Dishonour of Cheque

07. COMPANY/PARTNERSHIP FIRM

Sections 138, 139 - Partnership firm - Dissolution - One partner issued cheque to the other towards his liability - Presumption is that cheque was for the discharge, in whole or in part, of any debt or other liability. (Abdul Hameed Vs State of Rajasthan) 2004(2) CIVIL COURT CASES 321 (Raj.) : 2004(2) CRIMINAL COURT CASES 194 (Rajasthan)

Section 138, Companies Act, 1956, Section 536(2) - Company - Dishonour of cheque - Company cannot avert its liability on mere ground that winding up petition was presented prior to company being called upon to pay amount of cheque. (Pankaj Mehra Vs State of Maharashtra) 2000(1) CIVIL COURT CASES 591 (S.C.) : 2000(1) APEX COURT JOURNAL 323 (S.C.) : 2000 ISJ (BANKING) 0256 : 2000 (1) ALL INDIA CRIMINAL LR (S.C.) 0819

Section 138, Criminal Procedure Code, 1973, Section 438, Indian Penal Code, 1860, Sections 420, 467, 471 - Company - Managing Director of the Company convicted under Section 138 of Negotiable Instruments Act - A case under Section 420, 471, 467 IPC also registered against the Managing Director and two Directors of the accused company on the ground that they forged a receipt of Rs.40 lacs in token of having made the payment to Complainant - As two Directors are women and not convicted u/s 138 of Negotiable Instruments Act as such equity demands that anticipatory bail should be allowed to them - Anticipatory bail also allowed to Managing Director till decision of appeal filed by him against conviction u/s 138 of the Act. (Pawan Sachdeva Vs State (U.T., Chandigarh) 2000(1) CIVIL COURT CASES 104 (P&H) : 1999 (4) ALL INDIA CRIMINAL LR (P&H) 0077

Section 138, Partnership Act, 1932, Section 69(2) - Dishonour of cheque - Complaint by partnership firm - Section 69 Partnership Act is not applicable to proceedings u/s 138 Negotiable Instruments Act. (Gurcharan Singh Vs State of U.P.) 2002(3) CIVIL COURT CASES 187 (All.) : 2003 (1) ISJ (BANKING) 0070

Section 138 - Company - By a person who is incharge or responsible to the Company - Whether authorisation must be on the date or a subsequent authorisation can validate the complaint? - Held, even if initially there is no authority, still the Company can, at any stage, rectify that defect - At a subsequent stage the Company can send a person who is competent to represent the Company. (M/s M.M.T.C.Ltd. Vs M/s Medchl Chemicals & Pharma P.Ltd.) 2002(1) CIVIL COURT CASES 13 (S.C.) = 2001(2) APEX COURT JOURNAL 636 (S.C.) : 2002 (1) ISJ (BANKING) 0237

Section 138 - Company - No Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. (M/s M.M.T.C.Ltd. Vs M/s Medchl Chemicals & Pharma P.Ltd.) 2002(1) CIVIL COURT CASES 13 (S.C.) : 2001(2) APEX COURT JOURNAL 636 (S.C.) : 2002 (1) ISJ (BANKING) 0237

Section 138 - Dishonour of cheque - Partnership firm - Complaint filed by one of the partners - Death of partner - Proceedings would not abate - Some other partner be brought on record to pursue the complaint. (Dior International (P) Ltd. Vs M/s Raghuvansh Enterprises) 2000(1) CIVIL COURT CASES 80 (Delhi) : 2000 (1) ALL INDIA CRIMINAL LR (DELHI) 0071

Section 138 - Document sought to be produced by recalling a witness - Authority to file complaint by a resolution of Board of Directors - However, alongwith complaint another document filed - Relevant document mentioned in the list of documents filed alongwith complaint - Refusal of lower Court to recall witness for marking the correct document, not proper - The principle that prosecution cannot be permitted at a later stage during the trial to fill up the gaps in the prosecution case does not apply to a case where an honest mistake made at an earlier stage is sought to be corrected - Court is not to punish the parties for the mistake committed by them or their counsel - Witness to be recalled for producing the document - Petition allowed. (M/s Recon Agrotech Limited Vs M/s Vijaya Sales Corporation) 2000(3) CIVIL COURT CASES 427 (A.P.)

