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Supreme Court said a bare perusal of Section 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
The Supreme Court has said only a person who was in charge of a company and was responsible to the company for the conduct of its business, as well as the company, alone would be liable for an offence related to cheque dishonour under Section 138 of the Negotiable Instruments Act.
A bench of Justices CT Ravikumar and Sanjay Kumar said a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied.
"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," the bench said.
The court pointed a bare perusal of Section 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.
Court has allowed an appeal filed by Siby Thomas against the Punjab and Haryana High Court's order which declined to quash a complained filed against him under Section 138 of the NI Act.
The appellant said he had resigned from the partnership firm in 2013 while the cheque in question was issued in 2015.
Going through the complaint, the bench said the averments in the by the respondent M/s Somany Ceramics Ltd are not sufficient to satisfy the mandatory requirements under Section 141(1) of the NI Act, to create vicarious liability upon him.
"We are satisfied that the appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482 CrPC," the bench said.
It further noted 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.
It was alleged that for liquidation of legal liability outstanding accused Nos 2 and 3 issued the cheque on August 21, 2015 amounting to Rs 27,46,737 drawn upon Punjab National Bank, Ernhipalam (Kozhikode), in favour of the complainant from the account of accused No 1. The appellant was named as the accused No 4 in the complaint.
Case Title: Siby Thomas vs. M/s. Somany Ceramics Ltd.
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