Company arraignment is mandatory before prosecuting directors for cheque dishonour under the Negotiable Instruments Act.

A complaint under Section 138 of the Negotiable Instruments Act was held not maintainable against directors where the company, being the drawer and principal obligor, was not arraigned as an accused. Vicarious liability under Section 141 arises only when the company that committed the offence is also proceeded against, and arraignment of the company is a condition precedent except in legally impossible cases. As no such impediment existed, the summoning order against the director could not stand.

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Issues: Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 against directors is maintainable when the company, being the drawer and principal obligor, is not arraigned as an accused.

Analysis: The complaint itself proceeded on the basis that the cheque was issued on behalf of the company towards its liability, while the company was not impleaded as an accused. Section 141 of the Negotiable Instruments Act, 1881 fastens vicarious liability on officers only when the company, which committed the offence under Section 138, is also proceeded against. The settled position is that arraignment of the company is a condition precedent to prosecuting its directors or authorised signatories, subject only to exceptional cases where impleadment is legally impossible. No such impediment existed here.

Conclusion: The complaint was not maintainable against the petitioner in the absence of the company as an accused, and the summoning order could not stand.

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