Case: Jitendra Vora Vs. Bhavana Y. Shah &amp; Another

submitted that Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the NI Act’) has no application because the partnership firm was not arrayed as an accused. He further submitted that respondent No.2 is liable being a signatory of both the cheques and he was incharge of M/s. Shah Enterprises. 8. On the contrary, it is submitted by the learned counsel appearing on behalf of the respondents that both the Trial Court as well as the High Court rightly came to the conclusion that the complaint was not maintainable against the partnership firm since cheques were issued on behalf of the first respondent. Furthermore M/s. Shah Enterprises was never given any statutory notice nor it was arrayed as an accused before the Metropolitan Magistrate. He further submitted that a three Judge Bench of this Court in the case of Aneetha Hada vs. Godfather Travel and Tours Pvt. Ltd., (2012) 5 SCC 661 , held that for maintaining the prosecution under the NI Act, the company should be made a party irrespective of the fact that its Director has been arrayed as an accused. Learned counsel for the respondents further submitted that this appeal should be dismissed since the material facts have been suppressed from the Court. The appellant ceased to be the Proprietor of M/s. Satyen Polymer as per the deed of assignment cum conveyance dated 3.4.2008. The said fact was deliberately suppressed from the High Court as well as from the Trial Court. The appellant did not make M/s. Shah Enterprises as a party on whose account the cheque was drawn. Furthermore, M/s. Shah Enterprises had no outstanding liabilities. The complainant himself admitted in his cross-examination that nothing was sold to Shah Enterprises and at no point of time Shah Agencies has been prosecuted. The appellant further admits that he has no account with Shah Enterprises and he has running account with Shah Agencies. He also admitted that the transactions and dealings with Shah Agencies are reflected in the books of accounts. He further admitted that Shah Enterprises is not liable to pay any amount M/s. Satyen Polymers, and there were no transactions with Shah Enterprises. Learned counsel for the respondents submitted that in these circumstances, this appeal should be dismissed. 9. We have heard the learned counsel appearing for the parties and we have perused the evidence placed before us. From a bare reading of Section 138 of the NI Act, the first and foremost essential ingredient for attracting a liability under this Section is that the person who is to be made liable should be the drawer of the cheque and should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge, in whole or part, of any debt or other liability. In this context, this Court in the case of Krishna Texport and Capital Markets Ltd. v. Ila A. Agrawal & Ors, (AIR 2015 SC 2091 ), has held as under - “The notice under Section 138 is required to be given to the ‘drawer’ of the cheque so as to give the drawer an opportunity to make the payment and escape the penal consequences. No other person is contemplated by Section 138 as being entitled to be issued such notice. The plain language of Section 138 is very clear and leaves no room for any doubt or ambiguity. There is nothing in Section 138 which may even remotely suggest the issuance of notice to anyone other than the drawer.” 10. The learned counsel for the respondents has relied upon the case of Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 , wherein this Court held – “Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. But there are offences which could be attributed to juristic person also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under Section 138 of the Act. Now there is no scope for doubt regarding that aspect in view of the clear language employed in Section 141 of the Act. In the expanded ambit of the word ‘company’ even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company.”(Emphasis supplied) “Thus when the drawer of the cheque who falls within the ambit of Section 138 of the Act is a human being or a body corporate or even firm, prosecution proceedings can be initiated against such drawer. In this context the phrase ‘as well as’ used in Sub-section (1) of Section 141 of the Act has some importance. The said phrase would embroil the persons mentioned in the first category within the tentacles of the offence on a par with the offending company. Similarly the words ‘shall also’ in Sub-section (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the other two categories of persons can also become liable for the offence.” 11. In our opinion, the High Court has correctly come to the conclusion that the liabilities of M/s. Shah Agencies were never taken over by M/s. Shah Enterprises. Therefore, the reasoning given by the High Court, in our opinion, is absolutely flawless and we find no ground to interfere with the concurrent findings of the Trial Court and the High Court.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]From a bare reading of Section 138 of the NI Act, the first and foremost essential ingredient for attracting a liability under this Section is that the person who is to be made liable should be the drawer of the cheque and should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge, in whole or part, of any debt or other liability.In our opinion, the High Court has correctly come to the conclusion that the liabilities of M/s. Shah Agencies were never taken over by M/s. Shah Enterprises. Therefore, the reasoning given by the High Court, in our opinion, is absolutely flawless and we find no ground to interfere with the concurrent findings of the Trial Court and the High Court.