MANU/MH/1812/2009Equivalent Citation: 2010(88)AIC782, 2009(32)CriminalCC213,

2010(3)RCR(Civil)412, 2010(5)RCR(Criminal)195
IN THE HIGH COURT OF BOMBAY
Criminal Revision Application Nos. 278, 279 of 2009
Decided On: 17.11.2009
Appellants: Mukesh Raoji Navadhare
Vs.
Respondent: Ajit Bhaskar Kasbekar and Ors.
Hon'ble Judges/Coram:
D.G. Karnik, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Datar
For Respondents/Defendant: Mr. A.A. Garge, for the Respondent No. 1 and Mr. A.S.
Shitole, APP, for the State
JUDGMENT
D.G. Karnik, J.
1. Heard.
2. By this petition, the petitioner prays for quashing of the criminal complaint, bearing
Summary Criminal Case No. 1489 of 2001, filed under section 138 read with section
141 of the Negotiable Instruments Act, 1881 by the respondent No. 1 against him.
3. The facts of the case are rather peculiar and are briefly stated below:
The petitioner and the complainant were carrying on business in partnership in the
name and style of "M/s. Shantakrupa Corporation" (for short "the firm") under a written
deed of partnership dated 14th December 1996. On 16th June 2001, the firm issued a
cheque bearing No. 568699 to the complainant. The cheque was signed on behalf of the
Firm by the petitioner as its partner. The cheque on presentation was dishonoured. After
a notice of demand, the complainant filed a complaint to the Magistrate under section
138 read with section 141 of the Negotiable Instruments Act (for short "the Act"). The
firm was not joined as a party accused, but only the petitioner was arrayed as an
accused.
4. Learned counsel for the petitioner submitted that the cheque was issued by the firm,
of which both the petitioner and the complainant were partners. Since the complainant
was a part of the firm and was its partner, the prosecution of other partner under
section 138 of the Act was not maintainable. Per contra, learned counsel for the
respondent No. 1 submitted that the cheque was signed and issued by the petitioner. As
the cheque was dishonoured, the petitioner had committed an offence punishable under
section 138 read with section 141 of the Act.
5. A partnership firm is not a body corporate. Section 4 of the Partnership Act defines
"partnership" as relation between the persons who have agreed to share profit of a
business carried on by all or any of them acting for all. The persons who have entered

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into a partnership with one another are called individually as partners and collectively
"a firm". The name under which the business is carried on is called the firm name. The
firm name is merely a compendious name given to group of persons who have agreed
to carry on business in partnership.
6 . In M/s. Malabar Fisheries Co. v. The Commissioner of Income Tax, Kerala,
MANU/SC/0326/1979 : AIR 1980 SC 176, the Supreme Court has considered the nature
of a firm and has explained the difference between the mercantile view and the legal
view on a partnership firm. Merchants and lawyers have different notions in respect of a
firm. Commercial men and accountants are apt to look upon a firm in the light in which
lawyers look upon a corporation i.e., as a body distinct from the members composing it,
and having rights and obligations distinct from those of its members. Hence, in keeping
partnership accounts, the firm is made debtor to each partner for what he brings into
the common stock, and each partner is made debtor to the firm for all that he takes out
of that stock. In the mercantile view, partners are never indebted to each other in
respect of partnership transactions; but are always either debtors to or creditors of the
firm. But this is not the legal notion of a firm. The firm is not recognized by lawyers as
distinct from member composing it. The law, ignoring the firm, looks to the partners
composing it. Property of the firm is their property and what is called the debts and
liabilities of the firm are their debts and their liabilities. In a point of law, a partner may
be a debtor or the creditor of his copartner, but he cannot be either debtor or creditor of
a firm of which he himself is a member. In para 18 of the decision, the Supreme Court
observed :
1 8 . Having, regard to the above discussion, it seems to us clear that a
partnership firm under the Indian Partnership Act, 1932 is not a distinct legal
entity apart from the partners constituting it and equally in law the firm as such
has no separate rights of its own in the partnership assets and when one talks
of the firm's property or firm's assets all that is meant is property or assets in
which all partners have a joint or common interest.
7. Applying the law as laid down by the Supreme Court to the facts of the present case,
the petitioner cannot be held liable under section 138 of the Act for the dishonour of the
cheque. The cheque was drawn from an account in a bank maintained in the name of
the firm. It bears the rubber stamp of the firm and the petitioner has signed it as a
partner of the firm. In law, when a cheque is issued by the firm and from an account
maintained by the firm, the cheque is issued by all the partners, and one of the partners
merely signs it as an agent of the firm i.e. agent of all partners (see section 18 of the
Partnership Act). The complainant who is a partner of the firm would therefore be
regarded as one of the drawers being a part of the firm. Thus, the complainant is co-
drawer as well as payee of the cheque. He therefore cannot prosecute himself or other
partner under section 138 of the Act. The position may be different when a firm issues a
cheque not to its own partner but to a third person. There, the firm would be liable as
also the partners subject, of course, to the provisions of section 141 of the Act and in
particular explanation (b) thereto. It is however not necessary to consider this aspect in
the facts of the present case.
8 . In this view of the matter, the prosecution of the petitioner by the complainant is
clearly misconceived. Continuation of the prosecution would not only be unjust but
would be a wasteful expenditure of time of the Court. For these reasons, the petition is
allowed and the prosecution is quashed. The Rule is made absolute in terms of prayer
clause (a).

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