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2024 Supreme(Online)(AP) 6914
HIGH COURT OF ANDHRA PRADESH
TARLADA RAJASEKHAR RAO
Syed Bajuddin – Appellant
Versus
M. Muralidhar – Respondent
CRLP 13966/2018
Vicarious liability for cheque bouncing requires specific averments and proof, and the drawer of the cheque is primarily liable for the bouncing of the cheque.
Headnote:
Negotiable Instruments Act - Vicarious Liability - Cheque Bouncing
Fact of the Case:
The complainant paid an advance amount for the supply of old iron scrap through a cheque, which was subsequently bounced. The accused No.1 issued the cheque, but the petitioner/accused No.2 was also implicated in the case.
Finding of the Court:
The court found that the petitioner/accused No.2 cannot be held vicariously liable for the cheque bouncing as the cheque was not issued by the petitioner/accused No.2. The court allowed the Criminal Petition and quashed the proceedings against the petitioner/accused No.2, directing the court below to proceed against accused No.1.
Issues: The legal points considered were the sustainability of the summoning order against the petitioner/accused No.2 and whether the petitioner can be held vicariously liable for the offences committed.
Ratio Decidendi: The person who has drawn the cheque on an account maintained by him alone is liable in the event of bouncing of the cheque later. Vicarious liability must be pleaded and proved, and in this case, the complainant failed to establish the petitioner's vicarious liability.
Final Decision: The Criminal Petition was allowed, and the proceedings against the Petitioner/Accused No.2 were quashed, directing the court below to proceed against accused No.1.
ORDER:
The present Criminal Petition is filed to call for the record pertaining to C.C. No. 129 of 2012 on the file of the I Additional Judicial Magistrate of First Class at Proddatur and to quash the same, which is filed by the complainant for the offence under Sections 138 and 142 of the Negotiable Instruments Act, 1881 (for short, “the Act”).
2. Succinctly, the facts of the case are that the complainant has approached the accused No.1 in a business transaction to supply old iron scrap. The accused No.1 demanded an advance amount for supply of the iron scrap. Accordingly, the complainant paid an amount of Rs.20,00,000/- by way of cheque bearing No.037884 drawn on Axis Bank, Proddatur. The accused no.1 informed the complainant that old iron scrap will be supplied through accused No.2 i.e. ALLA INC Company represented by Syed Bajuddin and requested the complainant to issue cheque in the name of Petitioner/AccusedNo.2 i.e. ALLA INC Company Syed Bajuddin. Accordingly, the complainant issued cheque in favour of the petitioner/accused No.2. As the petitioner has not supplied the old iron scrap as agreed, the complainant demanded to return the advance amount and on repeated demands, the accused no.1 issued cheque bearing No.701682 dated 26.06.2011 for an amount of Rs.18,00,000/-. The same was presented in the complainant’s bank and it was bounced on the ground that “funds insufficient. On the request of the accused no.1, the complainant has re-presented the cheque for twice, even though, the cheque was bounced due to “funds insufficient”. Following due procedure as contemplated under the Act, a complainant was lodged. The Court below took cognizance for the offence under Sections 138 and 142 of the Act and issued summons to the accused.
3. The said complaint is assailed in the present Criminal Petition by the petitioner herein/accused no.2 on the ground that the cheque was not issued by the accused no.2 and the same was issued by the accused no.1 and contended that there is no vicarious liability. Drawer of the cheque only liable for the transaction if any and relied on the judgment of the Hon’ble Apex Court in Aparna A. Shah v. Sheth Developers Private Limited and another1 for the aforesaid proposition.
Relevant portion of the judgment is reproduced herein:
“28. We also hold that under Section 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint account-holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account- holder. The said principle is an exception to Section 141 of the NI Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as arm-twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to the dishonor of a cheque can, in no case “except in case of Section 141 of the NI Act” be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted
that only after issueance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage.”
4. Heard learned counsel for the petitioner and learn
