TaxTMI 
TaxTMI 
2026 (8) TMI 149
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....rejected the petitioner's plea to drop his name from the array of the accused, holding himself procedurally restricted within a summary summons framework from recalling his own process. 2. The factual landscape, as it appears from the complaint, reveals that the complainant, a private limited company dealing in mobile handsets, instituted a prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The complainant asserted that an entity styled as M/s S.R. Telematics (Accused No. 1) had run up an outstanding commercial liability of Rs. 2,34,931/- for mobile phone supplies. The complaint states that Accused No. 2 (Ram Ratan Sharma) and Accused No. 3 (Prakash Sharma, the petitioner here) were active "partners" of the firm, looking after its daily operations. To liquidate part of this debt, two cheques totalling Rs. 53,879/- (being Cheque No. 006914 for Rs. 27,287/- and Cheque No. 006915 for Rs. 26,592/-), dated 20.02.2020, were drawn on the Hatibagan Branch of Allahabad Bank under the account of the firm. When presented on 21.04.2020, both instruments bounced and were returned with the banking remark "ACCOUNT CLOSED" vide Cheque Return Memo dated ....
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....d that a domestic, familial relationship within a household cannot serve as a legal substitute for a registered partnership deed or a defined corporate structure. In the absence of a registered partnership deed, a spouse or family member cannot be hauled into the net of criminal prosecution under Section 141 based on bald, generic averments of participation in a business. 7. He further cites Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103 to emphasize that Section 141 of the N.I. Act is strictly restricted to companies, partnership firms, or defined associations of individuals, and cannot be extended to a sole proprietorship concern, which lacks a separate legal personality from its owner. He also places reliance on Alka Khandu Avhad v. Amar Syamprasad Mishra, (2021) 4 SCC 675 to argue that criminal liability under Section 138 is strictly author-centric, binding only the signatory of the cheque, and a person who is not a drawer of the cheque and has not signed it cannot be prosecuted unless the vicarious principles of Section 141 are attracted. He also cites TV Today Network Ltd. and others v. Ramesh Bhiduri, 2025 SCC OnLine Del 8215 to emphasize that the elements of crim....
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....individuals" within the broad definition tracked under the Explanation to Section 141 NI Act, and that the petitioner actively deceived the complainant by deliberately tendering pre-signed cheques of his deceased father to liquidate active business liabilities, while keeping the complainant in the dark regarding the death. She submits that the petitioner made a continuous legal representation that the banking mandate was alive, and he must now step into the witness box to rebut the statutory presumptions rather than seeking an early, unauthorized exit from the prosecution. Therefore, she prays for the dismissal of the revision. 12. I have given my anxious consideration to the structural anatomy of the underlying complaint; the arguments advanced by both sides and evaluated the records. The legal conflict here requires this Court to determine whether the statutory net of Section 141 NI Act can be cast over a family member of a sole proprietorship, and whether a non- signatory can be prosecuted for cheques linked to a banking mandate that was legally extinguished by death. 13. It is basic to criminal jurisprudence that the statutory fiction of vicarious liability codified under....
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.... drawer of the cheque. A person who is not a drawer of the cheque and has not signed it cannot be prosecuted under Section 138, unless the vicarious principles of Section 141 apply." The same strict statutory boundary was reinforced by this Court in TV Today Network Ltd. (supra). 16. The complainant's narrative that the petitioner handed over his late father's pre-signed cheques does not save the prosecution under the NI Act. Even if true, the petitioner is not the drawer of the cheques, nor is the account maintained by him. If a fraud or deception was committed by passing off a defunct instrument, the remedy lies under the general penal provisions for cheating or forgery, not by distorting the strict statutory ingredients of a summary cheque-bouncing law. 17. The precedents relied on by the complainant (Adalat Prasad, Subramanium Sethuraman, and the Suo Motu Writ Petition)(supra) correctly restrict a subordinate Magistrate from recalling process, but they do not restrict the plenary constitutional and statutory powers of the High Court under Section 482 of the Code. Similarly, the ruling in Rathish Babu (supra) against premature intervention applies to genuine factual dis....
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....tion 482 of the Code to quash an ex-facie groundless prosecution. 20. The impugned prosecution against the petitioner suffers from a terminal structural vacuum as the penal fiction of vicarious liability under Section 141 of the NI Act cannot be stretched by judicial implication to penetrate a sole proprietorship concern. As settled in Raghu Lakshminarayanan (supra) and aligned with Paragraph 61(iv) of N. Mamatha Nagesh (supra), a close domestic or filial relationship within a household is not a legal substitute for a registered partnership deed. 21. Furthermore, Section 138 creates a strictly author-centric offense. The biological fact of the father's death in 2017 automatically revoked the banking mandate by operation of law under Section 201 of the Indian Contract Act, 1872. Since the petitioner is a non-signatory to the instruments and does not maintain the account, the primary statutory ingredients of Section 138 are completely non-existent as against him. Following the rule in Alka Khandu Avhad (supra), a non-signatory cannot be prosecuted under the Act. 22. In the light of the comprehensive discussion tracking the law and facts above, this Court arrives at the d....