Lamba Auto Electric Pvt Ltd Earlier ... vs Sh Tarandeep Singh And Anr

Headnote AI-drafted · Reviewed and approved

The petitioners sought quashing of a complaint filed under Sections 138/141 of the Negotiable Instruments Act, 1881, arising out of the dishonour of three cheques totalling Rs.80,00,000/- drawn on Canara Bank, Vikas Puri, Delhi. The cheques were issued by respondent No.2 allegedly as the authorised signatory of petitioner No.1 company in connection with a buy-back return plan related to investment in a residential colony project. The petitioners contended that they were neither signatories to the cheques nor held the bank account jointly with respondent No.2, and that the cheques were drawn on respondent No.2's personal account.

The Court examined the scope of Section 138 and Section 141 of the Negotiable Instruments Act, 1881, and held that Section 138 can only be attracted against the person who draws the cheque on an account maintained by them. Section 141, which provides for vicarious liability of directors, applies only where the offence under Section 138 has been committed by a Company. Since the subject cheques were issued from respondent No.2's individual account and not from the company's account, the petitioners could not be held vicariously liable under Section 138 read with Section 141 of the NI Act.

Reliance was placed on the Supreme Court decision in Mainuddin Abdul Sattar Shaikh v. Vijay D. Salvi, (2015) 9 SCC 622, wherein it was held that if a cheque is drawn by an employee of an accused company on his personal account, even if to discharge dues of the company and its directors, the company and its directors cannot be held liable under Section 138 NI Act. The Court further noted that NI Act proceedings are quasi-criminal and in personam in nature, requiring strict construction of its provisions, and that there is no concept of shared liability under the Act.

Catchwords: Negotiable Instruments Act · dishonour of cheque · Section 138 · Section 141 · vicarious liability · directors · personal account · company account · quashing of complaint · authorized signatory · in personam · strict construction

Cheque dishonour (Section 138 NI Act)