whether an unregistered partnership firm could maintain a complaint under Section 138 of the Negotiable Instruments Act.
A complaint under Section 138 Negotiable Instruments Act is to be filed against the drawer of the cheque. If the drawer of a cheque is a company or a firm, the signatory to the cheque would not be relevant and it would only be the company or the firm which would have to be arrayed 2023:APHC:140 RRR,J Crl.P.No.12454 of 2017 & batch 19 as an accused. However, in the case of a company / firm, the director or a partner who is in the management of the company and / or who are aware of the transaction, issuance of the cheque and subsequent dishonour of the cheque on account of insufficiency of funds, can also be arrayed as an accused in view of the provisions of Section 138 read with Section 142 of Negotiable Instruments Act. In this process, the noninclusion of the person, who signed the cheque on behalf of the company or firm would not, in any manner, result in the complaint being dismissed. In any event, the question of who signed the cheque is a matter of fact, which has to be determined in the trial.
IN THE HIGH COURT OF ANDHRA PRADESH
***
Crl.P.Nos.12454, 12543, 12545, 12612 & 12626 of 2017
And
Crl.P.Nos.508, 515, 763, 818 & 967 of 2018
Crl.P.No.12454/2017
BETWEEN:
# 1. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Date of Judgment pronounced on : 04.01.2023
HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
1. Whether Reporters of Local newspapers : Yes/No
May be allowed to see the judgments?
2. Whether the copies of judgment may be marked : Yes/No
to Law Reporters/Journals:
3. Whether The Lordship wishes to see the fair copy : Yes/No
Of the Judgment?
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
2
*IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
*HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
Crl.P.Nos.12454, 12543, 12545, 12612 & 12626 of 2017
And
Crl.P.Nos.508, 515, 763, 818 & 967 of 2018
% Dated:04.01.2023
Crl.P.No.12454/2017
BETWEEN:
# 1. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Crl.P.No.12543/2017
BETWEEN:
# 1. M/s. Kaula Agro Foods Private Limited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
3
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. V.V.V. Spices India Private Limited, rep. by its Authorised
Signatory Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office
at Door No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet,
Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Crl.P.No.12545/2017
BETWEEN:
# 1. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Crl.P.No.12612/2017
BETWEEN:
# 1. M/s. Kaula Agro Foods Private Limited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
4
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. V.V.V. Spices India Private Limited, rep. by its Authorised
Signatory Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office
at Door No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet,
Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Crl.P.No.12626/2017
BETWEEN:
# 1. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
2. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
3. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
... Respondents
Crl.P.No.508/2018
BETWEEN:
# Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
….Petitioners (A.1 to A.3)
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
5
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. V.V.V. Spices India Private Limited, rep. by its Authorised
Signatory Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office
at Door No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet,
Guntur City.
3. M/s. Kaula Agro Foods Private Limited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
4. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
5. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
... Respondents
Crl.P.No.515/2018
BETWEEN:
# Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
4. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
5. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
... Respondents
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
6
Crl.P.No.763/2018
BETWEEN:
# Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
4. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
5. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
... Respondents
Crl.P.No.818/2018
BETWEEN:
# Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. M/s. Priyom Condiments Private Lilmited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
4. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
7
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
5. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
... Respondents
Crl.P.No.967/2018
BETWEEN:
# Hfsath Muhammad Sadique, Additional Director of M/s. Kaula Agro
Foods Pvt. Ltd., R/o. MPT House, Matool Central, Mattul Kannur –
670302, Kerala State.
….Petitioners (A.1 to A.3)
AND
$ 1. State of Andhra Pradesh rep. by Public Prosecutor, High Court of
Andhra Pradesh.
2. M/s. Venkata Ramana Traders, rep. by its written authority agent
Maddi Vinay Kumar, S/o. Maddi Kasi Viswanadh, reg. office at Door
No.12-27-104/A, 1st floor, Seelamvari Street, Kothapet, Guntur City.
3. M/s. Kaula Agro Foods Private Limited rep. by its Authorized
Signatory, Sameer Muhamed Abdul Rahman, Reg. Office at
VIII/141A, Edavankavu Temple Road, Kurichilakode, Kodanadu Post,
Perumbavoor, Kerala State – 683544.
