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Framing of charge under Section 138 of the Negotiable Instruments Act, 1881 against directors of a company based on vicarious liability. Analysis: The petitioners challenged the order directing the framing of charges against them under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that cheques issued by the company were dishonored due to insufficient funds, leading to a legal notice and subsequent filing of a complaint against the company and its directors. The petitioners contended that they were not in charge of the company's business and therefore should not be vicariously liable for the offense. The court examined Section 141 of the Act, which outlines the vicarious liability of individuals in a company. It distinguishes between those in charge of the company's business and other officers. Subsection (1) holds those responsible for the conduct of the business directly liable, while Subsection (2) covers directors, managers, etc., only if the offense was committed with their consent or connivance. The court emphasized the need for specific averments in the complaint to establish vicarious liability. The court clarified that the burden of proving a person's responsibility for the company's conduct lies with the complainant. Even if the complainant meets this burden, the accused can still show lack of knowledge or due diligence to avoid liability. In this case, the court found no evidence or allegations suggesting the petitioners' involvement in the offense. Therefore, the charge against them could not be sustained under Section 141 of the Act. The court disagreed with a previous judgment that allowed prosecution based solely on being named in the complaint without specific averments regarding responsibility. Consequently, the court set aside the order framing charges against the petitioners and discharged them. The judgment highlighted the importance of factual allegations and evidence to establish vicarious liability under the Act. In conclusion, the court ruled in favor of the petitioners, setting aside the order to frame charges against them under Section 138 of the Act. The petition was disposed of, and the trial court was instructed to proceed accordingly.
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