Dismissed

N. v. Bharathi v The State of Telangana

Telangana HC13 Mar 2023CRLP/8/2020

Case brief

AI extract

What is this about?

Petitioner challenged criminal proceedings for cheque bounce under Section 138 NI Act, arguing that prosecution against an individual proprietor without joining the firm was invalid. The court held that in proprietorship, the individual is solely responsible, so joining the firm is unnecessary.

What did the court decide?

Criminal petition under Section 482 CrPC and I.A. for stay of proceedings in C.C. No. 5/2019 dismissed.

N. v. Bharathi Vs The State of Telangana — Cheque Dishonour | Telangana HC (2023)

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HIGH COURT FOR TI{E STATE OFTELANGANA

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MONDAY,THE THIRTEENTH DAYOF MARCH TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE K.SURENDER

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CRIMINAL PETIIION NO: 8 OF 2020

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Between:

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N. V. Bharathi, W/o. N.V. Rambabu, Aged 46 years, business, R/o.D.No.41-1-35 Rangaiah Naidu Street, Kakinada-533 007.

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And

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!/O.^{D No 16-23-35/10A,Aditya Marine,RoadNo. 1, AyodhyaNagar,} Kakinada - 533 003.

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... PETTTIONETVACCUS ED

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AND

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1 ]he State of Telangana,-Through public prosecutor, High Court for the State of Telangana, Hyderabad.

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Shoba Rani NH, W/9. Hari Babu, Aged about 56 years, Occ. Business, R/ o.1-L486 to 507, Flat No.602, Rakish Residency, Baiaram, Gandhi Nagar, Hyderabad-80.

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... RESPONDENryCOMPLAINANTS

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Petition under Section 482 of Cr.p.C praying that in the circumstances stated in the Memorandum of Grounds of Ciiminal petition, the High_ Court may be pleased to call for the records relating to and connecred wirh c.c.No.5/2019 on the file of the X special Mlgisrrate, Erramanzil, Hyderabad.

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I.A. NO: lOF2Om

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition,the High Court may be pleased to grant stay of all further proceedings in C.C.No.5/2019 on the file of the X Splcial Magistrate, Erramanzil, Hyderabad.

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This Petition coming on for hearing, upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the ar.guments of Sri V V Anil Kumar, Advocate for the Petitioner and the Public Prosecutor (TG/AP) on behalf of the Respondent No.1 and none appeared for the Respondent No.2.

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The Court made the following: ORDER

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HON'BLE SRI JUSTICE K.SUR.ENDER CRIMINAL PETITION IIo.O8 OF 2O2O

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ORDER:

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This Criminal Petition is filed to quash the proceedings against the petitioner/Accused in C.C.No.S of 2Ol9 on the hle of X Special Magistrate, Etarnanzil, Hyderabad for the offences under Sections 138 and 142 of the Negotiable Instruments Act, 1861 (for short, the Act).

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The petitioner is being prosecuted by the 2nd, respondent/complainant for the offence under Section 13g of the Act. The case of the complainant is that the petitioner herein approached her for frnanciar assistance and an amount of Rs. 15.0O lakhs hand loan was advanced. The said loan was acknowledged and the petitioner agreed to pay 1g%o interest per annum. A cheque No. I 18414 dated 07.05.201g was issued for Rs.10.O0 lakhs in the name of Shobha Rani N.H72"a respondent/complainant. On presentation, the same was returned unpaid, for which reason, notice was issued. Having received notice, since the petitioners failed to make the payment covered by the cheque, present complaint was hled.

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Learned counsel appearing for the petitioner would submit that the cheque was issued by the firm proprietary concern namely Aditya Marine. Since the petitioner is partner of the firm, the prosecution without making the f-rrm as an accused, cannot be maintained. Learned counser reried on the judgment of High Court of Madras in Criminal O.p.No. l3L4T of 2015, dated 23.07.2019 in the case of Rangabashyam and another v. Ramesh. In the said judgment, the Madras High Court held that under Section 141 of the Act, the partners or the Directors or the persons in charge of the company would be made vicariously liabre and it has to be shown that they are responsible for the day to day aftairs of the business. Unless the company or the partnership firm is made as an accused, the prosecution cannot be maintained against the other persons. The above said proposition is not in dispute. In the event of a company or a partnership firm issues a cheque, the signatory of the cheque and the persons responsible for the conduct of day to day aftairs of the hrm/company would be vicariously liable under Section I4l of the Act. The provision makes the company or firm iiable aqQ.the persons responsible

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I \

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vicariously liable. In the absence of company/hrm being made as an accused, the question of prosecuting tlre persons incharge of such company/hrm does not arise.

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The cheque in question was issued by the proprietor of Aditya Marine and signed A1/N.V.Bharathi asa Proprietor/ authorized signatory.

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In the case of proprietary concern, an individual or a person would be the proprietor and the proprietary concerrl would be identihed on the basis of the proprietor. There would be no other persons in a proprietar5r concern to be made vicariously liable under Section 141 of the Act.

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Since the firm or the proprietor are seen as one entier, even in the absence of a proprietary concern being made as an accused in a prosecution under Section 138 of the Act, it has no bearing on the prosecution of the proprietor.

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( (

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The Honble Supreme Court in the case of Raghu Lakshminarayanan v. Fine Tubesl while dealing with a

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112OOz1 5 Supreme Court Cases 103

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similar situation held that the proprietary concern stands absolutely on a different footing. A person carr5ring on business in the name of the business concern being a proprietor would be solely responsible for the conduct of its affairs. A proprietarSr concern cannot be company or a partnership frrm, as such, the question of proceeding against the proprietor within the meaning of Section 141 of the Act does not arise.

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For the aforementioned reasons, not making the proprietary concern as a part5r is ofno consequence.

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In the result, there are no merits in the petition and the same is accordingly dismissed. Consequently, miscellaneous applications, if any, shall stand closed.

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To,

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SE- MOHD. SANAULLAH ANSARI ASSISTANT REGISTRAR /[RUE^coPy//

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SECTION OFFTCER

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