Section 138 - Employee of company issued cheque in his individual capacity to discharge liability of company - Held, employee of company is drawer of cheque in his individual capacity - Proceedings against company quashed. (Kitex Garments Limited Vs Ajay Koushik Prop.Karan Traders) 2002(1) CIVIL COURT CASES 51 (Madras)

Section 138 - Company - General authorisation by Board of Company to its M.D. to file law suits with further power to delegate its power - Complaint filed by AGM on delegation of power by M.D. - No illegality - Resolution of Board of Directors is not required in each case. (Thapar Agro Mills Vs Haryana State Ind. Dev. Corp. Ltd.) 2004(3) CRIMINAL COURT CASES 478 (P&H)

Section 138 - Firm - Managing partner of the firm and the person who represents the association can be prosecuted along with the firm or association - All the partners and members of the association need not be arraigned as accused persons. (Nucor Wires Ltd. Vs HMT International) 1998(1) CIVIL COURT CASES 689 (Kant.) : 1998 ISJ (BANKING) 0202 : 1998 (2) CIVIL LJ 0361 : 1998 (2) BANKING CASES 0411 : 1998 (1) ALT (CRL.) 0340 : 1997 ILR KARNATKA 3239 : 1998 (1) CCR 0502 : 1998 (2) KARLJ 0337

Section 138 - Proprietorship firm - Cheque issued by proprietor - Firm need not to be impleaded as a party - Proceedings can be launched against the person who had drawn the cheque whether it is in his capacity as the proprietor of the firm or in personal capacity. (Babu Vs Suresh) 2004(3) CIVIL COURT CASES 259 (Kerala) : 2004(3) CRIMINAL COURT CASES 614 (Kerala)

Section 138 & Criminal Procedure Code, 1973, Section 200 - Complaint - Company - No Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the Company till the end of the proceedings. (Associated Cement Co.Ltd. Vs Keshavanand) 1998(1) CIVIL COURT CASES 482 (S.C.) : 1999 ISJ (BANKING) 0171

Section 141 - Company - When company commits offence then not only the Company but also every person who at the time when the offence was committed, was in charge of and was responsible to the Company for the conduct of the business of the Company shall be deemed to be guilty of the offence and liable to be proceeded against and punished accordingly. (K.P.G.Nair Vs M/s Jindal Menthol India Ltd.) 2001(1) APEX COURT JOURNAL 313 (S.C.)

Section 142 & Sick Industrial Companies (Special Provisions) Act, 1985, Section 22 - Sick company - Dishonour of cheque - If commission of the offence under Section 138 of the NI Act was completed before the commencement of proceedings under Section 22(1) of SICA there is no hurdle in any of the provisions of SICA against the maintainability and prosecution of a criminal complaint duly instituted under Section 142 of the NI Act. (M/s BSI Ltd. Vs Gift Holdings Pvt. Ltd.) 2000(1) APEX COURT JOURNAL 409(S.C.)

Sections 138, 141 - "Person incharge" - Meaning - "person incharge" must mean that the person should be in over all control of the day to day business of the company or firm - The person should be a party to the policy being followed by a company and yet not be in- charge of the business of the company or may be incharge of but not in overall charge or may be in charge of only some part of business. (Smt.Katta Sujatha Vs Fertilizers and Chem. Travancore Ltd.) 2003(1) CRIMINAL COURT CASES 161 (S.C.)