4. Khaleelu Rahman Kunhammad Haji Challakkara, Managing Director of
M/s. Kaula Agro Foods Pvt., Ltd., R/o. Darunoon House, Mattul P.O.,
Kannur – 670302, Kerala State.
5. Sameer Muhamed Abdul Rahman, Additional Director and Whole time
Director of M/s. Kaula Agro Goods Private Limited, R/o. Shareef
Manzil, Mattambram Puthiyangadi Post, Madayi Kannur – 670304,
Kerala State.
... Respondents
! Counsel for Petitioners : Sri M. Chalapati Rao
^Counsel for Respondent No.2 : Smt. K. Sesha Rajyam Sr. Counsel
representing Smt. Hima Bindu
<GIST :
>HEAD NOTE:
? Cases referred:
1. (2007) 4 SCC 70
2. 2009 (2) ALD (Cri) 801
3. (2000) 2 SCC 745
4. 2018 (1) ALT 684
5. 2016 (2) ALT (CRI) 410
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
8
HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
Crl.P.Nos.12454, 12545, 12612 & 12626 of 2017
And
Crl.P.Nos.508, 515, 763, 818 & 967 of 2018
COMMON ORDER:
As these cases relate to a set of transactions between the same
parties, which raise common questions of fact and law, the same are
being disposed of by way of this common order.
2. The above 10 criminal petitions have arisen out of the
issuance of five cheques. The details of the criminal petitions are as
follows:
a) C.C.No.412 of 2017 had been filed against a cheque issued for a
sum of Rs.68,54,758.70 ps. Accused Nos.1 to 3 in the said case
have filed Crl.P.No.12612 of 2017 and accused No.4 has filed
Crl.P.No.967 of 2018.
b) C.C.No.30 of 2017 had been filed against a cheque issued for a
sum of Rs.25,00,000/-. Accused Nos.1 to 3 in the said case have
filed Crl.P.No.12454 of 2017 and accused No.4 has filed
Crl.P.No.515 of 2018.
c) C.C.No.31 of 2017 had been filed against a cheque issued for a
sum of Rs.25,00,000/-. Accused Nos.1 to 3 in the said case have
filed Crl.P.No.12545 of 2017 and accused No.4 has filed
Crl.P.No.818 of 2018.
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
9
d) C.C.No.133 of 2017 had been filed against a cheque issued for a
sum of Rs.26,50,044/-. Accused Nos.1 to 3 in the said case have
filed Crl.P.No.12626 of 2017 and accused No.4 has filed
Crl.P.No.763 of 2018.
e) C.C.No.29 of 2017 had been filed against a cheque issued for a
sum of Rs.1,44,764/-. Accused Nos.1 to 3 in the said case have
filed Crl.P.No.12543 of 2017 and accused No.4 has filed
Crl.P.No.508 of 2018.
3. The facts in all these cases, according to the complainant,
are more or less similar. The 2nd respondent/complainant is a firm, which
is carrying on business in dry chillies in Guntur city. The 1st accused, in the
case of four cheques, is a private limited company by name M/s. Kaula
Agro Goods Private Limited. The 1st accused in the case of the cheque
relating to Crl.P.No.12454 of 2017 and Crl.P.No.515 of 2018 is M/s. Priyom
Condiments Private Limited. The 2nd accused is the Managing Director of
the 1st accused-company. The 3rd accused is said to be an additional and
whole time Director of the 1st accused-company and the 4th accused is
said to be an Additional Director of the 1st accused-company. Accused
Nos.2 to 4 representing the 1st accused-company, are said to have
approached the complainant for supply of dry chillies on credit. In this
way, the complainant had supplied chillies to the 1st accused-company, on
credit, and cheque bearing No.122663 dated 31.10.2016 for a sum of
Rs.68,54,758.70 ps.; cheque bearing No.241505 dated 31.08.2016 for a
2023:APHC:140
RRR,J
Crl.P.No.12454 of 2017 & batch
10
sum of Rs.25,00,000/-; cheque bearing No.241506 dated 31.07.2016 for a
sum of Rs.25,00,000/-; cheque bearing No.241510 dated 30.098.2016 for
a sum of Rs.26,50,044/-; and cheque bearing No.122664 dated
31.07.2016 for a sum of Rs.1,44,764/-; were issued by the 1st accusedcompany to the complainant and the same were dishonoured upon
presentation. Notices were sent informing the accused of the dishonour of
the cheques and calling upon the accused to pay the same. Accused Nos.1
and 4 have received the notices. The accused Nos. 2 and 3 have managed
to get the said notices returned. However, the said notices would have to
be treated as served and the accused are liable for punishment. It is the
further case of the complainant that accused Nos.2 to 4 are in day-to-day
business of the 1st accused-company and the cheque that was issued in
the name of the 1st accused-company was issued with the consent of
accused Nos.2 to 4.
