2024 (9) TMI 103

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....ndigarh as well as summoning order dated 10.03.2021(Annexure P- 2) whereby the petitioner has been wrongly summoned u/s 138 of Negotiable Instruments Act, 1881. 2. Briefly put forth, the facts of the case are that the respondent complainant filed the complaint against the petitioner under section 138 of Negotiable Instruments Act on the ground that from the year 2012-17, petitioner had taken friendly loan from respondent-complainant to the tune of Rs. 15,00,000/- for setting up Ice Factory out of which the petitioner returned Rs. 6,50,000/- with remaining liability of Rs. 8,50,000/-. Thereafter, it is alleged that the petitioner issued part payment cheque bearing no. 113603 dated 19.11.2020 in favour of respondent-accused for a sum of Rs....

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....ecifically declared that three cheques were given by the petitioner himself to the respondent-company in regard to its legal liability and therefore by his act and conduct, had fraudulent and dishonest intention to deceive the respondent-company. 6. It is vehemently argued that the said M. R. Trading Co. is a sole proprietorship firm which has no separate legal identity wherein Surinder Kumar Jain is the sole proprietor and therefore it is only the proprietor who can be held liable u/s 138 of Negotiable Instruments Act, 1881 on account of the fact that the proprietorship firm has no separate legal identity. He further argues while relying upon 'Raghu Lakshminarayanan vs M/s. Fine Tubes(2007) 5 SCC 103' wherein it has been held that in ca....

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....ct, be punished with imprisonment for a term which may be extended to [two] years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless:- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and ....

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....prevent the commission of such offence [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any secretary or other officer of the company such director, manager, director, manager....

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....imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as' in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the compary and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words "as well a....

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....tegories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three- Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." 12. A company being an artificial person acting through its management has a separate legal entity wherein it owns its assets....