2021 (2) TMI 403 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - privity of contract between the petitioner and respondent - Section 141 of the N.I.Act - HELD THAT - This is not a fit case for indulgence in the exercise of inherent jurisdiction vested in this Court by Section 561 A Cr. P.C. (now Section 482 Cr. P.C.). Admittedly, the petitioner is an employee of respondent no. 2, this is evident from the certificate placed on record by the petitioner as Annexure-2 with the petition, which is also reproduced by the Revisional Court in the judgement impugned. Simply because the employer of the petitioner i.e., Welcome World Electrical Pvt. Ltd. is executing NFS Project in coordination with respondent no. 1 does not make the petitioner an employee of the later. That apart, cheque for the discharge of liability towards the petitioner has been issued by the respondent no. 2 as is evident from the copy of the cheque placed on record by the petitioner as Annexure-4 and the cheque has been returned with the memo insufficient funds in the account of respondent no. 2. In that view of the matter, it is difficult to comprehend the submission of learned counsel for the petitioner that respondent no. 2 being a partner in business with respondent no. 1 too is guilty of commission of offence under Section 138 of the N.I.Act. It is axiomatic that it is only the person who has issued the cheque for discharge of legally enforceable debt, which is bounced or returned by the Bank due to insufficiency of funds in the account of such person, alone can be arraigned as accused in the complaint under Section 138 of the N.I.Act. It is only where the person committing an offence under Section 138 of the N.I.Act is a company, every person, who, at the time of commission of offence was incharge of, and was responsible to the company for conduct of business of the company, as well as the company, shall be deemed to be guilty of offence and liable to be proceeded against and punished accordingly. This is evident from the provisions of Section 141 of the N.I.Act. In the instant case, going by the allegations contained in the complaint and the supporting evidence placed on record, it is respondent no. 2, a company, which is accused of committing an offence under Section 138 of the N.I. Act. By operation of Section 141 of the N.I. Act, it is not only the company i.e., respondent no. 2, but every person, who, at the time of commission of offence was incharge of, and responsible to the company for conduct of business, shall be deemed to have committed offence and, therefore, liable to be proceeded against and punished accordingly. Section 141 of the N.I. Act cannot be stretched so as to fasten the liability on the other company, who may be executing works in partnership with the accused company. Petition dismissed.

Summary

Issues:
Quashment of order passed by Revisional Court under Section 482 Cr.P.C.

Analysis:
The petitioner sought quashment of an order passed by the Revisional Court under Section 482 Cr.P.C. The petitioner was engaged as a Project Coordinator and issued a cheque by the respondent, which was dishonored. The petitioner filed a complaint under Section 138 of the Negotiable Instruments Act. The Revisional Court set aside the order of cognizance against the respondent, leading to the petitioner's challenge. The petitioner argued that both companies were jointly liable under Section 141 of the N.I. Act. However, the respondent contended that there was no privity of contract with the petitioner and the liability, if any, rested with the other respondent. The Court noted that the petitioner was an employee of the second respondent, and the cheque was issued by the second respondent, not the first. Thus, the Court found no legal basis to continue proceedings against the first respondent.

The Court emphasized the essential ingredients for a complaint under Section 138 of the N.I. Act, including a legally enforceable debt, issuance of a cheque for discharge of debt, and the cheque being returned due to insufficient funds. It clarified that only the person issuing the bounced cheque for a legally enforceable debt could be accused. Section 141 of the N.I. Act holds individuals responsible if they were in charge of the company at the time of the offense. The petitioner's reliance on Section 141 was deemed meritless as the accused company was solely liable. The Revisional Court thoroughly analyzed the case and concluded that the first respondent was wrongly accused, leading to the dismissal of the petition.

In conclusion, the Court found the petition lacking merit and dismissed it along with connected matters. The judgment highlighted the importance of legal liability in cases of bounced cheques and reiterated that individuals could only be held accountable if directly involved in the offense under the N.I. Act.