4. The grounds raised in each of these criminal petitions, by Sri
M. Chalapati Rao, learned counsel appearing for the petitioners, are as
follows:
Crl.P.No.12612 of 2017 and Crl.P.No.967 of 2018
a) The cheque issued by the accused was returned on the ground of
“connectivity failure” and not on the ground of insufficiency of
funds.
b) The cheque was issued to M/s. Sri Venkataramana Traders while
the name of the complainant is M/s. Venkataramana Traders.
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
11
c) While the cheque was dated 31.10.2016, the authorisation to file
the complaint, filed by the complainant, is dated 17.12.2016 and as
such the said authorisation is invalid and cannot be the basis for
filing the complaint.
d) The registered notice was sent on the instructions of Sri Maddi Kasi
Viswanath, who is the managing partner of the complainant.
Consequently, Sri Maddi Vinay Kumar cannot be authorised to file
the complaint.
e) The complainant, which is said to be a partnership firm, has not
produced any registration certificate and as such the complainant
would have to be treated as an unregistered firm, which is not
entitled to file the present complaint on account of the bar under
Section 69 of the Indian Partnership Act, 1932.
f) The allegation that the 3rd accused had signed the cheque is
incorrect as nothing has been placed to show that the 3rd accused
was authorised to sign the cheque.
g) The cheques were signed by an employee and not accused Nos.2
to 4, who are said to be the Directors of the 1st accused company.
h) The actual signatures of the 3rd accused is available at page 22 of
Crl.P.No.12612 of 2017 and a comparison of the signatures in this
page with the signature on the cheque would show to the naked
eye that the 3rd accused had not signed the cheque. Further, this
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
12
fact has not been denied by the complainant in the vacate petition
filed by the complainant in the present case.
i) One Mr. Noushad K., Manager, who had actually signed the
cheque, is not a party to the complaint and as such the complaint
would have to fail.
j) Para-1 of the complaint states that the complainant is a limited
company while para-3 of the very same complaint shows that the
complainant is a firm. This clear contradiction, in the description of
the complainant, casts any amount of doubt as to the legal status
of the complainant and the maintainability of the complaint filed by
such an entity.
k) The 4th accused, who is a lady, had resigned as Director of the 1st
accused-company on 28.03.2016 itself and cannot be made liable
for any offence said to have been committed by the 1st accusedcompany.
l) The 4th accused has been wrongly described as a man and the
complainant has not denied this fact in the vacate petition filed by
the complainant. The manner in which the 4th accused had been
described as a man would go to show that the petitioner is making
blind allegations without knowing the facts and with a view to
simply rope in all accused Nos.2 to 4 into the case.
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
13
m) The allegations in paragraph-2 of the complaint relating to accused
Nos.2 to 4 are not sufficient to fasten any liability on accused Nos.2
to 4 or the Directors of the 1st accused-company.
