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NON REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1001 OF 2010

JITENDRA VORA                                       …APPELLANT

VERSUS

BHAVANA Y. SHAH & ANR.                        …RESPONDENTS

JUDGMENT  

Pinaki Chandra Ghose, J  .

1. This appeal is directed against the judgment and order

dated 1st April, 2009 passed by the High Court of Judicature

at Bombay in Criminal Application No.940 of 2008 whereby

the  High  Court  has  rejected  the  prayer  for  leave  to  appeal

against the judgment of the Trial Court.

2. The brief facts of this case are as follows: The appellant

supplied    goods   to     M/s.  Shah Agencies. The 1st and 2nd

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respondents carried their business in the names of M/s. Shah

Enterprises and M/s. Shah Agencies. In part discharge of the

liability of M/s. Shah Agencies, two cheques for Rs. 5 lakhs

each, both dated 20th August, 2000, drawn on the Vysya Bank

Ltd., S.P. Road, Secunderabad, signed by Respondent No.2 as

Power of Attorney Holder of Respondent No.1, were issued on

an account maintained by M/s. Shah Enterprises.  

3. On presentation, both the cheques were dishonoured due

to  insufficient  balance  in  the  account  of  M/s.  Shah

Enterprises.  A  demand  notice  dated  8th March,  2001  was

served upon respondent Nos.1 & 2 which was duly received by

them  on  13th March,  2001.  The  respondents  failed  and

neglected to comply with the said notice of demand. Hence, a

complaint was lodged before the Metropolitan Magistrate, 28th

Court, Esplanade, Mumbai. The said complaint was numbered

as CC No.505/S/01 dated 17th April, 2001. The said complaint

was  lodged  against  the  accused  respondents  describing

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accused No.1 as the Proprietor of M/s. Shah Enterprises and

accused No.2  as  Power of Attorney Holder of the said M/s.

Shah Enterprises.  The Trial Court acquitted the respondents

on the ground that  the appellant did not  institute  the case

against the partnership firm i.e. M/s. Shah Enterprises.  

4. Being  aggrieved  by  the  said  order  passed  by  the

Metropolitan Magistrate, the appellant filed an application for

leave to appeal  under  sub-section (4)  of  Section 378 of  the

Code of  Criminal  Procedure,  1973, before the Bombay High

Court.  The High Court by its order dated April 1, 2009  held

that the applicant has not made out a case for grant of leave to

appeal  under  Section  378(4)  Cr.P.C.  and  rejected  the  said

application for leave to appeal. The High Court held that the

case made out in the complaint was that the goods were sold

and supplied to M/s. Shah Enterprises and the liability was of

M/s.  Shah  Enterprises.  While  in  the  affidavit  in  lieu  of

examination-in-chief,  the  appellant  herein  came  out  with  a

case that the liability was that of M/s. Shah Agencies as goods

were sold and supplied to M/s. Shah Agencies and it was not

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the case of the appellant that the accused had agreed to take

over and discharge the liabilities of M/s. Shah Agencies.  

5. The question which arose before us is whether the High

Court was correct in coming to such a conclusion. The High

Court  duly  perused  the  complaint,  affidavit  in  lieu  of

examination-in-chief  of  the  applicant,  his  cross-examination

and  other  material  documents  on  record.  From  these

documents  it  appears  that  notice  of  demand  had  been

addressed  to  the  first  respondent  in  her  capacity  as  a

Proprietor  of  M/s.  Shah  Enterprises,  and  to  the  second

respondent in his capacity as the Power of Attorney Holder of

M/s. Shah Enterprises.  In the notice itself it has been stated

that the goods were sold and supplied to the Proprietor of M/s.

Shah Agencies. In the notice it has been further stated that

the  appellant  is  engaged in  business  of  manufacturing  and

selling of  synthetic  Polymers/Resins and in response to the

orders from the 2nd respondent as Proprietor of Shah Agencies,

the applicant has supplied goods from time to time and the

disputed cheques were issued in discharge of the liabilities of

such supply.  The notice was addressed to the Proprietor and

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the constituted Attorney of M/s. Shah Enterprises, but there

is no specific averment that the liability of M/s. Shah Agencies

was taken over by M/s. Shah Enterprises.  In the complaint,

the first respondent was impleaded as Proprietor of M/s. Shah

Enterprises and the second respondent was impleaded as a

Power of Attorney Holder of M/s. Shah Enterprises.    6. After perusing the notice and the averments made in the

complaint and the examination-in-chief, the High Court found

that  the  case  made  out  by  the  appellant/applicant  in  the

aforesaid affidavit is that accused No.1 was one of the partners

of M/s. Shah Enterprises. It is not asserted that accused No.2

is  the  partner  of  the  said  firm  but  what  is  stated  is  that

accused No.2 is the husband of accused No.1 and Power of

Attorney Holder of M/s. Shah Enterprises. After perusing the

aforesaid  facts,  the  High  Court  came  to  the  conclusion  as

follows:  

“It is not the specific case of the applicant made out in  the  complaint  that  the  first  accused  in  his capacity of proprietor of Shah Enterprises and the second accused in his capacity of  power of attorney of  Shah Enterprises  had agreed to  take  over  and discharge  the  liability  of  M/s.  Shah  Agency. Reliance is placed by the applicant on the letter at

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Exh.P-5. Apart from the fact that the said letter is no  evidence  to  show  that  the  liability  of  Shah Agency  was  taken  over  by  Shah  Enterprises,   as stated earlier, the said case was never made out by the applicant in the complaint. The said case made out in the complaint is that the liability is of M/s. Shah Enterprises and not of M/s. Shah Agencies. The letter dated  7th December 2000 at Exh. P-5 is not  signed by accused No.1 who according to the applicant  is  the  proprietor  or  partner  of  Shah Enterprises.  The  letter  has  been sent  by  accused No.2 in his capacity as constituted attorney of Shah Agencies. Therefore, the letter cannot be termed as a  document  under  which  the  liability  of  Shah Agencies was specifically agreed to be taken over by the Shah Enterprises or by the accused Nos.1 and 2.”      

In these circumstances, the High Court held that no case is

made out for grant of leave and rejected the application.  

7. Learned  counsel  appearing  on  behalf  of  the  appellant

contended before us that both the Courts below have failed to

appreciate that the complaint was essentially filed against the

accused in their personal capacities since at the time of filing

of  the  complaint,  the  appellant  believed  that  M/s.  Shah

Enterprises was a proprietary concern of respondent No.1. He

further contended that respondent No.2 was a signatory of the

cheques  and  he  was  incharge  of  the  affairs  of  M/s.  Shah

Enterprises. According to the learned counsel, both the Courts

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adopted highly technical view of the matter. It is not in dispute

that  the  cheques  were  drawn from the  account  maintained

with  M/s.  Shah  Enterprises.   When  this  Court  asked  the

learned counsel for the appellant whether there is any liability

of M/s. Shah Agency, then it was submitted that the cheques

were  drawn by  M/s.  Shah  Enterprises  but  the  liability,  as

would be evident from the examination-in-chief, is that of M/s.

Shah Agency. Learned counsel further 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

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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

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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-

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“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

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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.

Therefore,  the  present  appeal  is  devoid  of  any  merit.

Accordingly, this appeal is dismissed.

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…..……………………….J (Pinkai Chandra Ghose)

…..……………………..J  (R.K. Agrawal)

New Delhi; September 16, 2015