Case Note & Summary
The matter arose from a criminal application under Section 482 of the Code of Criminal Procedure, 1973 filed by the applicant partnership firm through its partner, challenging an order passed by the Court of Sessions Judge, Thane in Criminal Revision Application No. 79/2019. The applicant firm was engaged in trading and supplying metal products, while respondent No.1 was a partnership firm manufacturing sheet metal pressed components, with respondents 2 to 4 as partners. The parties had business dealings since 2013. As on 17 October 2018, a sum of Rs. 26,68,206 was due to the applicant from respondent No.1 towards goods sold and delivered. In discharge of dues, respondent No.1 issued a cheque dated 25 September 2018 for Rs. 25,47,982 in favour of the applicant; the cheque was returned unpaid. After exchange of notices, the applicant filed complaint S.C.C. No. 10767/2018 before the Magistrate at Thane under Section 138 read with 141 of the Negotiable Instruments Act, 1881. The Magistrate recorded verification on 22 November 2018 and issued process on 16 January 2019 after satisfying himself that there was sufficient ground to proceed. Respondents challenged the issue of process before the Sessions Court, which allowed the revision and set aside the process order on four grounds: the complainant firm was unregistered and hence barred by Section 69(2) of the Indian Partnership Act; the accused resided outside jurisdiction and the Magistrate ought to have postponed process and conducted inquiry under Section 202 CrPC; the process was issued without examining the complainant on oath; and accused No.4 was arraigned despite being neither a partner nor responsible for day-to-day transactions. The High Court heard arguments from advocates and examined the three principal legal issues. On the first issue, the High Court noted that the Division Bench in Narendra Amarnathji Kalda v. Balbirsingh Motisingh Chawhan had held that prosecution under Section 138 NI Act is not hit by the bar under Section 69(2) of the Indian Partnership Act, and that the Sessions Court's contrary view was due to non-consideration of this precedent. On the second issue, the High Court found that the Sessions Court's factual finding that the complainant was not examined on oath was incorrect because the verification dated 22 November 2018 showed otherwise; further, the Full Bench in Rajesh Chalke v. State of Maharashtra had laid down that after insertion of Section 145 of the NI Act, a Magistrate may issue process based on affidavit without separate examination unless he thinks fit. On the third issue concerning Section 202 CrPC, the applicant argued that inquiry was not mandatory even when the accused resides outside jurisdiction, relying on various High Court decisions. The provided excerpt of the judgment ends before the court's final conclusion on the third issue and before the operative order. Therefore, the final decision is not available in the provided text.
Headnote
A) Criminal Law - Cheque Dishonour - Maintainability by Unregistered Partnership Firm - Negotiable Instruments Act, 1881, Section 138; Indian Partnership Act, 1932, Section 69(2) - The Sessions Court held that a complaint by an unregistered partnership firm was not maintainable due to the bar under Section 69(2) of the Indian Partnership Act. The High Court observed that the Division Bench in Narendra Amarnathji Kalda v. Balbirsingh Motisingh Chawhan had concluded that prosecution under Section 138 of the NI Act is not hit by that bar. Held that the Sessions Court's view was contrary to binding precedent (Para 8). B) Criminal Procedure - Issue of Process - Examination of Complainant on Oath - Code of Criminal Procedure, 1973, Section 200; Negotiable Instruments Act, 1881, Section 145 - The Sessions Court found that process was issued without examining the complainant on oath. The High Court found this factually incorrect because the verification dated 22 November 2018 showed the complainant was examined on oath. Further, the Full Bench in Rajesh Chalke v. State of Maharashtra held that after Section 145 of the NI Act, a Magistrate may issue process on the basis of the complaint, documents, and affidavit without separate examination on oath. Held that the Sessions Court's finding was erroneous (Para 9). C) Criminal Procedure - Postponement of Issue of Process - Inquiry Under Section 202 CrPC When Accused Outside Jurisdiction - Code of Criminal Procedure, 1973, Section 202; Negotiable Instruments Act, 1881, Section 138 - The applicant argued that inquiry under Section 202(1) of the CrPC is not mandatory in a Section 138 complaint even if the accused resides outside jurisdiction, relying on Bansilal S. Kabra v. Global Trade Finance Ltd., Dr. Rajul Ketan Raj v. Reliance Capital Ltd., and Girish Dharmchand Chordiya v. Neeta Sachin Chandak. The High Court was considering whether such inquiry is mandatory; the provided excerpt ends before the final conclusion (Paras 10-11).
Issue of Consideration
Whether prosecution under Section 138 NI Act by unregistered partnership firm is barred by Section 69(2) Indian Partnership Act; whether Magistrate must examine complainant on oath before issuing process under Section 138 NI Act; whether inquiry under Section 202 CrPC is mandatory when accused resides outside jurisdiction.
Law Points
- Prosecution under Section 138 NI Act not barred by Section 69(2) Indian Partnership Act for unregistered partnership firm
- After Section 145 NI Act Magistrate may issue process based on affidavit without separate examination on oath
- Section 202 CrPC inquiry not mandatory in Section 138 complaint when accused outside jurisdiction if Magistrate applied mind (issue under consideration)
