Vicarious liability under the Negotiable Instruments Act requires active control of the firm at the relevant time; former partners cannot be proceeded against.

Vicarious criminal liability under Section 141 of the Negotiable Instruments Act, 1881 attaches only to persons who were partners and were in charge of and responsible for the firm's business at the relevant time. Where firm records showed that the petitioners had resigned before the loan transaction and cheque issuance, and the complaint materials did not establish their continued partnership or control over the business, the basis for fastening liability under Sections 138 and 141 was absent. The criminal proceedings were therefore liable to be quashed.

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Issues: Whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed against partners who had resigned from the firm before the borrowal of loan and issuance of cheques.

Analysis: Liability under Section 141 of the Negotiable Instruments Act, 1881 is vicarious and can arise only against persons who were partners and were responsible for the conduct of the business at the relevant time. The petitioners produced firm records showing that they had resigned from the partnership with effect from 01.04.2014, and their names were deleted from the register. The cheques were issued much later, and the complaint materials did not establish that they continued as partners when the transaction took place or when the cheques were issued. In these circumstances, the basis for fastening criminal liability under Sections 138 and 141 was absent.

Conclusion: The proceedings against the petitioners were liable to be quashed and the issue is answered in favour of the petitioners.

Final Conclusion: The criminal proceedings could not be sustained against the petitioners, as the materials showed that they had ceased to be partners before the relevant transaction and cheque issuance.

Ratio Decidendi: Vicarious criminal liability under Section 141 of the Negotiable Instruments Act, 1881 cannot be fastened on a person who had ceased to be a partner before the relevant transaction, unless the complaint and materials show that such person was in charge of and responsible for the business at the relevant time.

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