Company cheque dishonour requires arraigning the company and serving notice before fastening director liability

In cheque dishonour prosecutions arising from a company's cheque, vicarious liability under the Negotiable Instruments Act cannot be fastened on a director alone unless the company is arraigned as an accused and the statutory demand notice requirements are satisfied. The Calcutta HC noted that the cheque was issued in the course of the company's business, but the company was neither made an accused nor served with demand notice. Without these statutory prerequisites, the complaint was not maintainable against the director alone. The conviction and sentence were set aside, and the director was acquitted under Sections 138 and 141.

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Issues: Whether a complaint under the Negotiable Instruments Act was maintainable against a director alone, where the company that allegedly issued the cheque was not arraigned as an accused and no demand notice was served on the company.

Analysis: The liability under Section 141 of the Negotiable Instruments Act arises when the offence under Section 138 is committed by a company, in which event the company must be prosecuted along with the persons sought to be made vicariously liable. The record showed that the cheque was issued in the course of the company's business through its director, but the company was neither made an accused nor served with notice of demand. In such circumstances, the statutory foundation for fastening vicarious criminal liability on the director was absent. The earlier decisions relied upon established that arraigning the company as an accused is imperative and that a complaint lacking such arraignment, together with notice compliance, is not maintainable.

Conclusion: The complaint was not maintainable against the petitioner alone, and the conviction and sentence were set aside. The petitioner was acquitted of the offence under Sections 138 and 141 of the Negotiable Instruments Act.

Final Conclusion: The prosecution failed for want of compliance with the statutory requirements governing company-related cheque dishonour cases, resulting in the reversal of the conviction and the petitioner's acquittal.

Ratio Decidendi: In a prosecution for cheque dishonour arising from a company's cheque, the company must be arraigned as an accused and the statutory notice requirements must be complied with before vicarious liability can be imposed on its director.

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