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Issues: (i) Whether the officers of a company could be prosecuted and convicted under Section 138 of the Negotiable Instruments Act without arraying the company as an and without separate notice to them when the notice was served on the company; (ii) Whether imprisonment in default of payment of compensation awarded under Section 357(3) of the Code of Criminal Procedure was legally permissible.
Issue (i): Whether the officers of a company could be prosecuted and convicted under Section 138 of the Negotiable Instruments Act without arraying the company as an accused and without separate notice to them when the notice was served on the company.
Analysis: The complaint and the evidence showed that the accused officials had placed the orders, received the goods and handed over the cheques. The concurrent finding was that they were in charge of and responsible for the conduct of the company's business. On that basis, separate notice to them was held unnecessary where notice had been served on the company. The revisional court found no illegality or impropriety in the findings recorded below.
Conclusion: The prosecution and conviction of the company officials was upheld and the challenge on this ground failed.
Issue (ii): Whether imprisonment in default of payment of compensation awarded under Section 357(3) of the Code of Criminal Procedure was legally permissible.
Analysis: Though the argument was raised that compensation under Section 357(3) is not fine and that default imprisonment could not be imposed, the Court held itself bound by the law declared by the Supreme Court. It was noted that the Supreme Court had approved enforcement of compensation by a sentence in default and that such declaration is binding on all courts under Article 141 of the Constitution of India.
Conclusion: Imprisonment in default of payment of compensation was held to be lawful.
Final Conclusion: No ground was found to interfere in revisional jurisdiction, and the conviction as well as the sentence, including the default sentence, stood confirmed.
Ratio Decidendi: A company's officers who are in charge of and responsible for its business may be prosecuted under Section 138 when notice is served on the company, and compensation awarded under Section 357(3) may be enforced by a sentence in default in view of binding Supreme Court precedent.
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