Vicarious liability under cheque dishonour law requires arraigning the firm first before prosecuting its partner or signatory.

For prosecution under section 138 read with section 141 of the Negotiable Instruments Act, 1881, the firm or company must be arraigned as an accused before vicarious liability can attach to an authorised signatory, managing partner, or other person in charge. Where the cheque is drawn on the firm's account and statutory notice is not issued to the firm, the condition precedent for fastening liability on its officers is not satisfied. On that basis, the conviction and sentence were held unsustainable and the accused was acquitted.

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Issues: Whether an authorised signatory or partner can be prosecuted for an offence under section 138 of the Negotiable Instruments Act, 1881 without arraigning the firm or company as an accused.

Analysis: The cheque was found to have been drawn on the account of the firm and the signatory's liability was only statutory, arising from his status as managing partner. The governing principle applied was that for prosecution under section 141, the firm or company must be impleaded as an accused before vicarious liability can attach to its officers or persons in charge. The Court relied on the later binding view that the earlier contrary approach was no longer good law. Since no statutory notice had been issued to the firm and the firm was not arraigned as an accused, the condition precedent for fastening vicarious liability was not satisfied.

Conclusion: The accused could not be held liable under section 138 read with section 141 of the Negotiable Instruments Act, 1881 in the absence of the firm being made an accused; the conviction and sentence were unsustainable and were set aside, and the accused was acquitted.

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