Cheque Dishonour Liability Cannot Proceed Against Signatory Alone When Company Is Not Made an Accused

Section 138 prosecution for cheque dishonour cannot be sustained against an authorised signatory alone where the company or proprietorship concern on whose behalf the cheque was issued is not arraigned as an accused. Vicarious liability under Section 141 applies only when the company itself is prosecuted, so a complaint and summoning order issued solely against the signatory were legally untenable. The complaint and summoning order were quashed.

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Issues: Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 and the accompanying summoning order could be sustained against an authorised signatory when the company or proprietorship concern in whose name the cheque was issued was not arraigned as an accused.

Analysis: Liability under Section 138 arises from a cheque drawn on an account maintained by a person for discharge of debt or liability, while Section 141 fastens vicarious liability on persons in charge of a company only when the company itself is prosecuted. The cheque in question was signed by the petitioner as an authorised signatory of M.R. Trading Co., and the statutory notice and complaint were issued only against the petitioner. In view of the requirement that the company must be arraigned as an accused before vicarious liability can be invoked, the prosecution against the petitioner alone was legally unsustainable.

Conclusion: The complaint and summoning order were liable to be quashed, and the petition succeeded.

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