Crl.P.Nos.12454 of 2017 and 515 of 2018; Crl.P.Nos.12543 of
2017 and 508 of 2018; Crl.P.Nos.12545 of 2017 and 818 of 2018;
and Crl.P.Nos.12626 of 2017 and 763 of 2018:-
5. Sri M. Chalapathi Rao, apart from reiterating the above
grounds, would raise additional grounds in these set of complaints. In
C.C.No. 29 of 2017, no certificate of registration has been filed. In the
other complaints, the certificate of registration filed by the complainant
shows that the firm had not been registered with the Registrar of Firms by
the time of the date of the cheque or the date of the legal notice. This
gives rise to two disqualifications. The complainant, as an unregistered
firm, at the relevant time, cannot file a complaint. Further, as the
complainant was not a registered firm, it would not be able to initiate any
litigation for recovery of its debts. This would mean that there was no
legally enforceable debt existing as on the date of presentation of the
cheque or the date on which the legal notice has been issued or on the
date on which the time granted for payment of the amounts in the
dishonoured cheques had expired. As only cheques issued for discharge of
legally enforceable debts can be the basis for a complaint under Section
138 of the Negotiable Instruments Act, the present complaint would have
to fail.
2023:APHC:140
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Crl.P.No.12454 of 2017 & batch
14
6. The complaint does not make any specific averment against
the directors of A.1-company, who are arrayed as accused in the
complaint. In the absence of specific allegations that the directors are in
day to day management of the company with specific allegations relating
to the role of each of the directors in the company, the directors of the
company cannot be arrayed as accused in the complaint. He relies upon
the judgment of the Hon’ble Supreme Court in S.M.S. Pharmaceuticals
Ltd., vs. Neeta Bhalla and Anr.,1 and the judgment of the Delhi High
Court in Sunita Palta and Ors., vs. M/s. KIT Marketing Pvt., Ltd., in
Crl.M.C.No.1410 of 2018 dated 03.03.2020.
7. Smt. K. Sesha Rajyam, learned Senior Counsel appearing for
Smt. Hima Bindu, learned counsel for the 2nd respondent-complainant,
would submit that the grounds raised by the petitioners would not, in any
manner, affect the complaints filed by the 2nd respondent-complainant.
She would submit that the allegations and the grounds raised by the
petitioners are only for the purpose of delaying the trial in these matters.
8. Smt. K. Sesha Rajyam, would further submit that the
description of the lady director as a male director is only a typographical
error and that can not mean that the complainant, without even knowing
about the role of the lady director, had roped in the lady director as an
accused.
1
(2007) 4 SCC 70
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9. Smt. K. Sesha Rajyam, learned Senior Counsel would draw
the attention of this Court to the specific averments in the complaint, that
petitioners 2 to 4 had approached the complainant for supply of cashew
nuts with the promise of clearing the cheques issued for payment of such
sale of cashew nuts and that the cheques, under consideration, were
issued with their consent. She would contend that such allegations are
sufficient to meet the objection raised by the petitioners, that specific
allegations have not been made against the directors of the company.
10. Smt. K. Sesha Rajyam, further submits that the return of the
cheque on the ground of “connectivity failure” is sufficient to maintain a
complaint under Section 138 of the Negotiable Instruments Act as the test
in such complaints is whether there were sufficient funds in the account to
clear the said cheque, and such a test can only be carried out in the
course of the trial of the complaint. Consequently, these criminal petitions
would have to be dismissed.
11. Smt. K. Sesha Rajyam, would submit that non-inclusion of
the Manager of the company, who according to the petitioners, had signed
the cheque, would not, in any manner, affect the maintainability of the
complaint. It is the drawer of the cheque, who would be the accused and
where a cheque is signed on behalf of a company, the said company
would be A.1 and the directors who are involved in the day to day affairs
of the company and who were aware of the issuance of the cheque and
dishonour of the cheque, would be liable to be arrayed as accused in the
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complaint. As such, non-inclusion of the alleged signatory of the cheque is
not fatal to the case.
12. Smt. K. Sesha Rajyam, learned Senior Counsel would also
rely upon the judgment of the Full Bench of the erstwhile High Court of
Andhra Pradesh in Dr. A.V. Ramanaiah vs. M. Shekhar2
to contend
that a criminal complaint is maintainable by an unregistered firm also. She
would further submit that an unregistered firm can also seek to recover all
its debts by registering itself prior to the filing of the case before the civil
Court. She would thus submit that the contention of the petitioners that
there is no legally recoverable debt, against which the cheques in question
have been issued, would have to be discarded.
