IMPORTANT POINT
Vicarious liability cannot be attached to the employees of a sole proprietor concern under Sec. 141 of the NI Act.

JUDGMENT

VENKATA JYOTHIRMAI PRATAPA, J. - CrL.P.Nos., 564, 566, 569 and 572 of 2020 are filed under Sec. 482 of the Code of Criminal Procedure, 1973, [In short 'Cr.P.C']seeking to quash proceedings initiated in C.C.Nos., 1145, 1147, 1146 and 1148 of 2019 on the file of Judicial Magistrate of First Class, Nandyal, Kurnool District, [In short, Magistrate]for the offences under Ss. 138 and 142 of the Negotiable Instrument Act, 1881.[In short, NI Act]

2. The facts leading to filing of these Petitions are;

a. Accused No.1 is the sole proprietor of Sri Mahati Trading Company. Petitioner/Accused No.2 is the Manager/Authorized signatory of the sole proprietorship. Respondent No.2/defactoComplainant supplied rice worth about Rs.18, 00, 000.00 to the firm of the Accused No.1, on credit basis.

b. Accused No.1 issued acknowledgment to that effect. Thereafter, Accused No.1 issued Cheques bearing No.000378 for Rs.5, 00, 000.00 on 18/5/2019; No.000377 for Rs.5, 00, 000.00 on 20/5/2019; No.000380 for Rs.3, 00, 000.00 on 21/5/2019 and No.000379 for Rs.3, 00, 000.00 on 17/5/2019 respectively. Thereafter, whenRespondent No.2 presented the said cheques, theywere returned with an endorsement 'insufficient funds'.

c. De-factoComplainant after observing the formalities of issuing statutory notice, laid a private complaint before the courtunder Sec. 200 of Cr.P.C.Subsequently, the learned Magistrate took cognizance for the offences punishable under Ss. 138 and 141 of NI Act against the Petitioner also, vide C.C.Nos., 1145, 1147, 1146 and 1148 of 2019.By virtue of the present petition, Petitioner seeks indulgence of this Court to quash proceedings against him.

d. Hence, Criminal Petitions.

Arguments Advanced at the Bar

3. Heard Sri V.R. Reddy Kovvuri, learned Counsel for the Petitioners and Ms. Prasanna Lakshmi, learned Assistant Public Prosecutor representing State/Respondent No.1. Though notice is served on Respondent No.2, no appearance is made to submit any objections.

4. Learned counsel for the Petitioners based his arguments on two broad grounds. First, he submitted that all the criminal cases registered against the Petitioner/A.2 are not maintainable as he is not a signatory to the cheques that were dishonored. Second, he would contend that the when the Accused No.1 is a proprietor of sole trading concern, the question of vicarious liability against the present Petitioner, being authorized signatory, does not arise to attract Sec. 141 of the N.I. Act.On these grounds, the counsel urges this Court to quash the proceedings.

5. Per contra, learned Assistant Public Prosecutor would submit that there is ample material against the Petitioner to attract the offences under Ss. 138 and 141 of NI Act. Hence, she would submit that the question of quashment of the case against the Petitioner does not arise and prays to dismiss theses petitions. Points for Determination

6. Having heard the submissions advanced, this Court has perused the material available on record. The points that would arise for determination are;

i. Could an authorized signatory be made vicariously liable under Sec. 141 of N.I.Act, 1881 in a sole proprietary trading?

ii. Whether there are any justifiable grounds to exercise jurisdiction under Sec. 482 of the Cr.P.C., to quash the proceedings initiated against the Petitioner/Accused No.2 in C.C.Nos., 1145, 1147, 1146 and 1148 of 2019 on the file of Judicial Magistrate of First Class, Nandyal, Kurnool District?

Legal Analysis and Findings

7. Before determining the points raised, it is relevant to chalk out the crux of the legal provisions involved in this matter i.e., Ss. 138 and 141 of N.I.Act, 1881 and Sec. 482 of Cr.P.C.

8. It is often reiterated that Sec. 138 of the N.I.Act clothes criminality to a civil transaction by fiction of law. The intention behind fastening liability is to inculcate faith in the efficacy of financial operations that are based on negotiable instruments.The Hon'ble Apex Court in Dashrathbhai Trikambhai Patel v. H