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TMI Blog2013 (7) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... f specific provision being made in statutes extending liability to other - section 141 is a specific provision that in case an offence u/s 138 is committed by a company the criminal liability for dishonour of a cheque will extend to the officers of the company - it contains conditions which have to be satisfied before the liability can be extended – the conditions have to be strictly complied with – appeal decided in favour of appellant. - Criminal Appeal No. 813 of 2013 (Arising out of S.L.P. (Crl.) No. 9794 of 2010) - - - Dated:- 1-7-2013 - P. Sathasivam And Jagdish Singh Khehar,JJ. JUDGMENT P. Sathasivam,J. 1) Leave granted. 2) This appeal is directed against the final judgment and order dated 24.09.2010 passed by the High Court of Judicature at Bombay in Criminal Writ Petition No. 1823 of 2010 whereby the High Court partly allowed the petition filed by the appellant herein. 3) Brief facts: a) M/s Sheth Developers Private Ltd.-the respondent herein is a company incorporated under the provisions of the Companies Act, 1956 having its registered office at 11, Vora Palace, M.G. Road, Kandivali (West), Mumbai and is engaged in the business of land development and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent and the appellant, a cheque of Rs. 25 crores was issued by the husband of the appellant from their joint account. It is the case of the appellant that in breach of the aforementioned understanding, on 05.02.2009, the respondent deposited the cheque with IDBI Bank at Cuffe Parade, Mumbai and the said cheque was dishonoured due to insufficient funds . e) On 18.02.2009, a statutory notice under Section 138 of the Negotiable Instruments Act, 1881 (in short the N.I. Act ) was issued to the appellant and her husband asking them to repay the sum of Rs. 25 crores. On 06.03.2009, the appellant and her husband jointly replied mentioning the circumstances in which the said cheque was issued with the supporting letters. f) On 04.04.2009, a complaint was filed against the appellant and her husband in the Court of the Metropolitan Magistrate, Dadar, Mumbai and the same was registered as Case No. 1171-SS of 2009. By order dated 20.04.2009, process was issued against them. g) On 12.01.2010, the appellant and her husband filed an application objecting the exhibition of documents and the same was registered as Exh. 28. By order dated 11.05.2010, the said application was dismissed. h) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal action under the provisions of the N.I. Act. It is settled law that strict interpretation is required to be given to penal statutes. 9) In Jugesh Sehgal (supra), after noting the ingredients for attracting Section 138 on the facts of the case, this Court concluded that there is no case to proceed under Section 138 of the Act. In that case, on 20.01.2001, the complainant filed an FIR against all the accused for the offence under Sections 420, 467, 468, 471 and 406 of the Indian Penal Code, 1860 (hereinafter referred to as IPC) and there was hardly any dispute that the cheque, subject-matter of the complaint under Section 138 of the N.I. Act, had not been drawn by the appellant on an account maintained by him in Indian Bank, Sonepat Branch. In the light of the ingredients required to be fulfilled to attract the provisions of Section 138, this Court, after finding that there is little doubt that the very first ingredient of Section 138 of the N.I. Act enumerated above is not satisfied and concluded that the case against the appellant for having committed an offence under Section 138 cannot be proved. 10) In S.K. Alagh vs. State of Uttar Pradesh and Others, (2008) 5 SCC 662, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub-section enables certain persons to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. The liability under Section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. 14) It is not in dispute that the first respondent has not filed any complaint under any other provisions of the penal code and, therefore, the argument pertaining to the intention of the parties is completely misconceived. We were taken through the notice issued under the provisions of Section 138, reply given thereto, copy of the complaint and the order issuing process. In this regard, Mr.Mukul Rohatgi, learned senior counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, issuance of process etc., clearly show that only the drawer of the cheque being responsible for the same. 17) In addition to our conclusion, it is useful to refer some of the decisions rendered by various High Courts on this issue. 18) Learned Single Judge of the Madras High Court in Devendra Pundir vs. Rajendra Prasad Maurya, Proprietor, Satyamev Exports S/o. Sri Rama Shankar Maurya, 2008 Criminal Law Journal 777, following decisions of this Court, has concluded thus: 7. This Court is of the considered view that the above proposition of law laid down by the Hon ble Apex Court in the decision cited supra is squarely applicable to the facts of the instant case. Even in this case, as already pointed out, the first accused is admittedly the sole proprietrix of the concern namely, Kamakshi Enterprises and as such, the question of the second accused to be vicariously held liable for the offence said to have been committed by the first accused under Section 138 of the Negotiable Instruments Act not at all arise. After saying so, learned Single Judge, quashed the proceedings initiated against the petitioner therein and permitted the Judicial Magistrate to proceed and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... husband alone put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque. 23) We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case except in case of Section 141 of the N.I. Act be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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