Consideration of the Court:
13. Sri M. Chalapati Rao, learned counsel for the petitioners, has
raised various preliminary grounds before making his submissions on two
grounds – non-registration of complainant firm and the lack of specific
averments in relation to the directors of A.1-company. The said objections
are being considered before the main objections are being taken up.
Crl.P.No.12612 of 2017 and Crl.P.No.967 of 2018
a) The contention of the petitioners is that a complaint under section
138 of the Negotiable Instruments Act, would be maintainable only if the
2 2009 (2) ALD (Cri) 801
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cheques are returned with the noting that the dishonour is on account of
insufficiency of funds, and that a complaint cannot be filed if the cheque is
returned dishonoured on the ground of connectivity failure. As contended
by Smt. K. Sesha Rajyam, learned Senior Counsel, the question whether
there were enough funds in the account, to cover the amount set out in
the cheques, would be the subject matter of the trial. In the
circumstances, the said question would have to be decided in the trial and
cannot be decided by this Court in the present criminal petitions.
b) The difference in the name written on the cheque would not, in
any manner, make the complaint invalid. The cheque was presented
through the account of the complainant and was returned by the bank of
the accused on the ground of insufficiency of funds or connectivity failure
and not on the ground of difference in the name of the payee.
c) The contention that the complainant is not maintainable, because
the authorisation to file the complaint was given after the date of the
cheque, cannot be accepted. The authorisation, for filing a complaint on
behalf of a juristic person, need not be obtained even prior to the date of
the cheque. In fact, the need for filing a complaint would arise only after
the dishonour of the cheque and it is only at that stage that a company or
a firm would commence the process of filing a complaint by authorising
one or more persons or officers of the company or firm to file the
complaint.
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d) The contention that the complaint can be filed only by the
person, who instructed the counsel to issue the legal notice, and that the
complaint would not be maintainable, if any other person is authorised,
cannot be accepted. In the course of its business, a company or a firm
can always delegate the initial issuance of notice to one of its officers and
subsequently delegate the function of filing the complaint to any other
officer or person. In the usual course, companies and firms, in business,
always have a turnover of employees and firms or companies cannot be
non-suited merely because the partner / director / employee, who was
initially authorised to issue the legal notice, had left the said company or
firm.
e) The question whether non-filing of the registration certificate is
fatal to the complaint, is a matter which would have to be considered
along with the main objections raised by Sri M. Chalapati Rao.
(f) (g) (h) & (i) The contention of the petitioners is that the cheque
in question had been signed by one Sri K. Noushad, who is an employee
of the company and the complaint would have to be quashed on the twin
grounds of non-inclusion of Sri K. Noushad as an accused and the
incorrect submission of the complainant that accused No.3 had signed the
cheque. A complaint under Section 138 Negotiable Instruments Act is to
be filed against the drawer of the cheque. If the drawer of a cheque is a
company or a firm, the signatory to the cheque would not be relevant and
it would only be the company or the firm which would have to be arrayed
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19
as an accused. However, in the case of a company / firm, the director or a
partner who is in the management of the company and / or who are
aware of the transaction, issuance of the cheque and subsequent
dishonour of the cheque on account of insufficiency of funds, can also be
arrayed as an accused in view of the provisions of Section 138 read with
Section 142 of Negotiable Instruments Act. In this process, the noninclusion of the person, who signed the cheque on behalf of the company
or firm would not, in any manner, result in the complaint being dismissed.
In any event, the question of who signed the cheque is a matter of fact,
which has to be determined in the trial.
j) The discrepancy in the description of the complainant as a limited
company in one part of the complaint and as a firm in another part of the
complaint would not be fatal to the complaint. The basic pleadings in the
complaint clearly show that the complainant is a firm. In fact, the main
objection raised in the present set of criminal petitions, is that the
complainant firm has not registered itself prior to the transactions
between the complainant and the petitioners. In such a situation, the
minor discrepancy in the description of the complaint, will not detract from
the maintainability of the complaint.
