2015 (2) TMI 1368 - SC - Indian Laws

Supreme Court acquits appellants in two cases based on non-impleadment of company, citing Section 138 and 141.

The Supreme Court acquitted the appellant in the first case challenging a conviction under Section 138 of the Negotiable Instruments Act, as the company ... Dishonor of Cheque - insufficiency of funds - arraigning of a company as an accused - section 141 of N I Act - HELD THAT:- It was held in the case of ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT] where it was held that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. The judgment rendered in Aneeta Hada's case is also applicable to the case of the accused-appellant - Appeal allowed. Dishonor of Cheque - Appellants-accused have taken the defence that the alleged cheque was not duly recovered but it was security of loan - HELD THAT:- Though judgment in Aneeta Hada's is prospective but is applicable in all pending cases, including the trial, appeal, revision and special leave petition/appeal pending before this Court. The case of the Appellant being covered by the decision in Aneeta Hada's case, we set aside the impugned judgment and conviction passed by the trial court as affirmed by the appellate court - Appeal allowed. Issues:1. Application of Section 138 of the Negotiable Instruments Act.2. Vicarious liability under Section 141 of the Act.3. Retroactive application of legal judgments.Issue 1: Application of Section 138 of the Negotiable Instruments ActIn the first case, the appellant challenged the conviction under Section 138 of the Negotiable Instruments Act. The accused, as the managing director of a company, issued three cheques which were dishonored. The trial court convicted the appellant, but the appellant argued that the company itself should have been impleaded as an accused. Citing the precedent set in 'Aneeta Hada v. Godfather Travels and Tours Private Limited,' the Supreme Court held that for prosecution under Section 141 of the Act, arraigning the company as an accused is imperative. As the company was not included as an accused, the prosecution against the appellant was deemed void ab-initio, leading to the appellant's acquittal.Issue 2: Vicarious liability under Section 141 of the ActThe second case involved the conviction of accused-appellants under Section 138 of the Negotiable Instruments Act. The accused issued a joint cheque on behalf of an organization, which was dishonored. The accused argued that they should not have been convicted in the absence of the organization being impleaded as an accused. Relying on the judgment in 'Aneeta Hada v. Godfather Travels and Tours Private Limited,' the Supreme Court reiterated that for vicarious liability under Section 141 of the Act, the commission of the offense by the company is a prerequisite. As the organization was not included as an accused, the conviction of the accused-appellants was set aside, and they were acquitted.Issue 3: Retroactive application of legal judgmentsIn both cases, the appellants raised concerns regarding the retroactive application of legal judgments, specifically 'Aneeta Hada v. Godfather Travels and Tours Private Limited.' The Supreme Court held that while the judgment may be prospective, it is applicable to all pending cases, including trials, appeals, revisions, and special leave petitions/appeals pending before the Court. Therefore, the Court applied the principles established in 'Aneeta Hada' to the cases at hand, resulting in the acquittal of the appellants and the allowance of their appeals.This detailed analysis highlights the key legal issues, arguments presented by the parties, relevant legal precedents, and the Supreme Court's decisions in each case.