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2013 (7) TMI 718 - SC - Companies LawScope of section 141 of NI Act whether the officers of the company could be held vicariously liable for the criminal liability u/s 138 on account of dishonor of cheque - Held that - U/S 138 only the drawer of the cheque can be prosecuted - the appellant was not a drawer of the cheque and had not signed the same - court relied upon Raghu Lakshminarayanan vs. Fine Tubes (2007 (4) TMI 367 - SUPREME COURT OF INDIA ) - a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant had not signed the cheque - the interpretation sought to be advanced by the respondents would add words to Section 141 and extend the principle of vicarious liability to persons who are not named in it - if it is a Company, then Drawer Company and is extended to the officers of the company - normal rule in the cases involving criminal liability is against vicarious liability - exceptions on account of specific provision being made in statutes extending liability to other - section 141 is a specific provision that in case an offence u/s 138 is committed by a company the criminal liability for dishonour of a cheque will extend to the officers of the company - it contains conditions which have to be satisfied before the liability can be extended the conditions have to be strictly complied with appeal decided in favour of appellant.
Issues Involved:
1. Applicability of Section 138 of the Negotiable Instruments Act, 1881. 2. Interpretation of the term "drawer" under Section 138. 3. Vicarious liability under Section 141 of the Negotiable Instruments Act. 4. Criminal liability in cases of dishonour of cheques issued from joint accounts. Detailed Analysis: 1. Applicability of Section 138 of the Negotiable Instruments Act, 1881: The court analyzed the applicability of Section 138, which deals with the dishonour of cheques for insufficiency of funds. The essential ingredients for constituting an offence under Section 138 were outlined, including the drawing of a cheque on an account maintained by the drawer, the cheque being issued for the discharge of a debt or liability, and the cheque being returned unpaid due to insufficient funds. 2. Interpretation of the term "drawer" under Section 138: The court emphasized that only the "drawer" of the cheque can be held liable under Section 138. It was noted that strict interpretation is required for penal statutes. The court referred to previous judgments to establish that the liability under Section 138 is confined to the person who has drawn the cheque. In the present case, the appellant was not the drawer as she did not sign the cheque, and therefore, she could not be held liable under Section 138. 3. Vicarious liability under Section 141 of the Negotiable Instruments Act: The court discussed the concept of vicarious liability under Section 141, which extends liability to officers of a company if the company commits an offence under Section 138. It was clarified that vicarious liability in criminal law requires specific statutory provisions. The court rejected the respondent's argument that the appellant could be held liable as an association of individuals under Section 141, as this was not mentioned in the original complaint. 4. Criminal liability in cases of dishonour of cheques issued from joint accounts: The court held that in cases of joint accounts, only the person who has signed the cheque can be prosecuted under Section 138. The appellant, being a joint account holder but not the signatory of the cheque, could not be held liable. The court reiterated that the culpability for cheque dishonour cannot be extended to joint account holders who have not signed the cheque. Conclusion: The court concluded that under Section 138 of the Negotiable Instruments Act, only the drawer of the cheque can be prosecuted. In the present case, the appellant was not the drawer as she did not sign the cheque. Therefore, the proceedings against her were quashed. The appeal was allowed, and the process in Criminal Case No. 1171/SS/2009 pending before the Metropolitan Magistrate, 13th Court, Dadar, Mumbai, was quashed against the appellant.
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