Negotiable Instruments Act, 1881 – s. 138 r/w. s.141 – Respondent filed complaint u/s. 138 r/w. s.141 of the NI Act – Appellant set up twin grounds to seek quashment of the complaint against him; firstly, that he had resigned from the partnership firm on 28.05.2013 whereas the cheque in question was issued on 21.08.2015 and secondly, that the complaint is devoid of mandatory averments required to be made in terms of sub-Section 1 of s.141 of the NI Act, as relates him: Held: It is not averred anywhere in the complaint that the appellantaccused no.4 was in charge of the conduct of the business of the company at the relevant time when the offence was committed – What is stated in the complaint is only that the accused Nos. 2 to 6 being the partners are responsible for the day-to-day conduct and business of the company – It is also relevant to note that an overall reading of the complaint would not disclose any clear and specific role of the appellant-accused no.4 – In the complaint, it was alleged that accused No.1 through accused No.2 had purchased the goods from the complainant on credit basis through proper sales invoices and, in paragraph 6 it was alleged that for liquidation of legal liability outstanding accused Nos. 2 and 3 issued cheque in favour of the complainant from the account of accused No.1 – The averments in the complaint filed by the respondent are not sufficient to satisfy the mandatory requirements u/s. 141(1) of the NI Act – Since the averments in the complaint are insufficient to attract the provisions u/s. 141(1) of the NI Act, to create vicarious liability upon the appellant, he is entitled to succeed in this appeal. [Paras 12, 13, 17]
Negotiable Instruments Act, 1881 – Ingredients of s.141 – Vicarious liability:
Held: A vicarious liability would be attracted only when the ingredients of s.141(1) of the NI Act, are satisfied – It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company – A bare perusal of s.141(1) of the NI Act, would reveal that only that person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. [Para 16] Negotiable Instruments Act, 1881 – Specific averments in the complaint to make the accused vicariously liable:
Held: In the decision in S.P. Mani’s case in paragraph 47 (a) it was held that the primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. [Para 11] LIST OF CITATIONS AND OTHER REFERENCES
S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan 2022 SCC OnLine SC 1238; Gunmala Sales Private Limited v. Anu Mehta (2015) 1 SCC
103 : [2014] 10 SCR 1117; Ashok Shewakramani & Ors. v. State of Andhra Pradesh & Anr. 2023 INSC 692 – relied on.
Anita Malhotra v. Apparel Export Promotion Council & Anr. (2012) 1 SCC 520 : 2011 [13] SCR 76 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.