(k) & (l) The 4th accused is said to have resigned as a director of
A.1-company on 28.03.2016 itself and cannot be made liable for any
offence. This contention would require the accused persons, to adduce
evidence to show that the 4th accused has resigned as a director of A.1-
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company on 28.03.2016 itself. Further, the letter of resignation produced
by the petitioners in the criminal petition cannot be accepted without the
same being tested in the course of trial. As far as description of the 4th
accused as a man is concerned, the question whether the said misdescription is on the basis of a genuine ignorance of the gender of the 4th
accused and the role of the 4th accused, if any, in the functioning of A.1-
company, or whether it was a genuine typographical error as stated by
the de facto complainant, is a matter for trial and cannot be decided by
this Court in the present proceedings.
m) The question whether sufficient allegations have been made
against accused 2 to 4 to fasten them with the vicarious liability of the
dishonour of cheques is one of the main grounds raised by Sri M.
Chalapathi Rao, and will be dealt with while dealing with this issue.
14. The above grounds were taken in all these criminal petitions,
as such, the said grounds are taken to be raised by the petitioners and
answered by this Court, in all the petitions, in the manner set out above.
15. Sri M. Chalapati Rao, learned counsel for the petitioners,
would contend that Section 69 of the Indian Partnership Act, 1932 bars an
unregistered firm from filing any suit for recovery of money. He would
submit that the said bar would extend even to criminal complaints and
more specifically to complaints filed under Section 138 of the Negotiable
Instruments Act. Sri M. Chalapati Rao, would place reliance upon the
following table to contend that the firm was not registered at any stage of
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21
the criminal process commencing from the issuance of the cheque to
intimation of dishonour of the cheque of the accused / petitioners.
Sl.
No
C.C.No./Crl.P.No Date of
Cheque
Date of Dishonour
Date of legal
notice
Cause of
return of
cheque
Date of
complaint
Firm
registration
date
1 CC: 29 / 2017
CrlP:12543/2017
Crlp:508/2018
31.07.2016
Rs.1,44,764/-
31.08.2016
16.09.2016
Funds
insufficient 27.10.2016 Not filed
2. C.C: 30/2017
Crl.P:
12454/2017
Crl.P: 515/2018
31.08.2016
Rs.25,00,000
/-
08.09.2016
16.09.2016
Exceeds
Arrangement
s
27.10.2016 Filed
06.10.2016
3. C.C: 31/2017
Crl.P:
12545/2017
Crl.P: 818/2018
31.07.2016
Rs.25,00,000
/-
31.08.2016
16.09.2016
Exceeds
Arrangement
s
27.10.2016 Filed
06.10.2016
4. C.C: 133/2017
Crl.P:
12626/2017
Crl.P: 763/2018
30.09.2016
Rs.26,50,044
/-
01.10.2016
17.10.2016
Exceeds
Arrangement
s
01.12.2016 Filed
06.10.2016
5. C.C: 412/2017
Crl.P:
12612/2017
Crl.P: 967/2018
31.10.2016
Rs.68,54,758
/-
01.22.2016
19.11.2016
Connectivit
y
failure
02.01.2017 Not filed
16. He would submit that the alleged debt against which the
cheques were said to have been issued to the complainant firm is not a
legally recoverable debt as the complainant firm was not a registered firm
when the cheque was presented for payment or when notice of dishonour
of the cheque and consequent demand for payment of the dishonoured
amount had been issued by the complainant and served on the
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petitioners. He would submit that in such circumstances, the complaint
itself is not maintainable as the cheque was not issued for recovery of a
legally enforceable debt.
17. Smt. K. Sesha Rajyam, learned Senior Counsel relies upon
the Full Bench judgment of the erstwhile High Court of Andhra Pradesh in
Dr. A.V. Ramanaiah vs. M. Shekhar to contend that an unregistered
firm is not barred from initiating a complaint under Section 138 of the
Negotiable Instruments Act.
