Cheque dishonour liability under the N.I. Act depends on direct issuance and company responsibility at the time of offence.

Section 138 of the Negotiable Instruments Act requires a legally enforceable debt, issuance of a cheque in discharge of that debt, and dishonour for insufficiency of funds; the text states that liability attached only to the person who issued the bounced cheque. Section 141 extends responsibility to persons in charge of a company at the time of the offence, but the petitioner's reliance on that provision was found untenable because the cheque was issued by the second respondent and there was no legal basis to continue proceedings against the first respondent. The petition was dismissed as lacking merit.

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Issues: Whether the petitioner could seek quashment of the revisional order setting aside cognizance against respondent no. 1 in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, on the footing that Section 141 fastened liability on respondent no. 1 as well.

Analysis: Liability under Section 138 arises from the drawing of a cheque on an account maintained by the drawer for discharge of a legally enforceable debt or liability, followed by dishonour for insufficiency of funds. Section 141 extends liability to persons who, at the time of the offence, were in charge of and responsible for the conduct of the business of the company that committed the offence. The material on record showed that the petitioner was engaged by respondent no. 2, the cheque was issued from the account of respondent no. 2, and the dishonour also related to respondent no. 2's account. Mere coordination in execution of the project did not make respondent no. 1 the employer or drawer of the cheque, and Section 141 could not be stretched to fasten criminal liability on another company merely because it was associated in business with the accused company.

Conclusion: Respondent no. 1 was not liable to be proceeded against under Sections 138 and 141 of the Negotiable Instruments Act, 1881, and the order quashing cognizance against it was upheld.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, criminal liability is confined to the drawer of the cheque and, where the drawer is a company, to those persons who satisfy the requirements of Section 141; liability cannot be extended to another company merely on account of business association or joint execution of work.

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