From the above provisions of the Act, it is clear that every partner is an agent of the Firm and his other partners for the purpose of business of the firm and the acts of every partner bind the firm and his partners, unless, of course, the partner had, in fact no authority to act for the firm and his other partners. The learned trial Magistrate relied upon the judgment of this Court in the case of (Mrs. Alka Toraskar Vs. State of Goa and others), 2007 (1) Goa L.T. 159 which pertains to a Cooperative Society. The trial Magistrate further relied upon (Fragrant Leasing and Finance Co. Ltd. Vs. Jagdish Katuria),MANU/UP/1085/2007 : 2008 All M.R. (Cri.) Journal 3 and the judgment in the case of (Chico Ursula D'Souza Vs. Goa Plast Pvt. Ltd.), reported inMANU/MH/1085/2008 : 2008 (6) Bom. C.R. 399 : 2009 (1) All M.R. 290, both of which pertain to company. Admittedly, a Company is a separate juristic person distinct from its directors or shareholders and the company acts through the resolution passed by the Board of Directors. Because of the above, a person, who claims to represent another, is bound to produce an authority or power which entitles him to appear. The above is not the case with the Partnership Firm. As has been already seen above, each partner is an agent of the Firm. In the present case, it is not that some person on the strength of power of attorney had filed a complaint and had deposed on behalf of the complainant. In the present case, the complaint was not filed by PW 1, but it was filed by the Firm, through PW 1, as partner of that Firm. The person, who deposed on behalf of the complainant, was one of the partners of the said complainant-Firm. In fact, the agreement dated 5/4/2005 was signed by same partner Shri Pandharinath Chafadkar (PW 1) for himself and as attorney of the other two partners Arun Chafadkar and Narayan Nigalye. In the circumstances above, the finding of the trial Magistrate that there was no authority to PW 1 to file the complaint or to depose on behalf of the complainant is not correct.
IN THE HIGH COURT OF BOMBAY
Decided On: 02.04.2014
Reshmi Constructions Vs. Laxman Vithal Chunekar
Hon'ble Judges/Coram:U.V. Bakre , J.
Citation: 2014(2)BomCR(Cri)297,2014(5)MHLJ 537
1. Heard Mr. Kantak, learned Counsel appearing on behalf of the applicant and Mr. Shet, learned Amicus Curiae on behalf of respondent No. 1. This Revision Application was initially filed as Criminal Appeal No. 80/2009 which was admitted by order dated 16/11/2009. Revision Application stands admitted and by consent is heard forthwith.
2. This revision application has been filed against the judgment and order dated 15/5/2009 passed by the learned Judicial Magistrate, First Class at Ponda (trial Magistrate) in Criminal Case No. 389/OA/2006/B.
3. The revision applicant was the complainant in the said criminal case whereas respondent No. 1 was the accused. Parties shall, hereinafter, be referred to as per their status in the said criminal case.
4. The complainant, the Partnership Firm represented by its partner, namely Shri Pandharinath Chafadkar, had filed the complaint under section 138 of the Negotiable Instruments Act, 1881, ('N. I. Act') against the accused. It was alleged that the accused had issued a cheque bearing No. 1267782 dated 20/2/2006 for an amount of ' 1,20,000/- drawn on Goa Urban Cooperative Bank Ltd., Marcel Branch along with another cheque of similar amount on account of his liability to refund to the complainant a sum of 2,40,000/- being the excess sum received from the complainant towards the agreement dated 7/11/1996. When the said cheque was presented to the banker of the complainant for collection, it was returned back unpaid with the remark "funds insufficient". The complainant issued legal notice dated 2/5/2006 by Registered A.D. Post informing the accused about the dishonour of the cheque and calling upon him to pay the cheque amount within 15 days from the date of receipt of the said notice. The notice was received by the accused on 4/5/2006, but the accused failed and neglected to comply with the said notice. Hence, the complaint. The said complaint came to be registered as Criminal Case No. 389/OA/2006/B.
