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TMI Blog2005 (7) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... rge of and responsible for the conduct of the business of the society is arrayed as the second accused. 3. As per the complaint, ₹ 39.619/-was allegedly due from 'the accused' to the Government on account of hiring combined harvest machine 'controlled by the complainant.' Towards discharge of the said debt or liability, second accused allegedly signed and issued the cheque for and on behalf of the society, personally undertaking to discharge the liability of the society. The cheque when presented for encashment was dishonoured for the reason, 'funds insufficient.' Notices were issued to both accused but they did not send any reply. Thereafter, complying with the formalities under the Act, a complaint was filed against them and the case was taken on file and process was issued to petitioner, as Secretary of first accused-society. He seeks to quash the proceedings initiated against him. 4. Learned counsel appearing for petitioner submitted that petitioner cannot be proceeded against for offence under Section 1 38 of the Act, since there is nothing on record to show that the dishonoured cheque was drawn by petitioner on his account. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in Sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-- For the purposes of this section,-- (a) company means any body corporate and includes a firm or other association of individuals; arid (b) director , in relation to a firm, means a partner in the firm. 6. On a plain reading of the above provisions, it appears that Section 138 of the Act refers to 'offence by a person' whereas Section 141 deals with offences by companies'. From the introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson guilty of offence under Section 138 by virtue of Section 141 of the Act, the first and foremost requirement to be established is commission of the offence by another person i.e., a company, firm or association of individuals. Unless and until it is established that such juristic person commits offence under Section 138 of the Act, no person referred to in Section 141 of the Act can be proceeded against, summoned, prosecuted or convicted for offence under Section 138. In other words, commission of offence under Section 138 of the Act by a juristic person is an inevitable legal pre-requisite or the condition precedent to proceed against a person referred to under Section 141 of the Act and to hold him guilty of the said offence. 10. It is thus clear that a person referred to in Section 141 of the Act can be prosecuted and convicted for an offence committed by another person. Such a situation is rare and not quite common in criminal law. A Court must, therefore, bestow exceptional care and caution while dealing with cases involving persons covered by Section 141. The Court must be doubly alert in every step taken by it in such cases. The Court must be conscious that It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had ordered any amount of money to be paid to any other person from out of his account and that he had acted in terms of Section 138 of the Act. Hence, petitioner has no personal liability for offence under Section 138 of the Act. But, can he be deemed to be guilty of the said offence by virtue of Section 141 of the Act? 14. The records in this case will not reveal that commission of offence under Section 138 of the Act by the society also. The relevant cheque in this case is not drawn by the society and that it is signed on behalf of the society. The account on which such cheque is drawn is not maintained by the society with any banker. The payment ordered as per the cheque is not from out of the amount maintained by the society. Thus, none of the three basic requirements of Section 138 of the Act are established against the society and hence first accused-society cannot be deemed to have committed offence under the said section. In the above circumstances, secretary of the society cannot be proceeded against for the offence, under Section 141. 15. It is also pertinent to note that there is no allegation in the complaint that petitioner was in charge of and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence under Section 138. Even if the cheque issued was for clearing off the liability of the society, unless it is established that the dishonored cheque is drawn by the society on an account maintained by the society itself, neither the society nor its secretary can be proceeded against under Section 141 for offence under Section 138 of the Act. 19. Learned counsel for petitioner placed reliance upon the decision of the High Court of Andhra Pradesh in B.S.K. Prasad v. M/s. Laxmi Vessels, 2005 (1) LJ (NOC) 7 : (2004 Cri LJ 4079) (AP) in which it is held that as per Section 138 of the Act the drawer of a dishonoured cheque only is liable for punishment . He also cited K. Seetharam Reddy v. K. Radhika Rani, (2002) 112 Comp Cas 204 (AP) in support of his arguments. It is held in the said decision that Section 138 of the Negotiable Instruments Act, 1881, leaves no doubt that the person who has drawn the cheque on his account is alone liable in the event the cheque drawn by him is dishonoured . In the light of the above dictum also, I find that neither first accused-society nor petitioner, as secretary of the society can be proceeded against for offence under Section 138 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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