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        2021 (8) TMI 87 - HC - Indian Laws

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        Representative authority and firm arraignment are essential in Section 138 prosecutions under the Negotiable Instruments Act. A complaint under Section 138 of the Negotiable Instruments Act filed through a representative must be proved by valid authorisation and by evidence that ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                            Representative authority and firm arraignment are essential in Section 138 prosecutions under the Negotiable Instruments Act.

                            A complaint under Section 138 of the Negotiable Instruments Act filed through a representative must be proved by valid authorisation and by evidence that the representative knew the underlying transaction; mere filing of an authorisation letter in the record, or its exhibition in a connected matter, does not by itself cure the defect. The text also states that where cheques are drawn on behalf of a partnership firm, the firm is the principal offender and must be arraigned as an accused for vicarious liability to arise against the partner who signed the cheques. On these stated grounds, the convictions and sentences were set aside.




                            Issues: (i) Whether the complaint in one revision was maintainable where the authorised representative was not recalled and the authorisation letter was not exhibited in that case, though it had been exhibited in the connected case between the same parties; (ii) Whether, in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the partnership firm, being the drawer and the real debtor, had to be arraigned as an accused along with the partner who signed the cheques.

                            Issue (i): Whether the complaint in one revision was maintainable where the authorised representative was not recalled and the authorisation letter was not exhibited in that case, though it had been exhibited in the connected case between the same parties?

                            Analysis: The complaint in the relevant case was filed by a field officer who was required to prove both authority and knowledge of the transaction. The opportunity granted for recall and proof of authorisation was not availed in that case, and the document was neither exhibited nor subjected to cross-examination there. Mere filing of the letter in the record, or reliance on its exhibition in the connected matter, could not cure the defect. The requirement that the authorised person must have knowledge of the underlying transaction was also not satisfied on the record of that case.

                            Conclusion: The complaint in that revision was held to have been filed without proper authorisation and the conviction could not be sustained.

                            Issue (ii): Whether, in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the partnership firm, being the drawer and the real debtor, had to be arraigned as an accused along with the partner who signed the cheques?

                            Analysis: The underlying transaction and the cheques both pertained to the partnership firm, and the accused had signed the cheques only in the capacity of partner. Section 141 fastens liability on the company or firm as the principal offender, and vicarious liability of the partner arises only when the firm itself is impleaded. In the absence of the firm as an accused, the prosecution against the partner alone was not maintainable. The doctrine of lex non cogit ad impossibilia was held inapplicable on the facts.

                            Conclusion: It was held that the partnership firm ought to have been impleaded as a co-accused, and the conviction against the partner alone was unsustainable.

                            Final Conclusion: The revisional court set aside the convictions and sentences in both matters and granted relief to the petitioner on both grounds, with the complaint in one case failing for want of proved authorisation and both cases failing for non-impleadment of the partnership firm.

                            Ratio Decidendi: A complaint under Section 138 of the Negotiable Instruments Act, 1881 filed through a representative must be proved by proper authorisation and demonstrated knowledge of the transaction, and where the cheque is issued on behalf of a firm, the firm must be arraigned as an accused for liability under Section 141 to arise against the partner.


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