5. Substance of accusation was explained to the accused and the accused pleaded not guilty and claimed to be tried. The complainant examined its partner namely Shri Pandharinath Chafadkar as PW 1 and closed its case. The statement of the accused came to be recorded in terms of section 313 of the Code of Criminal Procedure (Cr. P.C). The accused examined one Shri Sudin Timble as DW 1 and closed his case. Upon perusal of the records, the trial Magistrate instead of considering the merits of the matter, formulated the following point for determination :
Whether the complaint is maintainable for non-production of proper authorisation to file the complaint ?
6. The trial Magistrate held that there was no authority given to PW 1 to file the present complaint. The trial Magistrate found that in his cross-examination, PW 1 stated that he is one of the partners of the complainant-Firm and that the transaction of the accused was with the complainant-Firm and PW 1 did not have any personal transaction with the accused. It was further found that PW 1 admitted that as per the power of attorney given to him by the complainant, there was no power to prosecute any person or to file any complaint or to depose on behalf of the complainant. The trial Magistrate, on perusal of the said power of attorney, also held that no specific powers were given to PW 1 to file criminal complaint on behalf of the complainant-Firm or to depose in any such matters. The trial Magistrate held that the accused had entered into transaction with the Partnership Firm and there was no personal transaction of the accused with PW 1. The trial Magistrate further held that the cheque was issued in the name of Pandharinath Chafadkar, but the complaint was not filed by the said payee. The Magistrate held that the complainant-Firm was not the holder in due course of the cheque. Hence, the trial Magistrate held that the complaint filed in the name of the Firm was not maintainable as no cause of action had arisen to the Firm. Consequently, the complaint was held to be not maintainable and the accused was acquitted.
7. Mr. Kantak, learned Counsel appearing on behalf of the applicant submitted that since the cheque was issued by the accused in the name of Pandharinath Chafadkar, Pandharinath had no other alternative but to deposit the same in his personal account. He read out the provisions of sections 4,9, 10, 14, 15, 19 and 22 of Indian Partnership Act, 1932 (the Act') and submitted that Shri Pandharinath Chafadkar being the partner of the complainant was the agent of the said Firm and hence, he was bound to transfer the said amount, if realized, into the account of the Firm. He further urged that as agent of the complainant, Pandharinath could file the complaint and depose on behalf of the complainant even without a power of attorney. My attention was drawn to the power of attorney given to said Shri Pandharinath Chafadkar by Shri Narayan Ram Nigalye, and more particularly to Clauses 6, 7 and 12 of the same and it was submitted that under the said power of attorney, PW 1 had ample powers to institute, defend and prosecute criminal proceedings and to appear for and represent the other partners before any Magistrate. He further submitted that PW 1 had power generally to do all acts, deeds and things as may be necessary in the premises on behalf of the Firm to all intents and purposes as the partners constituting the same for the time being, could do in their own person. He, therefore, submitted that the trial Magistrate wrongly held that PW 1 had no power to file the complaint and depose on behalf of the complainant-Firm. Mr. Kantak relied upon the following judgments :
(i) (Geekay Exim (India) Ltd. and others Vs. State of Gujrat and another), MANU/GJ/0023/1997 : 1998 Cri. L.J. 700(ii) (M.M.T.C. Ltd. and another Vs. MEDCHL Chemicals and Pharma (P) Ltd. and another), MANU/SC/0728/2001 : (2002)1 S.C.C. 234 and(iii) (Municipal Council, Tiroda Vs, K. Ravindra and Company and others), MANU/MH/0214/2003 : 2003 (6) Bom. C.R. 287.
He, therefore, submitted that the complaint was maintainable in all respects and, therefore, had to be decided by the trial Magistrate on merits.
