Maintaining prosecution under section 138 of the NI Act requires arraigning the company as an accused, and the vicarious liability of individuals associated with the company is contingent upon the company committing the offense as the primary offender.

ORDER DINESH KUMAR PALIWAL, J. : – This petition under section 482 of the Criminal Procedure Code has been filed by the petitioner/accused for quashment of the criminal complaint bearing Case No. 1952/2014, Ramlal Gupta (deceased through LRs) vs. Anil Kumar Lohadiya under section 138 of the Negotiable Instruments Act (hereinafter referred to as the “NI Act”), pending before the Chief Judicial Magistrate, Rewa.

2. According to the facts of the case, Ramlal Gupta filed a complaint in his lifetime before the CJM, Rewa alleging that complainant and accused knew each other personally for the last 10 years. Complainant had worked with the Navbharat Buildcon Private Limited Construction Company and for that work petitioner/accused had issued Cheque No. 560033 dated 10-1-2014 of an amount of Rs. 3,40,000/- of State Bank of India, Bhopal in favour of complainant. When he deposited that cheque in his bank account of Canara Bank, Rewa on 12-2-2014 and 3-4-2014, same stood dishonored due to insufficient fund in the account of accused. Thereafter, a statutory notice was given to the accused on 9-4-2014 which was served on him on 23-4-2014. Despite service of notice accused did not made the payment of Rs. 3,40,000/- to him. Hence, the deceased respondent Ramlal Gupta filed a complaint before CJM, Narsinghpur against petitioner/ accused for commission of offence under section 138 of the NI Act.

3. Learned counsel for the petitioner has submitted that as per the averments made in the complaint, petitioner/accused had given the cheque in question to the petitioner/accused for his work with Navbharat Buildcon Private Limited Construction Company under the capacity of Chairman of the company namely Navbharat Buildcon Private Limited Construction Company but the deceased respondent did not implead the company as a party in the complaint case. The respondent complainant has clearly averred that cheque was given for his work in the company. Hence, in view of the provisions of section 141 of the NI act the proceedings under section 138 of the NI act are not maintainable and deserves to be quashed and has prayed for the quashment of the complaint pending on the case file of the Chief Judicial Magistrate, Rewa.

4. Despite service of notice, none has appeared for the respondents.

5. Heard learned counsel for the petitioner and perused the material available with the petition.

6. On a perusal of the Annexure A/2, it is apparent that Navbharat Buildcon Private Limited is a company registered under the companies Act, 1956. On a perusal of the Cheque No. 560033, it is explicit that the disputed cheque had been issued on behalf of the company by the petitioner. Therefore, the core issue which emerges is whether the company could have been made liable for prosecution without being impleaded as an accused and whether the chairman could have been prosecuted for offence punishable under section 138 of the NI Act without the company being arraigned as an accused. To appreciate the controversy, it is necessary to consider the relevant provisions of law. Section 138 of the Negotiable Instruments Act which deals with the ingredients of offence for dishonor of cheque and consequent non-payment of the amount due thereon, read as follows :

“138. Dishonour of cheque for insufficiency, etc., of funds in the account. – Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 (a term which may be e