Vicarious liability under the Negotiable Instruments Act fails where liquidation had begun and statutory demand notice was not proved.

Vicarious liability under section 141 of the Negotiable Instruments Act cannot be fastened on an ex-director unless the complaint and evidence specifically show that he was in charge of and responsible for the company's business at the time of the offence. Here, the company had already gone into liquidation before the cheque date, control had passed to the official liquidator, and no specific role of the respondent in issuing the cheque or conducting business was proved. The prosecution also failed to establish reliable service of the statutory demand notice required under section 138. With both foundational ingredients unproved, the acquittal was sustained.

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Issues: (i) Whether an ex-director could be fastened with vicarious liability for an offence under section 138 read with section 141 of the Negotiable Instruments Act, 1881 when the company had already gone into liquidation and the cheque was issued after liquidation; (ii) Whether the prosecution proved service of the statutory demand notice required for an offence under section 138 of the Negotiable Instruments Act, 1881.

Issue (i): Whether an ex-director could be fastened with vicarious liability for an offence under section 138 read with section 141 of the Negotiable Instruments Act, 1881 when the company had already gone into liquidation and the cheque was issued after liquidation.

Analysis: Liability of a director under section 141 depends on whether, at the time the offence was committed, the person was in charge of and responsible for the conduct of the company's business. The evidence accepted that the company had gone into liquidation before the cheque date and that control had shifted to the official liquidator. The respondent's evidence that he ceased to be a director from the liquidation date remained unshaken, while the complaint and evidence did not establish any specific role of the respondent in issuing the cheque or in conducting the company's affairs at the relevant time.

Conclusion: The respondent could not be held vicariously liable under section 141, and the finding on this issue is against the appellant.

Issue (ii): Whether the prosecution proved service of the statutory demand notice required for an offence under section 138 of the Negotiable Instruments Act, 1881.

Analysis: Service of a written demand notice within the statutory time is an essential ingredient of section 138. The trial record did not establish that the alleged notice was proved or that its service on the respondent was shown by reliable evidence. In the absence of proof of service, the statutory requirement remained unfulfilled, and the accused was entitled to the benefit of doubt.

Conclusion: The statutory notice requirement was not proved, and this issue is also against the appellant.

Final Conclusion: The acquittal was sustained because the foundational ingredients of the cheque dishonour prosecution were not proved against the respondent.

Ratio Decidendi: For liability under section 141 of the Negotiable Instruments Act, 1881, the complaint and evidence must specifically show that the accused was in charge of and responsible for the company's business at the time of the offence; if the company had already gone into liquidation and statutory notice is also not proved, conviction cannot follow.

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