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of <h1>Court quashes criminal proceedings against company under section 138 of Negotiable Instruments Act</h1> <h3>Janachaitanya Housing (P.) Ltd. Versus Smt. P. Surya Kumari</h3> Janachaitanya Housing (P.) Ltd. Versus Smt. P. Surya Kumari - [2000] 28 SCL 175 (AP) Issues involved:Petition seeking quashing of criminal proceedings under section 138 of the Negotiable Instruments Act against a company based on a cheque issued by an employee.Analysis:The petition sought to quash criminal proceedings in a case where the petitioner-company was being prosecuted under section 138 of the Negotiable Instruments Act. The complainant had booked plots from the company, paid an initial amount, and later requested a refund due to financial difficulties. A cheque issued by an employee of the company bounced, leading to the complaint. The petitioner argued that since the cheque was issued by the employee and not the company, the company should not be held liable. The respondent contended that the employee acted in connivance with the company, making the company equally responsible.The court noted that the complainant requested the refund through the employee and not directly from the company. However, this did not absolve the company of criminal liability under section 138 for the bounced cheque. The court emphasized that the person criminally liable for a bounced cheque is the one who issued it, regardless of any internal arrangements within the company. In this case, the cheque was issued by the employee, not on behalf of the company, making the company's liability questionable.The court highlighted a mis-description of the company in the complaint, referring to the accused as the Branch Manager of the company. Despite this, the court held that neither the Branch Manager nor the company itself could be held liable for the bounced cheque issued by the employee. Consequently, the court allowed the petition and quashed the criminal proceedings against the petitioner-company.In conclusion, the judgment clarified that criminal liability under section 138 of the Negotiable Instruments Act rests with the individual who issued the bounced cheque. The court emphasized that the company cannot be held liable for actions of its employees unless the cheque was issued on behalf of the company. The decision to quash the criminal proceedings was based on the lack of direct involvement of the company in the issuance of the bounced cheque by the employee.
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