Sections 138, 141, Companies Act, 1956, Section 446 - Special provisions contained in the Negotiable Instruments Act prevail over the provisions of Companies Act, 1956. (Anil Hada Vs Indian Acrylics Ltd.) 1998(3) CIVIL COURT CASES 681 (P&H) : 1999 ISJ (BANKING) 0097 : 2000 (1) ALL INDIA CRIMINAL LR (S.C.) 0229

Sections 138, 141, Companies Act, 1956, Section 446, 391 - Company - Prosecution against the Company and its two Directors who signed the cheque - Company going into liquidation - Company discharged - Directors who signed the cheque cannot escape the criminal liability - Protection of Section 446 of Companies Act is available to the Company but not to its Directors. (Anil Hada Vs Indian Acrylics Ltd.) 1998(3) CIVIL COURT CASES 681 (P&H) : 1999 ISJ (BANKING) 0097 : 2000 (1) ALL INDIA CRIMINAL LR (S.C.) 0229

Sections 138, 141 - Company - If not prosecuted - Directors can still be prosecuted - Payee can succeed only if he succeeds in showing that the offence was actually committed by the Company - In such a prosecution accused can show that the Company has not committed that offence, though such company is not made an accused - A finding that the offence was committed by the Company is sine qua non for convicting those other persons - If Company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act. (Anil Hada Vs Indian Acrylic Ltd.) 2000(1) APEX COURT JOURNAL 01 (S.C.)

Sections 138, 141 - Company - If not prosecuted - Persons falling within the purview of sub- sections (1) and (2) of Section 141 of the Act can still be prosecuted. (Anil Hada Vs Indian Acrylic Ltd.) 2000(1) APEX COURT JOURNAL 01 (S.C.)

Sections 138, 141 - Company - Person who is incharge and responsible to the Company for conduct of its business is also liable - Substance of the allegations read as a whole, should answer and fulfil the requirements of the ingredients of Section 141 of the Act - Allegations made in the complaint when do not fulfil the requirements of the provision then proceedings are liable to be quashed against that person. (K.P.G.Nair Vs M/s Jindal Menthol India Ltd.) 2001(1) APEX COURT JOURNAL 313 (S.C.)

Sections 138, 141 - Firm - Appellant in no way involved in any of the transactions referred to in the complaint and it was not stated that she was in charge of the business and was responsible for the conduct of the business of the firm - Proceedings qua petitioner quashed. (Smt.Katta Sujatha Vs Fertilizers and Chem. Travancore Ltd.) 2003(1) CRIMINAL COURT CASES 161 (S.C.)

Section 138, 141 - Partnership firm - Complaint filed against partner only and firm not made an accused on whose behalf the cheque was issued - Not a ground to quash the proceedings. (R.Rajagopal Vs S.S.Venkat) 2000(2) APEX COURT JOURNAL 444 (S.C.)

Sections 138, 141 - Company - If not prosecuted - Persons falling within the purview of sub-sections (1) and (2) of Section 141 of the Act can still be prosecuted. (Anil Hada Vs Indian Acrylic Ltd.) 2000(1) APEX COURT JOURNAL 01 (S.C.)

Sections 138, 141 - Partnership - Partners - Absence of averments in complaint that partners are Incharge of and responsible to the firm for the conduct of the business of the firm - Order of Magistrate discharging the appellants restored. (Monaben Ketanbhai Shah & Anr. Vs State of Gujarat & Ors.) 2004(3) CIVIL COURT CASES 598 (S.C.) : 2004(2) APEX COURT JUDGMENTS 473 (S.C.) : 2004 AIR SCW 4716

Sections 139, 141 - Presumption - Company - Where Company is not made an accused but the office bearers of the company alone are made the accused such office bearers are well within their rights to adduce rebuttal evidence to establish that the company did not issue the cheque towards any antecedent liability. (Anil Hada Vs Indian Acrylic Ltd.) 2000(1) APEX COURT JOURNAL 01 (S.C.)

Home Back