ’s case cited supra.

¶124

Admittedly, the Apex Court in Aneeta Hada ’s case cited supra was considering the question as to whether a complaint is maintainable without the company being arraigned as an accused. The applicability of the above-said judgment of the Apex Court in the case of a partnership firm

¶125

¶126

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

¶127

was considered by this Court specifically taking into consideration the fact that the company is a juristic person, whereas a partnership firm is not a legal entity like a company. This Court in Babu v. State of Kerala, 2017

¶128

(4) KLT SN.33 (C.No.34) held in paragraph 12 as follows:

¶129

“12. Even though partnership firm is not a legal entity, a legal fiction had been created under Section 141 of the Act bringing the firm or association of individuals within the term "company" in Section 141 of the Act. The Explanation (b) would make it more clear that the Director in relation to a firm means a partner in the firm. It is thus very much evident that a fiction had been created whereby if the person committing the offence is a firm, the firm as well as the categories of persons in charge and responsible for the conduct of the business of the firm shall be deemed to be guilty of the offence under Section 138 of the Act. It is only because of the deeming provision that the vicarious liability is fixed on the company as well as the persons in charge and responsible for the conduct of the company. In view of the legal fiction brought in under Section 141 of the Act, it has to be held that if a firm commits the offence under Section 138 of the Act, the firm as well as the persons referred to in Section 141 shall be deemed to be guilty of the offence. Therefore, for maintaining the prosecution under Section 141 of the Act, the arraigning of the firm as an accused is imperative.”

¶130

(underline supplied)

¶131

This Court has again considered the said issue in Moideen Kutty v.

¶132

Abdul Rasheed, 2023 KLT OnLine 1693 and after referring to the judgment of the Apex Court in Aneeta Hada ’s case cited supra as well as the judgment of this Court in Babu’ s case cited supra held in paragraph 16 as follows:

¶133

¶134

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

¶135

“16. On evaluation of the legal position, the present complaint filed by the complainant against the accused/revision petitioner without arraying the firm as an accused would not sustain. Since the cheque was one belonged to the firm, the complainant should have arrayed the firm as an accused and the directors, if any, by disclosing their complicity in detail so as to warrant conviction and sentence provided under Section 138 of the N.I. Act.”

¶136

It is pertinent to note that the Apex Court has recently considered the issue as to whether a partner can be convicted and could be held vicariously liable when the partnership firm is not arraigned as an accused in Dilip Hariramani v. Bank of Baroda, 2022 SCC OnLine SC 579 , and the Apex Court has held as follows:

¶137

“ 2. The issues raised in this appeal by the appellant, Dilip Hariramani, challenging his conviction under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, are covered by the decisions of this Court on the aspects of (i) vicarious criminal liability of a partner; and (ii) whether a partner can be convicted and held to be vicariously liable when the partnership firm is not an accused tried for the primary/substantive offence.

¶138

xxxx xxxx xxxx “16. The provisions of Section 141 impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable. Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. However, such vicarious liability arises only when the company or firm commits the offence as the primary offender. This view has been subsequently followed in Sharad Kumar Sanghi v. Sangita Rane (2015) 12 SCC 781, Himanshu v. B.Shivamurth (2019) 3 SCC 797, and Hindustan Unilever Limited v. State of Madhya Pradesh (2020) 10 SCC 751. The exception carved out in Aneeta Hada

¶139

¶140

Crl.R.P. Nos.36, 37, 38 and 39 of 2007

¶141

(supra)(2012) 5 SCC 661, which applies when there is a legal bar for prosecuting a company or a firm, is not felicitous for the present case. No such plea or assertion is made by the respondent.”

¶142

In the present case, the averment in the complaint and the evidence adduced would clearly show that the transaction was made for the partnership firm and that the firm is not arraigned as an accused in the complaint. In view of the above factual situation and based on the declaration of law as stated above, it is without any doubt that a prosecution under Section 141 of the NI Act cannot be maintained without arraigning the partnership firm as an accused in the complaint. In the said circumstance, the conviction and sentence passed against the revision petitioner cannot be sustained.

¶143

In the result, all these revision petitions stand allowed, setting aside the conviction and sentence passed by the courts below under Section 138 of the NI Act and the revision petitioner stands acquitted and is set at liberty forthwith. The bail bond of the revision petitioner shall stand discharged.

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Sd/-

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VIJU ABRAHAM JUDGE

¶146

cks

Balakrishna Prabhu v. Mrs.v.Indira & Another

Case brief

What is this about?

What did the court decide?

Balakrishna Prabhu v. Mrs.v.Indira & Another

Case brief

What is this about?

What did the court decide?

What the court decided

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