TARIQ SALEEM SHEIKH, J. The Petitioner is engaged in the poultry business and has set up an office on Jhang Road, Bhakkar. On 04.11.2023, he submitted an application under section 22-A, Cr.P.C. before the Ex-officio Justice of Justice, Bhakkar, stating that Respondents Nos.4 to 6 were operating as a partnership firm under the name and style of Al-Ittefaq Brokers in Rahimyar Khan. The Petitioner claimed that he had a longstanding business relationship with them. On 17.03.2023, he conducted a transaction worth Rs. 5,000,000/- with Respondents Nos. 4 to 6 at his office in the presence of Muhammad Tahir and Muhammad Ashfaq. Respondent No. 5 issued him Cheque No 2466472506 on behalf of the firm drawn on Allied Bank Limited, Rahimyar Khan Branch, to pay him.
On 18.09.2023, when the Petitioner presented that cheque, it was dishonoured. Contending that Respondents Nos. 4 to 6 had dishonestly issued him a bad cheque and had thus committed a cognizable offence, he requested the Ex-officio Justice of Peace to direct the SHO, Police Station Saddar Bhakkar, to register an FIR under section 154, Cr.P.C. against all of them. By an order dated 21.11.2023, the Ex-officio Justice of Peace accepted his application concerning Respondent No. 5 alone on the ground that he had signed Cheque No. 2466472506. The Petitioner has challenged that order before this Court through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, to the extent that his request for the registration of an FIR against Respondents Nos. 4 and 6 has been declined.
2. Mr. Zafar Iqbal Chohan, Advocate, contends that partners of a firm bear both collective and individual responsibility for the actions undertaken by other partners within the firm's scope of business and for its benefit. Consequently, partners may be held collectively liable for the offence under section 489-F, P.P.C., regardless of whether they had signed the cheque that bounced.
According to Mr. Chohan, in the present case, Respondents Nos. 4 and 6 are partners of Al-Ittefaq Brokers as per the Partnership Deed dated 26.3.2019. They accompanied Respondent No. 5 on 17.03.2023 and actively participated in making a deal with the Petitioner. Subsequently, Respondent No. 5 issued Cheque No. 2466472506 in their presence and with their knowledge and consent.
Hence, an FIR should be directed to be registered against them along with Respondent No. 5.
3. Rai Tariq Saeed Kharal, Advocate, contends that Respondents Nos. 4 and 6 are not active partners of Al-Ittefaq Brokers and are not signatories of Cheque No. 2466472506. Therefore, section 489-F, P.P.C. cannot be invoked against them. The counsel relies upon the following cases in support of his contention: Anil Huda v. Indian Acrylic Limited (AIR 2000 SC 145), Monaben Ketanbhai Shah and another v. State of Gujarat and another (AIR 2004 SC 4274) and Kabir Akbar v. The State and others (2023 PCr.LJ 1588).
Opinion
4. This petition raises a fundamental legal question: Can an individual be prosecuted under section 489-F, P.P.C. solely because he is a partner in the firm, even if he is not a signatory of the dishonoured cheque?
5. The Partnership Act 1932 governs the legal framework for partnerships in Pakistan. Section 4 of the Act defines "partnership" and "firm" as "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." Section 1(a) states that an" 'act of a firm' means any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm." The essential feature of this relation is the concept of mutual agency, whereby each partner is an agent of the other in business matters.
In Cox v. Hickman (1860 8 HI, Cas 268), Lord Cranworth held that mutual agency is the conclusive test for determining the existence of a partnership. This feature allows the partnership to be run by any of the partners, acting on behalf of all the others.
6. Every partner is both an agent and a principal within the firm's structure. As an agent, a partner can bind the other partners through actions taken within the scope of the partnership agreement.
