TMI Blog2013 (11) TMI 1809X X X X Extracts X X X X X X X X Extracts X X X X ..... 138 of the Negotiable Instrument Act has been assailed. The allegation in the petition of complaint is to the effect that the dishonoured cheque in question was issued by accused No. 3, namely, M/s. Paramout Properties and Estate Development Limited. Upon dishonour, notice was issued but the amount of the cheque was not paid within the stipulated time, prima facie constituting an offence under section 138 of the Negotiable Instrument Act. It is further alleged that the said cheque had been issued in respect of a transaction entered into by and between the petitioners, that is, the accused Nos. 1 and 2 therein and the opposite party/complainant. Process was issued upon the petitioners as well as the accused No. 3 company under section 138 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is whether the petitioners whose liability is sought to be discharged by issuance of the cheque in question can be prosecuted on dishonour of such instalment under the provisions of section 138 read with section 141 of the Negotiable Instruments Act, 1881. Section 138 of the Act reads as follows: 138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a juristic entity is created by a legal fiction provided under section 141 of the Act. Section 141 reads as follows: 141. Offences by companies--(1) 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 business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when a cheque was issued from the personal account of an employee of a company in respect of liability of the company itself, the directors of the said company cannot be made liable under section 141 of the Negotiable Instrument Act. In (2013)8 SCC 71 (supra), the Apex Court had the occasion of dealing with the extent of criminal liability of a joint account holder in respect of a dishonoured cheque drawn on such joint account and held as follows:-- .... Considering the language used in section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, we are of the view that it is only the 'drawer' of the cheque who can be made liable for the penal action under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to be made personally liable for the acts which result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub-section enables certain persons to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. The liability under section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. It is a departure from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of the cheque, they cannot be held to be vicariously liable under section 141 of the Negotiable Instruments Act for dishonour of such cheque. 11. I am of the view that the petitioners cannot be prosecuted either under section 138 of the Negotiable Instrument Act or under the principles of vicarious liability as laid down under section 141 of the Act. For the aforesaid reasons, the revisional application is allowed. The impugned order dated 17th July, 2012 is set aside. The proceedings in case No. 17483 of 2010 pending before the learned Metropolitan Magistrate, 16th Court, Calcutta be quashed so far as the petitioners are concerned. Trial against other accused persons shall continue in accordance with law. Criminal section is di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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