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of <h1>Cheque dishonour u/s 138 N.I. Act and alleged vicarious liability u/s 141: proceedings quashed as abuse of process</h1> Dominant issue: Whether the complaint discloses a prima facie offence under Section 138 N.I. Act and whether vicarious liability under Section 141 can be ... Dishonour of cheque - ingredients of the offence under Section 138 of the N.I. Act - Absence of prima facie case - Abuse of process of law - Vicarious liability under Section 141 - High Court's powers under Article 226 of the Constitution and Section 482 Cr.P.C. - HELD THAT:- In the present case, the allegations do not make out a prima facie case against the petitioner. Hence, in view of the principle laid down by the Honourable Apex Court in Bhajan Lal’s [1992 (12) TMI 234 - SUPREME COURT] and also in Pawan Kumar Goel’s case [2022 (11) TMI 855 - SUPREME COURT], held that ' The Honourable Apex Court held that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. It was further held that liability under Section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. So far as signatory of the cheque, which is dishonoured, is concerned, he is clearly responsible for the incriminating act and will be covered under Section 141(2) of the N.I. Act. Thus, the order of the High Court of Allahabad was upheld by the Honourable Apex Court. ' Thus, the continuation of proceedings against the petitioner herein would be an abuse of process of law. Accordingly, the Criminal Petition is allowed and the proceedings are hereby quashed against the petitioner herein. Issues: Whether the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 pending in S.T.C.(N.I.).No.41 of 2023 against accused No.4 ought to be quashed for want of prima facie case.Analysis: The petition challenges the continuation of proceedings under Section 138 N.I. Act against accused No.4 on the ground that accused No.4 did not draw or issue the cheque and none of the statutory ingredients of Section 138 are attracted against it. Section 138 prescribes that the drawer of the cheque who drew it on his account and whose cheque is dishonoured is liable, subject to presentation and notice requirements. The complaint's averments indicate the cheques were signed by another accused purportedly for a different company and the only link alleged is an affiliation between companies. Established principles permit exercise of writ or inherent powers to quash criminal proceedings where the allegations, taken at face value, do not prima facie constitute an offence (see principles in Bhajan Lal) and where vicarious liability cannot be fastened without necessary averments (see Pawan Kumar Goel). Applying these principles, the record lacks the necessary allegations to fasten liability under Section 138 on accused No.4 and continuation of proceedings would amount to abuse of process.Conclusion: The petition is allowed and the criminal proceedings in S.T.C.(N.I.).No.41 of 2023 are quashed insofar as they relate to accused No.4.
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