Vicarious liability under the Negotiable Instruments Act survives a split-up of proceedings; automatic acquittal is not available.

In prosecutions under Section 138 read with Section 141 of the Negotiable Instruments Act, persons in charge of a company cannot obtain automatic acquittal merely because proceedings against the company or other accused have been split up; their liability remains a matter for evidence, subject to the statutory defence of absence of knowledge or due diligence. The split-up order was also found unsustainable where effective continuation of the case against all available accused remained possible, including by substituted service. The procedural course adopted by the trial court was corrected, the split-up order against accused 1 to 9 was set aside, and the proceedings were directed to continue against all concerned accused.

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Issues: (i) Whether the petitioners, being signatories and officials of the company, were entitled to acquittal or discharge under Section 255 of the Code of Criminal Procedure, 1973, on the ground that the case against the company and other accused had been split up; (ii) whether the order splitting up the case against accused 1 to 9 was sustainable in proceedings under Section 138 of the Negotiable Instruments Act, 1881 read with Section 141 of that Act.

Issue (i): Whether the petitioners, being signatories and officials of the company, were entitled to acquittal or discharge under Section 255 of the Code of Criminal Procedure, 1973, on the ground that the case against the company and other accused had been split up.

Analysis: Section 141 of the Negotiable Instruments Act, 1881 creates vicarious liability for persons in charge of and responsible for the conduct of the business of the company, and also permits prosecution where the company cannot be proceeded against for legal reasons. The petitioners could not claim automatic acquittal merely because the proceedings against some other accused had been split up. Their liability had to be tested on the evidence, and the proviso to Section 141 left them free to establish absence of knowledge or due diligence.

Conclusion: The petitioners were not entitled to acquittal or discharge at that stage.

Issue (ii): Whether the order splitting up the case against accused 1 to 9 was sustainable in proceedings under Section 138 of the Negotiable Instruments Act, 1881 read with Section 141 of that Act.

Analysis: Since the complaint alleged that the company and its responsible officers were jointly involved in the transaction, the proceedings should have been carried forward against all available accused by taking steps for effective service, including substituted service if necessary, rather than splitting the case in a manner that impeded adjudication against the persons responsible for the company's business. The Court held that the split-up order should not have been passed in the manner adopted by the trial court.

Conclusion: The split-up order against accused 1 to 9 was set aside and the proceedings were directed to be reopened against them as well.

Final Conclusion: The petition resulted in correction of the procedural course adopted by the trial court, while the petitioners' request for immediate acquittal was declined and the matter was directed to proceed against all concerned accused in accordance with law.

Ratio Decidendi: In prosecutions under Section 138 of the Negotiable Instruments Act, 1881, persons made liable under Section 141 cannot seek acquittal merely because proceedings against the company or other accused have been split up, and the court should avoid disabling adjudication against the responsible accused by an avoidable split-up when effective service and continuation of proceedings remain possible.

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