8. On the other hand, Mr. Shet, learned Amicus Curiae submitted that a perusal of the power of attorney would show that there was no separate power at all given to PW 1 by the Firm to file the complaint or to depose on its behalf or to accept the cheque on behalf of the complainant. He, therefore, submitted that there was no error made by the trial Magistrate in dismissing the complaint. He further submitted that admittedly, the cheque had been issued in the name of Pandharinath Chafadkar (PW 1) and not in the name of the complainant-Firm. He, therefore, urged that the complaint filed by the Firm was not maintainable, since the cheque was not issued in favour of the said Firm. He, therefore, urged that no interference is called for with the impugned judgment and order. In the alternative, Mr. Shet submitted that if this Court is inclined to allow the Revision Application, the matter will have to be remanded back to the trial Magistrate for deciding the same on merits:
9. I have gone through the material on record. I have considered the submissions made by the learned Counsel for the parties and also the judgments relied upon by them.
10. As has been rightly submitted by the learned Counsel appearing on behalf of the complainant, Mr. Pandharinath Chafadkar (PW 1) is not merely a power of attorney holder of the complainant, but he is one of the partners of the said Firm.
11. In the case of "MMTC Ltd. and another (supra), the Hon'ble Apex Court has held thus:
11. This Court has, as far back as, in the case of (Vishwa Mitter Vs. O.P. Poddar), reported in MANU/SC/0378/1983: (1983) 4 S.C.C. 701, held that it is clear that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take-cognizance. It has been held that no Court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by section 142 is that the complaint must be by the payee or the holder in due course. This criteria is satisfied as the complaint is in the name and on behalf of the appellant Company.
12. In the case of "Geekay Exim (India) Ltd. and others" (supra), the question was whether in the case of juristic person, a legal entity, special authorisation is required even if legal proceedings are initiated by principal officers in charge of Management or by such persons, who under law, are recognised to represent such a body. It has been held that when the law expressly recognised the right of such persons and executives to represent interests of legal entity, like corporate body, being the Firm, etc. no special and express authorisation is required for initiating any legal proceedings like the one criminal complaint.
13. In the present case, PW 1 Shri Pandharinath Chafadkar had produced on record the power of attorney, dated 14/2/1992 given to him by Shri Arun Shripad Chafadkar. He had also produced the power of attorney dated 5/9/1996, given to him by the other partner Shri Narayan Ram Nigalye. By this power of attorney, PW 1 had power to ask for, demand, recover, receive and collect all monies due and payable to the complainant-Firm in connection with its business from any person or persons, Company or Association, etc. He had right to appear for and represent the said other partner as also the Firm, inter alia, before any Magistrate and in all courts having civil, criminal, original or appellate, revisional or such jurisdiction, including the jurisdiction of any High Court, etc. He had power to institute, defend and prosecute and enforce or resist any suit or other actions and proceedings, appeals in any Court anywhere within or outside India, including the International Courts in its civil, criminal, revenue, revision or before any Tribunal of Arbitration or Industrial Court, Income Tax and Sales Tax Authorities, etc. He had also power to act, plead, sign and verify the plaint and written statement, etc. and to present any documents, etc. and to do all acts, deeds, things that may be necessary or requisite in connection therewith. Clause No. 23 of the said Power of Attorney provided as under :
23. And generally to do acts, deeds and things as may be necessary in the premises on behalf of the said firm to all intents and purposes as the partners constituting the same for the time being could do in their own person.
14. Be that as it may, since PW 1 was himself the partner of the complainant, he did not need any power of attorney to file complaint or to depose on behalf of the complainant.
15(a). Section 4 of the Act lays down as under :
4. Definition of "Partnership'', "partner'', "firm" and "firm name"-"Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name".
(b) Section 9 of the Act says that:
9. General Duties of partners-Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative.
(c) Section 18 of the Act provides as under :
18. Partner to be agent of the firm-Subject to the provisions of this Act, a partner is the agent of the firm for the purpose of the business of the firm.
(d) Section 19 of the Act lays down as under: "19. Implied authority of partner as agent of the firm-
(1) subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.The authority of a partner to bind the firm conferred by this section is called his "implied authority''.(2) In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to -(a) submit a dispute relating to the business of the firm to arbitration,(b) open a banking account on behalf of the firm in his own name,(c) compromise or relinquish any claim or portion of a claim by the firm,(d) withdraw a suit or proceeding filed on behalf of the firm,(e) admit any liability in a suit or proceeding against the firm,(f) acquire immovable property on behalf of the firm,(g) transfer immovable property belonging to the firm, or(h) enter into partnership on behalf of the firm.
