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2022 (6) TMI 1172 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - vicarious liability - It is alleged that the accused knowing it well that there is no sufficient fund in the account still issued the cheques and made himself liable u/s 138 of N.I.Act - HELD THAT - The Court has gone through the materials on record and finds that in the complaint the firm is not made an accused. On perusal of the cheques which have been brought on the record by way of I.A petition it transpires that the cheque in question was issued by the firm and the petitioner is not a drawer in both the cases. On perusal of this section, it is crystal clear that vicarious liability under sub section 1 or 2 of section 141 of the Negotiable Instruments Act can be fastened if the person is having the control over the day to day affairs of the company. Looking to the explanation of the said section, it is crystal clear that the firm or the company are required to be made an accused in the complaint, which is lacking in the case in hand. However, such vicarious liability arises only when the company or the firm commits offence as primary offence. The judgment relied by Mr. Singh, the learned counsel appearing on behalf of the petitioners in the case of ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. 2012 (5) TMI 83 - SUPREME COURT is on the same footing which is helping the petitioners. Recently, the Hon'ble Supreme Court has again examined this aspect of the matter in the case of Dilip Hariramani v. Bank of Baroda 2022 (5) TMI 424 - SUPREME COURT - By the Hon'ble Supreme Court in the judgment clearly held that section 141 of the Negotiable Instruments Act extends vicarious criminal liability to the officers associated with company or firm when one of twin requirements of section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. In absence of the firm and looking into the admitted position that the petitioner is not the drawer and in both the case he cannot be liable to be punished. Petition allowed.
Issues Involved:
1. Quashing of entire criminal proceedings in connection with complaint cases C.C.No.110/2016 and C.C.No.178/2016. 2. Validity of the orders taking cognizance dated 05.12.2016 and 22.09.2016 under Section 138 of the Negotiable Instruments Act (N.I. Act). 3. Vicarious liability under Section 141 of the N.I. Act. 4. The necessity of making the firm or company an accused in the complaint. Issue-wise Detailed Analysis: 1. Quashing of entire criminal proceedings: The petitions sought to quash the entire criminal proceedings arising from complaint cases C.C.No.110/2016 and C.C.No.178/2016. The court examined the facts and found that the petitions were filed to quash the orders taking cognizance under Section 138 of the N.I. Act. The court noted that the cheques in question were issued by a firm and not by the petitioners personally. 2. Validity of the orders taking cognizance: The court scrutinized the orders dated 05.12.2016 and 22.09.2016, which took cognizance under Section 138 of the N.I. Act. The court observed that the cheques were issued by the firm and the petitioners were not the drawers of the cheques. The court referred to the case of "Aneeta Hada v. Godfather Travels and Tours Private Limited" and emphasized that for vicarious liability to be fastened, the company or firm must be made an accused, which was not done in this case. 3. Vicarious liability under Section 141 of the N.I. Act: The court analyzed Section 141 of the N.I. Act, which deals with offenses by companies and vicarious liability. It was highlighted that vicarious liability can only be imposed if the person has control over the day-to-day affairs of the company and if the company or firm is made an accused. The court referred to the case of "Dilip Hariramani v. Bank of Baroda" and reiterated that the primary liability must be established against the company or firm before vicarious liability can be imposed on individuals. 4. Necessity of making the firm or company an accused: The court emphasized that the firm or company must be made an accused in the complaint for vicarious liability to be imposed on individuals associated with the firm. The court noted that the firm was not made an accused in the complaint, and thus, the petitioners could not be held liable under Section 138 of the N.I. Act. The court referred to the case of "Mainuddin Abdul Sattar Shaikh v. Vijay D. Salvi" and distinguished it by noting that in the present case, the petitioners were not the drawers of the cheques. Conclusion: The court concluded that the petitions succeeded as the firm was not made an accused, and the petitioners were not the drawers of the cheques. The entire criminal proceedings arising from complaint cases C.C.No.110/2016 and C.C.No.178/2016, along with the orders taking cognizance dated 05.12.2016 and 22.09.2016, were quashed. The petitions Cr.M.P.No.2183 of 2017 and Cr.M.P.No.2190 of 2017 were allowed and disposed of, and any interim applications were also disposed of.
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