Director cannot be prosecuted alone under Section 138 without company being joined as accused party

The Gujarat HC dismissed an appeal concerning dishonour of cheque proceedings under Section 138 of the Negotiable Instruments Act. The case involved whether non-joinder of the company (drawer of the disputed cheque) as an accused party was fatal to proceedings against the director/authorized signatory. Following the SC precedent in Anita Handa, the HC held that a company being the principal offender and drawer of the cheque must be joined as accused. Proceedings against only the director without arraigning the company do not satisfy Section 141 requirements. The complaint was properly dismissed and appeal rejected.

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Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act.
2. Non-joinder of the company as an accused.
3. Vicarious liability of the Director under Section 141 of the Negotiable Instruments Act.

Summary:

1. Maintainability of the Complaint:
The applicant, original complainant, challenged the judgment of acquittal by the learned 2nd Additional Chief Judicial Magistrate, Anand, in Criminal Case No.3043 of 2018, where the respondent was acquitted for the offence under Section 138 of the Negotiable Instruments Act. The complainant argued that the learned Magistrate initially issued summons upon verification but later dismissed the complaint on erroneous grounds of non-maintainability.

2. Non-joinder of the Company as an Accused:
The crux of the issue was whether the complaint was maintainable without arraigning the company as an accused. The respondent was the sole Director and authorized signatory of Mahindarpur Balaji Trading (OPC) Co. Pvt. Ltd. The complaint was filed against the Director in his capacity, but the company was not separately joined as an accused. The court examined the legislative intent and legal precedents, concluding that the company, being a separate legal entity, must be arraigned as an accused for the complaint to be maintainable.

3. Vicarious Liability of the Director under Section 141:
The court referred to the Hon'ble Supreme Court's interpretation in the case of Anita Handa Vs. Godfather Travels and Tours Pvt. Ltd., which emphasized that for vicarious liability to be imposed under Section 141, the company must be prosecuted as the principal offender. The court reiterated that the company's non-joinder as an accused was fatal to the proceedings under Section 138 of the Negotiable Instruments Act.

Conclusion:
The court held that non-joinder of the company as an accused rendered the complaint not maintainable, and thus, no arguable case was made for granting special leave to appeal. Consequently, the application for special leave to appeal was dismissed, and the Criminal Appeal No. 335 of 2022 was disposed of.

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