18. A perusal of the said judgment would show that the Full
Bench was considering the question of whether an unregistered
partnership firm could maintain a complaint under Section 138 of the
Negotiable Instruments Act. The judgment of the Full Bench is binding on
this Court and I am in respectful agreement with the ratio laid down by
the Full Bench. However, Sri M. Chalapati Rao, learned counsel for the
petitioners would contend that the Full Bench had not considered the
question whether the debt against which the cheque is said to have been
issued is a legally enforceable debt or not. He contends that the bar under
Section 69 of the Indian Partnership Act clearly prohibits recovery of the
said debt by legal means as the unregistered firm cannot file a suit for
recovery of any debt. He would submit that the issuance of the cheques
cannot be treated as cheques being issued for payment of a legally
enforceable debt. Consequently, the complaint itself would not be
maintainable, even if the judgment of the Full Bench of this Court
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mentioned above is brought into the picture. He relies upon the
judgements in Kusum Ingots & Alloys Ltd., vs Pennar Paterson
Securities Ltd.,3 and New India Assurance Co. Ltd., vs. M/s Varsha
Aqua Farm Visakhapatnam4
.
19. Section 69 of the Indian Partnership Act reads as follows:
69. Effect of non-registration.—
(1) No suit to enforce a right arising from a contract or
conferred by this Act shall be instituted in any court by or on
behalf of any person suing as a partner in a firm against the
firm or any person alleged to be or to have been a partner in
the firm unless the firm is registered and the person suing is
or has been shown in the Register of Firms as a partner in
the firm.
(2) No suit to enforce a right arising from a contract shall be
instituted in any Court by or on behalf of a firm against any
third party unless the firm is registered and the persons
suing are or have been shown in the Register of Firms as
partners in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply
also to a claim of set-off or other proceeding to enforce a
right arising from a contract, but shall not affect,—
(a) the enforcement of any right to sue for the dissolution of
a firm or for accounts of a dissolved firm, or any right or
power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court
under the Presidency-towns Insolvency Act, 1909 (3 of
1909) or the Provincial Insolvency Act, 1920 (5 of 1920) to
realise the property of an insolvent partner.
3
(2000) 2 SCC 745
4 2018 (1) ALT 684
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(4) This section shall not apply,—
(a) to firms or to partners in firms which have no place of
business in 8
[the territories to which this Act extends], or
whose places of business in 9
[the said territories], are
situated in areas to which, by notification under 10 [section
56], this Chapter does not apply, or
(b) to any suit or claim of set-off not exceeding one hundred
rupees in value which, in the Presidency-towns, is not of a
kind specified in section 19 of the Presidency Small Cause
Courts Act, 1882 (5 of 1882), or, outside the Presidencytowns, is not of a kind specified in the Second Schedule to
the Provincial Small Cause Courts Act, 1887 (9 of 1887), or
to any proceeding in execution or other proceeding
incidental to or arising from any such suit or claim. State
Amendments
20. The said provision prohibits recovery of any debts by way of
filing of a suit unless the firm is registered. A learned single judge of this
Court, in 2018 (1) ALT 684, New India Assurance Co. Ltd., Vs M/s Varsha
Aqua Farm Visakhapatnam, while considering the effect of section 69 of
the Partnership Act on a suit filed by an unregistered firm, had held that a
suit filed by an unregistered firm would be hit by the bar under Section 69
and subsequent registration would not rectify the said defect. There can
be no quarrel with this principle.
21. The bar under the provisions of Section 69 of the Indian
Partnership Act would operate only against such firms which file a suit
without registering themselves. However, an unregistered firm can always
register itself, and then file a suit for recovery of its debts. The question
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25
whether the debt is legally enforceable or not, would arise only at the
stage of filing of the suit. It cannot be said that the cheque issued for
payment of a debt of an unregistered firm would amount to a cheque
being issued for clearing a legally unenforceable debt. The judgement of
the Hon’ble Supreme Court in Kusum Ingots & Alloys Ltd., vs. Pennar
Paterson Securities Ltd., does not set out any principle to the contrary.
22. In the circumstances, the said contention of the petitioners
would have to fail.
