A sole proprietor can be held individually liable under Section 138 of the N.I. Act, even if the cheque was issued as a security. Arguments regarding vicarious liability and misuse are insufficient for quashing the order.

JUDGMENT

Rajiv Gupta, J.

Heard learned counsel for the applicant, learned A.G.A. and perused the record.

2. The instant application under section 482 Cr.P.C. has been filed to quash the impugned summoning order dated 03.08.2023 passed by the court of learned Metropolitan Magistrate-II, Kanpur Nagar in Complaint Case No. 142253 of 2022 (Anil Kumar Pal v. Ankit Awasthi), under section 138 N.I. Act, Police Station Chakeri, District Kanpur Nagar as well as the entire proceeding of case No. 142253 of 2022 (Anil Kumar Pal v. Ankit Awasthi), under section 138 N.I. Act, Police Station Chakeri, District Kanpur Nagar pending in the court of Metropolitan Magistrate-II, Kanpur Nagar.

3. As per the allegation made in the complaint, it is alleged that the applicant had issued a cheque No. 418170 dated 21.04.2022 for a sum of Rs. one lac to the opposite party no. 2. However, on presentation of the said cheque, the same was dis-honoured by the bank and returned back.

4. After the dis-honour of the cheque, a legal notice was sent to the applicant to make good the payment of cheque amount, however, despite being noticed the due amount was not paid by the applicant and as such the instant complaint case under section 138 N.I. Act was instituted against the applicant.

5. Learned Magistrate on the basis of the allegation made in the complaint and after making the requisite enquiry under sections 200 and 202 Cr.P.C. have summoned the applicant to face trial under section 138 N.I. Act vide impugned order dated 03.08.2023.

6. Being aggrieved and dis-satisfied by the said impugned order, the present application under section 482 Cr.P.C. has been filed.

7. Learned counsel for the applicant has submitted that the cheque in question has been issued by the firm and, therefore, payment of said cheque was not his individual liability. He has further submitted that under section 141 of the N.I. Act if a person commits an offence under section 138 of the N.I. Act then without impleading the firm the proceedings under section 138 N.I. Act can not be drawn against him. In order to buttress his argument, learned counsel for the applicant has placed reliance upon two cases Dilip Hariramani v. State of Baroda reported in 2022 SCC Online SC 579 and Anil Gupta v. Star India (Pvt.) Limited and another 2014 (10) SCC 373. Learned counsel for the applicant has further submitted that the cheque in question was given as a security to the O.P. No. 2 and has been misused by him as such proceeding under section 138 N.I. Act can not be drawn against him.

8. Per contra, learned A.G.A. has vehemently opposed the prayer of the learned counsel for the applicant and has supported the impugned order. He has further submitted, that the cheque in question, which has been enclosed as Annexure-1 to the application has been issued in individual capacity by the applicant who is in fact the sole proprietor of Shradha Travels and is not a partner in any firm, and no documents showing him to be partner of any firm has been brought on record, therefore, the provision contained under section 141 N.I. Act would not be applicable to him and there is no question of there being any vicarious liability upon the applicant to honour the cheque in question, and therefore, the proceeding under section 138 N.I. Act has rightly been instituted against him.

9. He has further submitted that even the second argument, of the learned counsel for the applicant that the cheque in question was issued as a security and mis-used by the applicant, therefore, no proceeding under section 138 of N.I. Act could be drawn against him is also untenable and is not worth consideration in view of the sett