{"id":231311,"date":"2020-06-24T16:23:46","date_gmt":"2020-06-24T10:53:46","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=231311"},"modified":"2020-07-03T14:47:42","modified_gmt":"2020-07-03T09:17:42","slug":"dishonour-of-cheque-mp-hc-director-managing-director-joint-director-other-officers-and-employees-of-a-company-can-not-be-prosecuted-under-s-138-of-ni-act-unless-the-company-is-impleaded-as-an-acc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2020\/06\/24\/dishonour-of-cheque-mp-hc-director-managing-director-joint-director-other-officers-and-employees-of-a-company-can-not-be-prosecuted-under-s-138-of-ni-act-unless-the-company-is-impleaded-as-an-acc\/","title":{"rendered":"[Dishonour of Cheque] MP HC | Director\/MD\/JD\/other officers and employees of a company can not be prosecuted under S. 138 of NI Act unless the company is impleaded as an accused"},"content":{"rendered":"

Madhya Pradesh High Court:\u00a0<\/strong>Rajendra Kumar Srivastava, J., while addressing a matter with regard to dishonour of cheque held that, Director\/Managing Director\/Joint Director\/other officers and employees of company can not be prosecuted under Section 138 of NI Act unless the company is impleaded as an accused<\/span><\/p>\n

Petitioner is aggrieved with the Order passed against him by JMFC framing a charge under Section 138 of Negotiable Instruments Act, 1881.<\/p>\n

Complaint was filed by respondent-trade firm against the petitioner wherein it was mentioned that on account of business relations between the parties petitioner had borrowed an amount of Rs 2,00,000 from respondent, which was to be returned by within a period of four months.<\/p>\n

In November 2017, petitioner handed over a cheque amounting to Rs 2,00,000 which when the respondent submitted in January, 2018 was dishonoured\u00a0<\/strong>due to “stop payment” <\/span>by the petitioner.<\/p>\n

On the above-event’s occurrence respondent had sent a legal notice to the petitioner which was ignored by the petitioner and thus a complaint before JMFC was filed.<\/p>\n

Petitioners Contention<\/strong><\/p>\n

\n
\n
\n

Respondent had given the amount in question for business purpose and the petitioner had given the said cheque under the capacity of chairman of company namely \u2018Well Built Industry India Ltd.\u2019 but the respondent did not implead the company as a party in the complaint case.<\/p>\n

The respondent\/complainant also failed to specify the role of present petitioner on behalf of the company. Hence, in view of the provision of Section 141 NI Act, the proceedings under Section 138 NI Act are bad in law and deserves to be quashed. With the aforesaid, he prayed to allow this petition.<\/p>\n

\n

Section 138 NI Act: Dishonour of cheque for insufficiency, etc. of funds in the account.<\/p>\n

Section 141 NI Act: Offences by Companies<\/p>\n

\n
\n
\n

“…if an offence is committed by a company under Section 138 of the Act, every person, at the time, the offence was committed, was in-charge and responsible to the company in the conduct of the business of the company, is liable along with the company to be proceeded against and punished accordingly.”<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/blockquote>\n

\n
\n
\n

S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89<\/a>,\u00a0<\/span><\/strong><\/p>\n

“…Necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 NI Act is sought to be fastened vicariously on a person connected with a company, principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable.”<\/span><\/p>\n

Bench while referring to several decisions held that the person (Director\/Managing Director\/Joint Director\/other officers and employees) of company can not be prosecuted under Section 138 of NI Act unless the company is impleaded as an accused.<\/span><\/p>\n

Thus, in the present matter it is to be noted that a demand notice was served only on the petitioner\/accused, there was no demand notice against company, therefore, without arraying the company as an accused in complaint case, the petitioner can not be prosecuted for the offence of Section 138 NI Act.<\/span><\/p>\n

Hence the present petition was allowed.[Bhupendra Suryawanshi v. Sai Traders, 2020 SCC OnLine MP 1277<\/b><\/a> , decided on 09-06-2020]<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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