Vicarious liability under the Negotiable Instruments Act fails when the company is acquitted, protecting the Managing Director too.

Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 arises only where the company has itself committed the offence under Section 138. Where the company is acquitted and that acquittal has attained finality, liability cannot be fastened independently on the Managing Director or other persons in charge of its affairs. The cheque was issued in the Managing Director's capacity for the company, not towards any personal liability, so his conviction could not survive once the company stood exonerated. The conviction was therefore unsustainable and acquittal of the Managing Director followed.

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Issues: Whether the Managing Director of a company can be convicted for an offence under Section 138 of the Negotiable Instruments Act, 1881, when the company itself has been acquitted of the same offence.

Analysis: Liability under Section 141 of the Negotiable Instruments Act, 1881 arises only when the offence under Section 138 is committed by the company, because prosecution of the company is the foundational requirement for fastening vicarious liability on persons in charge of its affairs. The company in the present case had already been acquitted and that acquittal had attained finality. The cheque was issued in the petitioner's capacity as Managing Director and not towards any personal liability. In such circumstances, the petitioner's liability could not survive independently of the company's liability, since the liability of persons covered by Section 141 is co-extensive with that of the company.

Conclusion: The conviction of the Managing Director was unsustainable after the acquittal of the company, and he was entitled to acquittal.

Ratio Decidendi: Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 can be fastened only if the company is first shown to have committed the offence under Section 138, and if the company is acquitted, the persons sought to be made liable through Section 141 cannot be convicted for that offence.

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