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2023 (4) TMI 2 - HC - Indian LawsDishonour of Cheque - guarantor's liability - funds insufficient - legally enforceable debt or not - vicarious liability - discharge of initial burden in order to prove its case under Section 138 of the Negotiable Instruments Act - failure to rebut by oral or documentary evidence - HELD THAT:- The guarantor's liability under the Indian Contract Act, 1872 is a civil liability. However, vicarious liability in the criminal law in terms of Section 141 of the Negotiable Instruments Act cannot be fastened because of the civil liability. Vicarious liability under sub-Section (1) to Section 141 of the Negotiable Instruments Act cannot be pinned when the person is in overall control of the day-to-day business of the company or firm. There was no legally enforceable debt in order to issue any cheque by the petitioner. The petitioner, being stood as a guarantee for the aforesaid two companies, was not liable to pay any amount to the respondent and nothing warranted for the petitioner to issue cheque for any enforceable debt in favour of the respondent herein. Therefore, the alleged cheque was not issued for any legally enforceable debt and the petitioner cannot be held to be liable for the offence punishable under Section 138 of the Negotiable Instruments Act. Unfortunately, both the Courts below mechanically convicted the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act and it cannot be sustained against the petitioner herein. The Criminal Revision Case is allowed.
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