Conversely, as a principal, a partner is obligated by the actions of fellow partners. Hence, each partner bears responsibility for the firm's actions. Although certain provisions, such as sections 10, 12, and 24 of the Partnership Act 1932, impose criminal liability on partners in specific situations for the actions of another partner, the criminal liability of partners in the firm is generally governed by other relevant laws and statutes in force in the country. In Sham Sundar v. State of Haryana (AIR 1989 SC 1982), the appellants formed a partnership firm to establish and operate a rice mill. While one of the appellants actively managed the business, the remaining three were passive investors.
The Special Court found all four partners guilty of violating the Haryana Rice Procurement (Levy)
Order 1979, an offence punishable under section 7 of the Essential Commodities Act. The High Court upheld this conviction. The Supreme Court set aside the convictions of three appellants who were sleeping partners of the firm, holding as follows: "8. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold...Section 10 [of the Essential Commodities Act, 1955] does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not.
"9. It is, therefore, necessary to add an emphatic note of caution in this regard. More often it is common that some of the partners of a firm may not even be knowing of what is going on day to day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection
(1) [of section 10 of the Essential Commodities Act] that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in subsection (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State."
7. The British originally enacted the Negotiable Instruments Act of 1881. Following Partition, both India and Pakistan adopted this Act, although they have since made numerous amendments to tailor it to their respective needs. In this opinion, I would refer to the Indian Negotiable Instruments Act as "INIA" and its Pakistani counterpart as "Pak-NIA".
8. India has criminalized the dishonour of a cheque in section 138 of the INIA. Section 141 of the INIA elaborates that if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the company's business as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded and punished accordingly. The Explanation to section 141 states that, for the purpose of this section, "company means any body corporate and includes a firm or other association of individuals. It adds that "director", in relation to a firm, means a partner in the firm." In view of this Explanation, courts in India apply the same principles for determining the criminal liability of a partnership firm and its individual members for an offence under section 138 as a company and its directors. In Anil Huda v. India Acrylic Limited (AIR 2000 SC 145), the Supreme Court of India held: "Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. But there are offences which could be attributed to juristic person also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under section 138 of the Act. Now there is no scope for doubt regarding that aspect in view of the clear language employed in section 141 of the Act. In the expanded ambit of the word 'company', even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company."
9. In Monaben Ketanbhai Shah and another v. State of Gujarat and others (AIR 2004 SC 4274), the Indian Supreme Court extensively discussed the principles for the prosecution of the partners of a firm under section 138 of the NIA. It observed that section 141 equates a firm to a company. Consequently, anyone in charge of the firm's business at the time of the commission of the offence under section 138 is considered guilty and subject to punishment. Vicarious liability is thus imposed on those responsible for the conduct of the firm's business, Reproducing section 141 verbatim in the complaint is unnecessary because it is to be read as a whole. The complaint must proceed if the substance of the allegations therein meets the legal requirements. The Supreme Court cautioned against adopting a hyper-technical approach when construing complaints, emphasizing that the overarching objective of preventing bounced cheques and upholding the credibility of commercial transactions, which were behind the enactment of sections 138 and 141, must always be borne in mind. The power to quash should be used sparingly. The complaint should not be quashed if, read as a whole, a factual foundation for the offence has been laid.
However, the court must acquit the accused if the complaint lacks essential elements of the offence, even when considered in its entirety, and the allegations made therein are interpreted liberally in favour of the complainant. These principles were reaffirmed in the case of S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elanjovan (2022 INSC 968),
10. In Pakistan, section 489-F, P.P.C. governs the criminal consequences of the dishonour of a cheque and makes the offence punishable with imprisonment, a fine, or both. The following are the foundational elements to constitute the offence: (i) the cheque was duly issued; (ii) it was issued with a dishonest intent; (iii) it was issued towards repayment of a loan or fulfilment of an obligation;
(iv) it was dishonoured on presentation. In Muhammad Sultan v. The State (2010 SCMR 806), the Supreme Court of Pakistan held that "fulfilment of an obligation" is a broad term and is inter alia applicable to all lawful agreements and contracts.
11. Pakistan's legal framework does not have a provision akin to section 141 of the INIA. Therefore, Indian jurisprudence cannot be applied to determine the liability of partners in a firm under section 489-F, P.P.C. The cases of Anil Huda and Monaben Ketanbhai Shah, cited by Mr. Kharal, are not relevant to this discussion.
