2021 (9) TMI 47 - HC - Indian Laws

Dishonor of cheque - Insufficient Funds - prosecution under Section 141 of N.I. Act - Section 138 of Negotiable Instruments Act - HELD THAT - It is not in dispute that the cheque has been issued on the account of Belagavi Liberal Credit Souhard Co. Operative Ltd., in favour of respondent. The said society has not been impleaded as accused. The petitioners who were working as General Manger and Branch Manager respectively were arraigned as accused. Petitioner No.1 is a General Manager of the said society had signed on the said cheque. As per provisions of Section 141 of N.I. Act, if the person committed offence under Section 138 is company, every person who at the time the offence is committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence, shall be liable to be proceeded against and punished accordingly. In the absence of company (society) arraigned as accused, a complaint against the petitioners was therefore not maintainable. The petitioners being employed as General Manager and Branch Manager have signed the cheque, therefore, the proceedings against the petitioners are liable to be quashed. The learned counsel for respondent sought liberty to file an application to add company (Society) as the accused. Whether such application if filed by the respondent, maintainable or not cannot be considered in the present petition. If such an application is filed, it is for the trial court to consider it on merits. Application allowed.

Summary

Issues:
Seeking quashing of proceedings under Section 138 of Negotiable Instruments Act - Whether the cooperative society should be impleaded as an accused in the case.

Analysis:
The petitioners, accused Nos.1 and 2, filed a petition seeking to quash the proceedings in C.C. No.606/2016 related to an offence under Section 138 of the Negotiable Instruments Act. The respondent-complainant had filed a private complaint against the petitioners for dishonoring a cheque issued by a cooperative society. The petitioners contended that as employees of the society, they cannot be held solely responsible without the society being made a party to the proceedings. They relied on the Supreme Court's decision in Aneeta Hada v. Godfather Travels and Tours Private Limited, emphasizing the importance of impleading the company in such cases.

The respondent argued that the petitioners, being in charge of the society's business, were responsible for issuing the dishonored cheque and should be held guilty. They sought to amend the complaint to include the cooperative society as an accused, citing precedents like U.P. Pollution Control Board v. Modi Distillery and others. The court considered the provisions of Section 141 of the N.I. Act, which holds individuals responsible if the company commits an offence. The court referred to the strict construction of the law and the necessity of impleading the company for maintaining the prosecution under Section 141.

The court referred to the Supreme Court's decision in Himanshu v. B. Shivamurthy, which emphasized the need to arraign the company as an accused for offences under Section 138. As the petitioners were employees of the society and signed the cheque on its behalf, the absence of the society as an accused made the complaint against the petitioners not maintainable. Therefore, the court allowed the petition, quashing the proceedings against the petitioners and granting the respondent liberty to file an application to add the cooperative society as an accused. The decision on such an application was left to the trial court for consideration on its merits.