16. From the above provisions of the Act, it is clear that every partner is an agent of the Firm and his other partners for the purpose of business of the firm and the acts of every partner bind the firm and his partners, unless, of course, the partner had, in fact no authority to act for the firm and his other partners. The learned trial Magistrate relied upon the judgment of this Court in the case of (Mrs. Alka Toraskar Vs. State of Goa and others), 2007 (1) Goa L.T. 159 which pertains to a Cooperative Society. The trial Magistrate further relied upon (Fragrant Leasing and Finance Co. Ltd. Vs. Jagdish Katuria),MANU/UP/1085/2007 : 2008 All M.R. (Cri.) Journal 3 and the judgment in the case of (Chico Ursula D'Souza Vs. Goa Plast Pvt. Ltd.), reported inMANU/MH/1085/2008 : 2008 (6) Bom. C.R. 399 : 2009 (1) All M.R. 290, both of which pertain to company. Admittedly, a Company is a separate juristic person distinct from its directors or shareholders and the company acts through the resolution passed by the Board of Directors. Because of the above, a person, who claims to represent another, is bound to produce an authority or power which entitles him to appear. The above is not the case with the Partnership Firm. As has been already seen above, each partner is an agent of the Firm. In the present case, it is not that some person on the strength of power of attorney had filed a complaint and had deposed on behalf of the complainant. In the present case, the complaint was not filed by PW 1, but it was filed by the Firm, through PW 1, as partner of that Firm. The person, who deposed on behalf of the complainant, was one of the partners of the said complainant-Firm. In fact, the agreement dated 5/4/2005 was signed by same partner Shri Pandharinath Chafadkar (PW 1) for himself and as attorney of the other two partners Arun Chafadkar and Narayan Nigalye. In the circumstances above, the finding of the trial Magistrate that there was no authority to PW 1 to file the complaint or to depose on behalf of the complainant is not correct.
17. In the said agreement dated 5/4/2005, it was mentioned that the accused agreed to refund a sum of 2,40,000/- to the complainant being excess amount received from the complainant, for which the accused had issued two cheques one of which was bearing No. 1267781 dated 20/8/2005 for 1,20,000/- drawn on the Goa State Co-operative Bank Ltd., Marcel, Goa and the other bearing No. 1267782 dated 20/2/2006 for 1,20,000/- drawn on the Goa State Co-operative Bank Ltd., Marcel, Goa. The subject matter of the present case was the second cheque bearing No. 1267782 dated 20/2/2006 for 1,20,000/-. Thus, the case of the complainant-Firm itself was that the cheque of 1,20,000/- which was issued personally in the name of Shri Pandharinath Chafadkar was in fact issued in favour of the complainant. In such circumstances, the complaint filed in the name of the Firm could not be said to be not maintainable.
18. In all the circumstances above, the impugned judgment of the trial Magistrate holding that the complaint is not maintainable, is not sustainable. The impugned judgment and order is liable to be quashed and set aside. Though the trial Magistrate stated in the final order that the accused is acquitted, however, since the complaint has been held to be not maintainable, and since there was no decision on merits, the final order ought to have been that the complaint is dismissed as not maintainable and that the accused is discharged. It is, therefore, necessary that the matter is remanded to the trial Magistrate for being decided now on merits.
19. In the result, the appeal is partly allowed.
(a) The impugned judgment and order dated 15/5/2009 passed in Criminal Case No. 389/OA/2006/B is quashed and set aside.
(b) The complaint is maintainable and PW 1 has authority to depose on behalf of the complainant.
(c) The matter stands remanded to the trial Magistrate to decide the same now on merits.
(d) Learned Magistrate to complete this exercise and dispose of the matter finally on merits within 30 days from the date of appearance of the parties before him.
(e) Parties to appear before the trial Magistrate on 6/5/2014 on 10.00 a.m.
Revision application stands disposed of accordingly.
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