Court quashes criminal proceedings due to lack of firm's inclusion in complaint, highlights vicarious liability

The court quashed the entire criminal proceedings related to complaint cases C.C.No.110/2016 and C.C.No.178/2016. The orders taking cognizance under Section 138 of the Negotiable Instruments Act were found invalid as the cheques were issued by a firm, not the petitioners personally. Vicarious liability under Section 141 of the Act was discussed, emphasizing the necessity of making the firm an accused for liability to be imposed on individuals. Since the firm was not made an accused, the petitioners were not held liable, leading to the quashing of the proceedings and related orders.

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Issues Involved:
1. Quashing of entire criminal proceedings in connection with complaint cases C.C.No.110/2016 and C.C.No.178/2016.
2. Validity of the orders taking cognizance dated 05.12.2016 and 22.09.2016 under Section 138 of the Negotiable Instruments Act (N.I. Act).
3. Vicarious liability under Section 141 of the N.I. Act.
4. The necessity of making the firm or company an accused in the complaint.

Issue-wise Detailed Analysis:

1. Quashing of entire criminal proceedings:
The petitions sought to quash the entire criminal proceedings arising from complaint cases C.C.No.110/2016 and C.C.No.178/2016. The court examined the facts and found that the petitions were filed to quash the orders taking cognizance under Section 138 of the N.I. Act. The court noted that the cheques in question were issued by a firm and not by the petitioners personally.

2. Validity of the orders taking cognizance:
The court scrutinized the orders dated 05.12.2016 and 22.09.2016, which took cognizance under Section 138 of the N.I. Act. The court observed that the cheques were issued by the firm and the petitioners were not the drawers of the cheques. The court referred to the case of "Aneeta Hada v. Godfather Travels and Tours Private Limited" and emphasized that for vicarious liability to be fastened, the company or firm must be made an accused, which was not done in this case.

3. Vicarious liability under Section 141 of the N.I. Act:
The court analyzed Section 141 of the N.I. Act, which deals with offenses by companies and vicarious liability. It was highlighted that vicarious liability can only be imposed if the person has control over the day-to-day affairs of the company and if the company or firm is made an accused. The court referred to the case of "Dilip Hariramani v. Bank of Baroda" and reiterated that the primary liability must be established against the company or firm before vicarious liability can be imposed on individuals.

4. Necessity of making the firm or company an accused:
The court emphasized that the firm or company must be made an accused in the complaint for vicarious liability to be imposed on individuals associated with the firm. The court noted that the firm was not made an accused in the complaint, and thus, the petitioners could not be held liable under Section 138 of the N.I. Act. The court referred to the case of "Mainuddin Abdul Sattar Shaikh v. Vijay D. Salvi" and distinguished it by noting that in the present case, the petitioners were not the drawers of the cheques.

Conclusion:
The court concluded that the petitions succeeded as the firm was not made an accused, and the petitioners were not the drawers of the cheques. The entire criminal proceedings arising from complaint cases C.C.No.110/2016 and C.C.No.178/2016, along with the orders taking cognizance dated 05.12.2016 and 22.09.2016, were quashed. The petitions Cr.M.P.No.2183 of 2017 and Cr.M.P.No.2190 of 2017 were allowed and disposed of, and any interim applications were also disposed of.

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