12. Section 489-F, P.P.C. begins with the word "whoever". The Pakistan Penal Code does not define this word. According to the Merriam-Webster Online Dictionary, it connotes "whatever person: no matter who". The Oxford Advanced Learner's Dictionary (Eighth Edition) explains it as: "(1) the person or group who; any person who; (2) used to say that it does not matter who, since the result would be the same." Corpus Juris Secundum, Vol. XCIV, p. 94, states that "[whoever is a] comprehensive term which refers to a person or persons, and may include artificial persons, such as a municipality, corporations, and public officers as well as private persons." In Gulshan Bibi and others v. Muhammad Sadiq and others (PLD 2016 SC 769), the Supreme Court of Pakistan deliberated on the term "whoever" in sections 3(1) and 3(2) of the Illegal Dispossession Act, 2005.
The issue was whether section 3 of the Act applied solely to land grabbers or anyone who engaged in the prohibited activity. The apex Court held that when enacting a special law to penalize a crime, the legislature may or may not specify particular categories of persons who could be prosecuted.
However, if the law merely delineates offences without restricting the class of offenders and employs terms such as "anyone", "any person", "whoever", and "whosoever", it encompasses all potential offenders without distinction. In such a situation, regardless of the class of offenders to which the individual belongs, he can be prosecuted under that law.
13. In light of the above discussion, the term "whoever" in section 48.9-F, P.P.C. encompasses all offenders without distinction, whether natural or juristic persons. In Kabir Akbar, this Court held that a corporation could be liable under section 489-F, P.P.C. for dishonestly issuing a bad cheque.
However, the guilt of the individual who authored the cheque on behalf of the corporation depends on his role, position, and authority within the organization and whether he holds the status of its "directing mind."
14. The doctrine of identification referred to in Kabir Akbar is relevant in corporate criminal liability, but its application may differ in the context of partnership. In such cases, partners may have joint and several liability for the firm's Actions, including criminal offences, rather than being solely based on the actions of directing minds. The following excerpt from Ramchandra Rango Sawkar and others v. Emperor (AIR 1939 Bombay 129) is instructive: "With regard to accused 4, 5 and 7, the only circumstance against them is that they are partners in the firm of Joshi & Co., for whose benefit these loans were taken. But merely because a person is a partner in a firm, he is not liable for all the criminal acts of the managing partner unless he was aware of them or in some way has connived at them. In the view we take of their position in this firm upon the evidence, we do not think it is sufficiently established that they are responsible for this crime. The evidence suggests that they had not actively participated in the affairs of the firm and did not concern themselves with the methods adopted by the managing partners in financing it. It is also pointed out to us that some of them are men of respectability and means, and that they would not naturally lend themselves to a conspiracy of this description. We think the prosecution evidence falls short of that degree of proof which we would require to connect them with the doings of the partners."
15. In our country, under section 29A of the Pak-NIA, which was introduced through Ordinance No. 49 of 1962, a signature is crucial for liability under a cheque. It provides: 29A. Signature essential to liability.---No person is liable as maker, drawer, indorser or acceptor of a promissory note, bill of exchange or cheque who has not signed it as such: Provided that where a person signs any such instrument in a trade or assumed name he is liable thereon as if he had signed it in his own name.
16. Section 29A, ibid., carries significant implications. In Muhammad Abaid Ullah v. Ateeq-ur- Rehman and others (2015 CLD 307), the plaintiff filed a suit under Order XXXVII, C.P.C. based on a cheque. However, the maker of the cheque passed away before it could be presented for encashment. The High Court ruled that a summary suit could only be filed against the executants of bills of exchange, promissory notes, and cheques, as stipulated by section 29A. Consequently, it concluded that the suit was not maintainable. The relevant excerpt is reproduced below: "The aforementioned provisions make it clear that a party who is not a drawer or maker of a cheque/bill of exchange is not liable thereon and accordingly cannot be sued under Order XXXVII, Rule 2, C.P.C. Under section 29-A of the Negotiable Instruments Act 1881 [Pak-NIA], in order for a legal representative of a deceased person to become liable under the cheque issued by his predecessor, it is necessary that he signs the said cheque for assuming the liability thereunder.
