2023 (11) TMI 360 - HC - Indian Laws

Dishonour of Cheque - legally enforceable debt or not - acquittal of accused - non-joinder of drawer of the disputed cheque - fatal to the proceedings under Section 138 of the Negotiable Instruments Act or not - HELD THAT - The issue whether the learned Magistrate committed any error in dismissing the complaint by holding that non-joinder of drawer of the disputed cheque i.e. Company is fatal to the proceedings under Section 138 of the Negotiable Instruments Act is no longer res integra - The similar had question arose for consideration before three Judges Bench of the Hon'ble Supreme Court in the case of Anita Handa 2012 (5) TMI 83 - SUPREME COURT as to whether the complaint under Section 138 of the Negotiable Instruments Act and Section 141 thereto against the Director or authorized signatory of the cheque without arraigning the company as accused, was maintainable? Initially, the matter was notified before two Judges Bench, which due to diversion of opinion, was referred to the three Judges bench. The Hon ble Supreme Court had upon analysis of relevant provisions of the Negotiable Instruments Act, held that Section 141 uses terms person and refers it to a company. The Company is treated as a juristic person in the eyes of law and the concept of corporate criminal liability is attracted to a corporation and company. The said provisions of the Act invariably held in offences by the Company, certain categories of officers in certain circumstances are deemed to be guilty of the offence under Section 138 of the Negotiable Instruments Act. In view of the aforesaid analysis drawn by the Hon ble Supreme Court, this Court is of the view that non-joinder of the Company as accused, which otherwise is treated as principal offender being drawer of the cheque, the Director of the Company joined as sole accused representing the company as well as authorised signatory, would not served the provisions of Section 141 of the Act. Thus, no arguable case is made out to grant this application seeking special leave to appeal. Appeal disposed off.

Summary

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act.
2. Non-joinder of the company as an accused.
3. Vicarious liability of the Director under Section 141 of the Negotiable Instruments Act.

Summary:

1. Maintainability of the Complaint:
The applicant, original complainant, challenged the judgment of acquittal by the learned 2nd Additional Chief Judicial Magistrate, Anand, in Criminal Case No.3043 of 2018, where the respondent was acquitted for the offence under Section 138 of the Negotiable Instruments Act. The complainant argued that the learned Magistrate initially issued summons upon verification but later dismissed the complaint on erroneous grounds of non-maintainability.

2. Non-joinder of the Company as an Accused:
The crux of the issue was whether the complaint was maintainable without arraigning the company as an accused. The respondent was the sole Director and authorized signatory of Mahindarpur Balaji Trading (OPC) Co. Pvt. Ltd. The complaint was filed against the Director in his capacity, but the company was not separately joined as an accused. The court examined the legislative intent and legal precedents, concluding that the company, being a separate legal entity, must be arraigned as an accused for the complaint to be maintainable.

3. Vicarious Liability of the Director under Section 141:
The court referred to the Hon'ble Supreme Court's interpretation in the case of Anita Handa Vs. Godfather Travels and Tours Pvt. Ltd., which emphasized that for vicarious liability to be imposed under Section 141, the company must be prosecuted as the principal offender. The court reiterated that the company's non-joinder as an accused was fatal to the proceedings under Section 138 of the Negotiable Instruments Act.

Conclusion:
The court held that non-joinder of the company as an accused rendered the complaint not maintainable, and thus, no arguable case was made for granting special leave to appeal. Consequently, the application for special leave to appeal was dismissed, and the Criminal Appeal No. 335 of 2022 was disposed of.