23. Sri M. Chalapati Rao, learned counsel for the petitioners had
taken the objection that the requirement under Section 141 of the
Negotiable Instruments Act is that specific allegations relating to the
specific role and involvement of directors in the affairs of the company
and the specific role and involvement of the directors in transactions
relating to issuance and dishonour of the cheques would have to be set
out before directors / partners of a company/firm can be read into a
Section under the Negotiable Instruments Act. He relies upon the
judgements in S.M.S. Pharmaceuticals Ltd., vs. Neeta Bhalla and
Anr.,; Narendra Kurangi and Ors., vs. M/s. Greenmint India
Agritech Pvt. Ltd.,
5
; and the judgment of the Hon’ble High Court of
Delhi in the matter of Sunita Palta and Ors., vs. M/s KIT Marketing
Pvt., Ltd., dated 03.03.2020 in CRL.M.C. 1410 of 2018.
5 2016 (2) ALT (CRI) 410
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26
24. Section 141 of the Negotiable Instruments Act reads as
follows:
141. Offences by companies.—(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:
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:
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.
(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 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.
Explanation.—For the purposes of this section, —
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27
(a) “company” means anybody corporate and includes a
firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the
firm.
25. The principle laid down in the above judgments is that a bald
allegation that the directors / partners of a company / firm are involved in
the day to day affairs of a company / firm would not be sufficient. Specific
allegations relating to the role and nature of their functions in the
company / firm and their involvement, if any, in the transactions relating
to the issuance and dishonour of the cheque, have to be specifically spelt
out before any director / partner of the company would be arrayed as an
accused in such cases. In the present cases, the allegations that are
required for making out a case, against the accused no. 2 to 4, in terms of
the above judgments, are not available.
26. However, the matter does not end there. Section 141 of the
Negotiable Instruments Act has two limbs. The first limb contained in
section 141 (1) brings directors and persons responsible for the day to day
management of the company into the ambit of section 138. The second
limb, contained in section 141 (2), which starts with a non obstante
clause, stipulates that if it is proved that any offence under section 138
has been committed with the connivance or consent or neglect of any
director, or other officers mentioned therein, the said director or officer
would also be liable for the offence.
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27. In the present case, the allegation in all the complaints, in
relation to petitioners 2 to 4 is as follows:
“The accused No.1, represented by Accused No.1
represented by Accused Nos.2 to 4 have approached the
complainant for supply of dry chillies accordingly the supply
was made by way of credit and accused and accused No.1,
rep. by accused Nos.2 to 4 have availed the credit facility on
getting the supplies of dry chillies and in that course all
accused have fell in due for the dry chillies supplied as per
the khata maintained there is a outstanding balance of
Rs.1,00,98,971/- and also the interest payable thereupon.
The complainant firm further submits that as against
the said balance on repeated persuasions to discharge the
same, the accused No.1 represented by accused No.3 being
the authorized signatory with the consent of the accused
Nos.2, 3 and 4 who are in day to day business activity have
issued a cheque holding by the accused No.1.”
28. The said allegations, in terms of section 141(2), make out a
case against the accused 2 to 4. The question whether these allegations
are true or not, can only be answered after a proper trial is conducted in
the matter.
29. For all the aforesaid reasons, these criminal petitions are
dismissed. However, the 4th accused in all these cases, who is the
petitioner in Crl.P.No.967 of 2018, Crl.P.No.515 of 2018, Crl.P.No.818 of
2018, Crl.P.No.763 of 2018 and Crl.P.No.508 of 2018, is said to be a
pardanashin lady. In such circumstances her presence during the trial of
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29
the above complaints is dispensed with, except when her presence is
necessary for examination.
As a sequel, pending miscellaneous petitions, if any, shall stand
closed.
__________________________
R. RAGHUNANDAN RAO, J.
4
th January, 2023
Js.
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30
HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
Crl.P.Nos.12454, 12545, 12612 & 12626 of 2017
And
Crl.P.Nos.508, 515, 763, 818 & 967 of 2018
4
th January, 2023
Js.
2023:APHC:140
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