However, this is not the case here as respondents did no such thing. The respondents, therefore, were not liable to the petitioner under the said cheque issued by their predecessor."
17. It is necessary to point out that Muhammad Abaid Ullah only determined the maintainability of a summary suit under Order XXXVII, C.P.C. In Pynda Venkatachalapati Garu v. Pynda Ramakrishnayya and others (AIR 1930 Madras 168), a Division Bench of the Madras High Court held that if the plaintiff can demonstrate the existence of a contract with the partnership and the promissory note was merely evidence of such contract, all partners may be held liable. The principle that only the maker of the promissory note can be held liable is not applicable in cases where an independent contract is alleged.
18. A fundamental principle of statutory interpretation is that a person can only be prosecuted for committing an offence if his actions fall within the explicit scope and language of the penal provision as written in the law. In State of Pakistan and another v. Securities and Exchanze Commission of Pakistan and others (PLD 2018 SC 52), the Supreme Court of Pakistan reaffirmed this principle of strict interpretation, adding that judges are not supposed to create liability through interpretation techniques or attempt to rectify what they may assume should have been incorporated into a statute. It further stated that where ally provision is susceptible to two or more interpretations, then the one that does not extend the penalty/liability will be preferred over one that does. In Tahir Naqash and others v. The State and others (PLD 2022 SC 385), the Supreme Court held that when it is stated that all penal statutes should be interpreted strictly, it simply means that the court should ensure that the act in question meets the criteria of being an offence based on the plain meaning of the words used, without distorting or extending their interpretation.
Put differently, the rule of strict construction requires that the statute's language should not be construed in a manner that includes acts that do not fall within a reasonable interpretation of the statute. However, the rule of strict. construction must yield to the paramount rule that every statute is to be interpreted according to the express or manifest intention of the legislature.
19. To sum up, while certain provisions of the Partnership Act, such as sections 10, 12, and 24, impose criminal liability on partners for the actions of another partner in specific circumstances, the determination of criminal liability for dishonestly issuing a cheque is governed by section 489-F, P.P.C. read with section 29A of the Pak-NIA. All the elements of the offence must be established accordingly to hold a partner guilty.
20. In the present case, Respondents Nos. 4 and 6 are not the signatories of Cheque No. 2466472506. Section 29A of the Pak-NIA explicitly states that no person is liable as a maker, drawer, indorser, or acceptor of a promissory note, bill of exchange, or cheque unless they have signed it as such. Therefore, Respondents Nos. 4 and 6 cannot be prosecuted under section 489-F, P.P.C.
21. Importantly, the Petitioner has submitted a copy of the Partnership Deed dated 26.03.2019 executed between Respondents Nos.4 to 6 by which they established the firm Al-Ittefaq Brokers.
According to Clause 7 of the Partnership Deed, Respondent No. 5 is designated as the firm's Managing Partner. Furthermore, Clause 8 states that the firm shall maintain bank account/accounts with selected bank/banks, which will be operated exclusively by Respondent No.
5. These clauses, along with others, indicate that while Respondents Nos. 4 to 6 share profits and losses equally, regardless of their capital contribution, Respondent No. 5 is responsible for managing the business. In his application under section 22-A, Cr.P.C., the Petitioner asserted that on 17.03.2023, Respondents Nos. 4 and 6 were present with Respondent No. 5 during the business transaction conducted in his office. However, he has neither alleged in the said application nor brought any evidence on record suggesting that Respondents Nos. 4 and 6 were complicit in dishonesty with Respondent No. 5 when Cheque No. 2466472506 was issued.
22. In view of the above, the impugned order dated 21.11.2023 does not call for interference by this Court. This petition has no merit and is dismissed.