Vandana Jagdish Ahuja v. Ashok S. Bhagia & Anr.

Rule. Rule made returnable forthwith, and, with the consent of thelearned Counsel for the parties, heard finally.

As common questions arise for consideration in an almost identical factsituation in all the Petitions, they were heard together and are being decidedby this common judgment.

Respondent No.1 in each of the Petitions lodged complaints for theoffence punishable under Section 138 read with Section 141 of the NegotiableInstruments Act, 1881 (the Act, 1881) against M/s. Ahuja Properties &Associates (A1) – a partnership firm, and Mr. Jagdish Bhagwandas Ahuja(A2), Mr. Gautam Jagdish Ahuja (A3) and Vandana Jagdish Ahuja (A4); the Petitioner herein, the alleged partners of accused No.1 Firm.

It was, inter alia, averred that the accused had availed financialassistance from the complainant. There was default in repayment of the saidamount. Eventually, the matter was referred to arbitration. In the arbitralproceedings, the complainant and accused Nos.1 to 3 filed consent terms, whereunder accused Nos.1 to 3 agreed to repay the specified amounts to thecomplainant in terms of the Schedule agreed upon between the parties. Thecheques drawn by the accused pursuant to the consent terms were, however, SSP 2/9 32 wp 5631 of 2025.docdishonoured upon presentment. Hence, the complaint for the offencepunishable under Section 138 read with Section 141 of the Act, 1881, uponfailure of the accused to comply with the demand, despite service of thestatutory notice.

In the complaints, it was further alleged that the accused Nos.2 to 4were the partners and in-charge of the affairs of the business of accused No.1at the time of the transaction.

By an order dated 14 March 2024, the learned Magistrate issuedprocess against the accused for the offence punishable under Section 138read with Section 141 of the Act, 1881.

The Petitioner – (A4) assailed the said order of issuance of processbefore the Court of Session by filing Criminal Revision Applications. By theimpugned order dated 8 October 2025, the learned Additional Sessions Judgerejected the Criminal Revision Applications observing, inter alia, that the Petitioner had contended that she had retired from the accused No.1partnership firm but failed to place on record documents to substantiate thesaid claim. Reference was made to the provisions of the Indian PartnershipAct, 1932, which prescribe the manner in which the retirement of a partner isrequired to be notified.

Being aggrieved, the Petitioner has invoked the writ jurisdiction.

I have heard Mr. Yashpal M. Thakur, learned Counsel for the Petitioner, SSP 3/9 32 wp 5631 of 2025.docMr. Niranjan Mundargi, learned Counsel for Respondent No.1 in WP No.5631of 2025, Mr. Nikhil Mengde, learned Counsel for Respondent No.1 in rest fourPetitions and Mr. Metkari, learned AGP for the State.

Mr. Thakur, learned Counsel for the Petitioner, submitted that, thelearned Additional Sessions Judge has rejected the revision applicationswithout adequately delving into the contentions raised by the Petitioner thatthere was no material to show that the Petitioner was a partner of AccusedNo.1 firm. It was further urged that the learned Additional Sessions Judge didnot examine the nature of the underlying transactions, in pursuance of whichthe subject cheques were allegedly issued. It was the specific case of thecomplainant that the cheques were issued pursuant to the consent termsexecuted between the complainant and accused Nos.1 to 3 only, before thearbitral Tribunal. The Petitioner was not a party to the said consent terms. Neither the Petitioner is a partner of accused No.1 firm. Nor is she thesignatory to the subject cheques. In these circumstances, the provisionscontained in Section 141 of the Act, 1881, were not at all attracted qua the Petitioner.

To lend support to the aforesaid submissions, Mr. Thakur invitedattention of the Court to the Firm Registration Certificate issued by the Registrar of Firms and the copy of the consent terms executed before thearbitral Tribunal. SSP 4/9 32 wp 5631 of 2025.doc12.In contrast, Mr. Mundargi, learned Counsel for Respondent No.1 in WPNo.5631 of 2025, would urge that, in the complaint, the complainant hasmade a categorical assertion that the Petitioner was one of the partners of theaccused No.1 firm. Therefore, at this stage, the courts below were justified indeclining to delve into the questions of facts which warrant adjudication at thetrial to determine whether the Petitioner is not a partner of accused No.1 firm.

