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2024 (1) TMI 1 - HC - Indian LawsDishonour of Cheque - acquitted of the charges - vicarious liability of Managing Director for the offence committed by the company - HELD THAT - In the case on hand, the 1st accused-company owed amount to the complainant/1st respondent. Admittedly the revision petitioner was the Managing Director of that company and he issued that cheque in his capacity as its Managing Director. When the company is found not guilty of the offence alleged, the Managing Director cannot be held vicariously liable for the offence committed by the company. No appeal or revision has seen preferred by the complainant/1st respondent against the acquittal of the 1st accused-company. So, that verdict has become final. So much so, the revision petitioner Managing Director cannot be held liable as the company was acquitted, finding that no offence was committed by the company. The revision petitioner in his personal capacity did not owe any amount to the complainant/ 1st respondent and Ext.P2 cheque was issued not towards discharge of any personal liability of the revision petitioner. The liability of persons referred to in Section 141 of the N.I Act is coextensive with that of the company, firm or association of individuals, in a prosecution under Section 138 of the N.I Act. When it is found that the company has not committed the offence, and it is acquitted, its directors are not liable to be convicted, for the offence for which the company has been acquitted. The finding of the appellate court that, the revision petitioner/2nd accused has committed an offence punishable under Section 138 of the N.I Act in spite of acquittal of the 1st accused-company, is liable to be set aside - the impugned judgment is set aside and the revision petitioner is found not guilty of the offence punishable under Section 138 of the N.I Act and he is acquitted. Revision petition allowed.
Issues involved:
The revision by the 2nd accused in C.C. No. 695 of 2000 against the judgment in Crl. Appeal No. 226 of 2005, which upheld his conviction under Section 138 of the Negotiable Instruments Act, questioning the vicarious liability of the Managing Director of a company. Comprehensive Details: 1. The complaint was based on the dishonour of a cheque issued by the revision petitioner, the Managing Director of a company, towards a payment due to the complainant. The trial court found all accused guilty under Section 138 of the N.I Act, sentencing them accordingly. 2. The appellate court heard appeals by accused Nos. 1 to 3 and 5 together, acquitting some and upholding the conviction of the revision petitioner, modifying the sentence and compensation amount. The revision petitioner challenges this judgment on the grounds of vicarious liability. 3. The complaint alleged that the Managing Director and Directors of the company failed to return an investment amount to the complainant, leading to the cheque issuance. The notice sent under Section 138(b) of the N.I Act was accepted by the revision petitioner but no response was received. 4. The legal issue revolves around Section 141 of the N.I Act, which holds persons in charge of a company responsible for offences committed by the company. The revision petitioner argues that when the company is acquitted, the Managing Director cannot be held vicariously liable. 5. Citing legal precedents, the revision petitioner's counsel argues that vicarious liability under Section 141(1) of the N.I Act is contingent upon the company committing the offence. The court emphasizes the need for the company's guilt as a prerequisite for holding individuals liable. 6. The court concludes that since the company was acquitted, the Managing Director cannot be held liable for the offence under Section 138 of the N.I Act. The impugned judgment is set aside, and the revision petitioner is acquitted, with the bail bond cancelled. 7. The final decision absolves the revision petitioner of the offence, highlighting the importance of establishing the company's guilt before holding individuals vicariously liable under the N.I Act.
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