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2022 (6) TMI 1130 - HC - Indian LawsDishonor of Cheque - signing of cheque jointly - vicarious liability u/s 141 of NI Act - insufficiency of funds - acquittal of the accused - existence of legally enforceable debt or not - HELD THAT - This court finds force in the submission of learned counsel for the petitioners that, at no point of time, allegation, if any, with regard to advancement of loan to the petitioners ever came to be leveled rather, the complainant specifically stated in the complaint that in March, 2016, he on the request of accused Rishi Rana advanced him loan to the tune of Rs. 5.00 Lakh for his domestic use. There is not even a whisper in the complaint that the loan to the tune of Rs. 5.00 Lakh was advanced to some firm or other partners of accused Rishi Rana. It is only after conclusion of evidence, that the complainant filed an application under S. 319 CrPC praying therein to array the petitioners as an accused on the ground that they have also signed cheque alongwith accused Rishi Rana. It has been further averred in the reply that inadvertently before instituting complaint under S.138, no notice could be issued to the petitioners. Once there is no allegation in the complaint that Rs. 5.00 Lakh was advanced to the firm or to other partners of the accused Rishi Rana, complaint against the petitioners is otherwise not maintainable. Mere fact that they have also signed the cheque in question, is not sufficient to conclude complicity of the petitioners in the case, especially when there is no allegation in the complaint that the complainant had advanced loan to the tune of Rs. 5.00 Lakh to the firm or the persons sought to be arrayed as accused - True it is that in the case at hand, cheque in question has been signed by petitioners alongwith respondent/accused Rishi Rana, but once there is no liability if any of these persons towards complainant, they otherwise cannot be held liable for issuance of cheque, which ultimately came to be dishonoured on account of insufficient funds. Interestingly in the case at hand, there is no allegation worth the name in the complaint against the petitioners, that they had taken loan from complainant and they with a view to discharge their liability issued cheque which subsequently came to be dishonoured on account of insufficient funds - Otherwise also it is well settled by now that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action. No doubt under S.319 CrPC, court enjoys vast power to order impleadment of those persons as accused against whom, some evidence appears during trial or enquiry that he has also committed offence alongwith other accused but in the case at hand, there is /was no material available before court below to arrive at a conclusion that persons sought to be arrayed as accused i.e. petitioners herein had committed offence punishable under S.138 of the Act. Petition disposed off.
Issues Involved:
1. Quashing of the order dated 3.3.2018 under Section 319 CrPC. 2. Liability under Section 138 of the Negotiable Instruments Act. 3. Vicarious liability under Section 141 of the Negotiable Instruments Act. Issue-wise Detailed Analysis: 1. Quashing of the order dated 3.3.2018 under Section 319 CrPC: The petitioners sought to quash the order dated 3.3.2018, which allowed the application under Section 319 CrPC to array them as accused in a case filed under Section 138 of the Negotiable Instruments Act. The court noted that Section 319 CrPC allows the court to proceed against any person not being the accused if it appears from the evidence that such a person has committed any offence. However, the court found that there was no material available to conclude that the petitioners had committed the offence under Section 138 of the Act. The court emphasized that there were no allegations in the complaint that the loan was advanced to the firm or other partners, only to the accused Rishi Rana. Thus, the order to array the petitioners as accused was quashed. 2. Liability under Section 138 of the Negotiable Instruments Act: The complaint was filed under Section 138 of the Act due to the dishonor of a cheque issued by the accused Rishi Rana. The petitioners argued that they were not liable as there were no allegations that the loan was advanced to them or the firm. The court agreed, noting that the complaint specifically stated that the loan was given to Rishi Rana for his domestic use. The mere fact that the petitioners signed the cheque was not sufficient to establish their complicity, especially in the absence of any allegations that the loan was given to the firm or the petitioners. 3. Vicarious liability under Section 141 of the Negotiable Instruments Act: The court referred to the principles established by the Hon'ble Apex Court regarding vicarious liability under Section 141 of the Act. It was emphasized that to fasten vicarious liability, the complainant must specifically show how and in what manner the accused was responsible for the conduct of the business. The court cited the case of Ashoke Mal Bafna v. Upper India Steel Mfg. & Engg. Co. Ltd., which held that the Magistrate must examine the nature of allegations and evidence before summoning an accused under Section 138 of the Act. The court found that there were no specific averments against the petitioners showing their responsibility for the conduct of the business or the issuance of the cheque. Therefore, the petitioners could not be held vicariously liable. Conclusion: The court concluded that the petitioners could not be held liable under Section 138 of the Act as there were no specific allegations against them regarding the loan or the issuance of the cheque. The order dated 3.3.2018 was quashed, and the petition was allowed, disposing of all pending applications.
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