IMPORTANT POINT
No vicarious liability of surety for an offence under Section 138 of the Negotiable Instruments Act except in cases covered under Section 141.

C. Y. Somayajulu, J.—Heard the learned counsel for the petitioners. No representation on behalf of 1st respondent, though served.

2. Since parties to these petitions are the same and since common questions of law and fact arise in these cases, they are being disposed of by a common Order.

3. First respondent filed private complaints against the petitioners and M/s Vijaya Traders alleging that in connection with the business transactions between it and A1, petitioners stood surety for the amounts due and payable by A1, and for the amounts due to it, A1 gave cheque drawn on the Syndicate Bank, Malakpet, Hyderabad, which when presented for payment were returned with endorsements account closed and that in spite of statutory notices under Section 138(b) of the Negotiable Instruments Act, 1881 being sent to A1 and the petitioners, they failed to pay the amount covered by the dishonoured cheques and, so A1 and the petitioners are liable for punishment under Section 138 of the Act.

4. After recording the sworn statements of a partner of the first respondent firm, which is the complainant in these cases, the learned Magistrate took cognizance of the cases under Section 138 of the Act against the A1 and the petitioners. These petitions are filed to quash the proceedings against the petitioners who are shown as A2 and A3 in the two cases.

5. The contention of the learned counsel for the petitioners is that even assuming that all the allegations in the complaint are true, petitioners cannot be said to have committed an offence under Section 138 of the Act, because they did not issue the dishonoured cheques. Heard the learned Additional Public Prosecutor.

6. As per Section 138 of the Act, if a cheque drawn by a person on an account maintained by him with a banker, towards discharge, in which or in part of any debt or other liability, is returned unpaid by the bank, such drawer shall be deemed to have committed an offence under the section. As per Section 141 of the Act if the person that committed the offence under Section 138 of the act is a Company, every person in charge of, and responsible to the company for the conduct of its business, as well as the company, shall be liable for punishment. Thus, from a close reading of Sections 138 and 141 of the Act, it is clear that the drawer of the dishonoured cheque, and if the drawer is a company, the drawer company and the persons who run the day to day administration of that company alone would be liable for the offence under Section 138 of the Act.

7. In this case A1 is described as M/s Vijaya Traders, a proprietary concern, represented by its proprietor Mrs. I, Vijalaxmi. So, A1 is neither the association of individuals nor a partnership nor a Company. So, question of any person other than the person who drew the dishonoured cheque another person mentioned in Section 141 of the Act being made liable for the offence under Section 138 of the Act does not arise. Therefore, even assuming that petitioners stood surety for the amount due and payable by A1 to the first respondent, that liability can be enforced only in a civil court as there is no vicarious liability or surety for an offence under Section 138 of the Act, except in cases covered by Section 141 of the Act, so even assuming that all the allegations in the complaint are true, petitioners cannot be said to have committed an offence under Section 138 of the Act and so continuance of the proceedings against the petitioners would but be an abuse of process of law and, hence, the proceedings in C.C. Nos. 256 and 258 of 2001 against the petitioners are liable to be and hence are quashed.

8. These petitions accordingly are allowed.

Petition allowed.

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