Mr. Mundargi laid emphasis on the fact that, in the previoustransactions, the Petitioner has drawn the cheques in favour of thecomplainant in the capacity of the partner of M/s. Ahuja Properties and Associates. Therefore, it cannot be said that, there was no material todemonstrate, prima facie, that the Petitioner is a partner of accused No.1 firm.

To lend support to the submission that, at this stage, a detailed enquiryis not warranted, Mr. Mundargi placed reliance on a judgment of the SupremeCourt in the case of Shivappa Reddy V/s. S. Srinivasan1. In the said case, the Supreme Court emphasised the necessity of compliance with the mdnateof the provisions contained in the Partnership Act, to sustain the plea that aperson has retired from the partnership firm.

Mr. Mengde, learned Counsel for Respondent No.1 in rest of the Petitions, adopted and supplemented the submissions of Mr. Mundargi.

I have carefully perused the material on record. From the perusal of12025 SCC Online SC 1162SSP 5/9 32 wp 5631 of 2025.docthe impugned orders, it appears that the learned Additional Sessions Judgeconcentrated on only one aspect of the matter, namely, the failure of the Petitioner to demonstrate prima facie that she had retired from the partnershipfirm.

Mr. Thakur made an attempt to urge that, actually it was the case of the Petitioner that she was never a partner of Accused No.1 firm and not that shehad retired from the said firm.

In this backdrop, this Court considered it appropriate to direct the Petitioner to place relevant material on record, including the partnership deedand the consent terms filed before the Arbitral tribunal, in discharge of theliability purportedly incurred thereunder the cheques were allegedly drawn.

A copy of the partnership deed dated 16 August 2007, whereby andwhereunder the accused No.1 firm was constituted with effect from 1 August2007 indicates that the Petitioner was not one of the eleven partners, whoinitially constituted the said firm. A copy of the Firm Registration Certificateissued by the Registrar of Firms, indicates that, though as many as 8 partnersretired from the said firm with effect from 1 April 2015, the Petitioner was notinducted as a partner of the said firm. Evidently, there is, prima facie, nomaterial to show that the Petitioner was subsequently admitted as a partner ofaccused No.1 firm.

It would be contextually relevant to note that, to the consent termsSSP 6/9 32 wp 5631 of 2025.docbefore the Arbitral Tribunal, which were executed between the complainantand accused Nos.1 to 3 only, incontrovertibly, the Petitioner is not a party. Indisputably, the Petitioner is also not the signatory to the subject cheques.

In the face of the aforesaid material, which, prima facie, yet with anelement of certainty, indicates that the Petitioner was neither a partner ofaccused No.1 firm, when it was constituted; nor she was admitted as apartner of accused No.1 firm subsequently, a bare assertion in the complaintthat the Petitioner is also one of the partners of the accused No.1 firm is notsufficient to make the Petitioner undergo the ordeal of trial.

The endeavour on the part of the complainant to bank upon the allegedrepresentations made in the past and the cheques drawn by the Petitionerpurportedly in the capacity of a partner and authorized signatory of theaccused No.1 firm, does not merit countenance.

In the face of the material which clearly demonstrates that the Petitionerhas never been a partner of accused No.1 firm, no constructive criminality canbe fastened upon the Petitioner by invoking the provisions contained in Section 141 of the Act. Moreover, in the case at hand, the complainant drawssupport and sustenance to the legal enforceability of the liability from theconsent terms executed before the arbitral tribunal, wherein accused Nos.1 to3 had incurred the obligations to repay the specified amounts in terms of the Schedule incorporated therein. The Petitioner is not a party to the saidSSP 7/9 32 wp 5631 of 2025.docconsent terms.

In the totality of circumstances, the learned Magistrate erred in issuingprocess against the Petitioner as well, by invoking the provisions contained in Section 141 of the Act, 1881. Learned Additional Sessions Judge failed tocorrect the error by concentrating on only one aspect of the matter andoverlooking the absence of foundational facts to invoke the provisionscontained in Section 141 of the Act, 1881 qua the Petitioner. Resultantly, both the orders deserve to be quashed and set aside.