Litigant Pays For Lawyer's Mistake, Bombay High Court Disallows Amendment To Cheque Bounce Complaint In Which Firm Was Not Made An Accused

Justice GA Sanap of the Nagpur bench held that the amendment application was not maintainable as there was an incurable legal defect in the complaint under section 138 of the Negotiable Instruments Act, 1881.

“The facts with regard to the issuance of cheque, signing of cheque, dishonour of cheque and the reason for dishonour of the cheque, are more or less undisputed. The unfortunate complainant, despite having all these facts on his side, seems to have been placed in the wrong hands…Once the litigant chooses an advocate, he reposes complete faith in the advocate. The advocate has to give justice to the cause of the litigant. The advocate must always be conscious that on account of his mistake, the litigant should not suffer. The advocate is required to bear in mind that the fundamental mistake while conducting the litigation at any stage can cause irreparable loss and harm to the litigant”, the court observed.

The court observed that the draftsman of the complaint committed a mistake by not making the firm the principal accused in the complaint when the complainant’s transaction was with the firm.

The complainant, one Syed Mazaruddin Syed Shabuddin, sold his land to the firm Ramdeobaba Developers and Builders. A cheque for Rs. 20 Lakhs drawn on the account of the firm was issued to him. The cheque was dishonoured as the drawer had stopped the payment. He issued a notice seeking payment of the amount but it was not paid. Therefore, he filed a complaint under section 138 of the NI Act against three partners of the firm. He died during the pendency of the complaint and his legal heirs were allowed to prosecute it.

Process was issued against the accused and the complaint was fixed for recording of evidence. Thereafter the complainants sought an amendment stating that the relevant facts regarding the vicarious liability of the three accused remained to be pleaded due to an oversight. Further, they sought to add another partner of the firm as accused. The Judicial Magistrate First Class allowed the amendment. Therefore, the accused filed the present application challenging the JMFC’s order.

Advocate M. M. Agnihotri for the applicants submitted that notice was not issued to the partnership firm before filing the complaint; therefore, there is an inherent defect in the complaint.

Advocate R. J. Mirza for the complainant submitted that a specific statement that the accused partners were vicariously liable remained to be made and this is a curable defect which can be removed by the amendment.

The court said that if the cheque is drawn on the account of the firm or company, the firm or company has to be the principal accused. If the firm or company is not arraigned as an accused in the complaint, the prosecution against the partners or directors is not maintainable. The court further said that if the firm or company is not an accused in the complaint, then it cannot be added as an accused by way of an amendment.

In the present case, notice was not issued in the name of the firm, and it is not made an accused. Even by the proposed amendment, the prayer is not to add the firm as an accused, the court noted. The court added that the complainants knew that their transaction was with the firm and the cheque was issued from the firm’s account signed by some of the partners.

The court said that the magistrate failed to consider the primary legal issue of maintainability of the complaint without arraigning the firm. The amendment application could not have been decided without addressing this issue, the court said.

The court said that without the firm as a principal accused, the complaint against the partners is not maintainable. Further, defect of this kind cannot be rectified subsequently by amending the complaint and adding the firm as an accused, the court added.

Thus, the court held that the amendment application was not maintainable as the complaint itself had an incurable legal defect.

“Notice was not issued in this case to the partnership firm. The partnership firm has not been arrayed as an accused. Even in the amendment application, no prayer was made to add the partnership firm as an accused. In the facts and circumstances, I am of the view that the learned Magistrate was not right in granting the amendment”, the court concluded.

Case no. – Criminal Application (APL) No. 682 of 2013

Case Title – Harikisan Vithaldasji Chandak and Ors. v. Syed Mazaruddin Syed Shabuddin (Since dead, through his Lrs)

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