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HIGH COURT OF KERALA
B.KEMAL PASHA, J
BINDHU – Appellant
Versus
M/S.KRIPA ELECTRICALS – Respondent
Crl.MC/7669/2015
Negotiable Instruments - Cheque Dishonour - Section 138 - Section 141 - Company as Accused - Legal Irregularity
Fact of the Case:
The petitioner, as the authorized signatory of a company, issued a cheque that was dishonored due to insufficient funds. The company was not made a party to the complaint, leading to the assertion that the proceedings against the petitioner were irregular.
Finding of the Court:
Citing a precedent, the court found that for a prosecution under Section 141 of the Negotiable Instruments Act, it is mandatory to arraign the company as an accused. Since this was not done, the complaint against the petitioner was illegal.
Issues: Whether the proceedings against the petitioner under Section 138 were maintainable despite the company not being named as an accused.
Ratio Decidendi: The necessity of arraigning the company as an accused in a complaint under Section 138 was mandated to validate proceedings against an authorized signatory, emphasizing vicarious liability.
Final Decision: Proceedings against the petitioner were quashed due to the absence of the company as a co-accused.
O R D E R
The petitioner is the accused in S.T.No.5567/2015 of the Judicial First Class Magistrate's Court-II, Kollam, for the offence under Section 138 of the Negotiable Instruments Act . The case is as a result of a private complaint filed by the 1st respondent herein as complainant.
2. The allegation against the petitioner is that the petitioner had issued Annexure-C cheque for ₹2,36,857/- in the capacity of authorised signatory of a company, named Hotel White Dammar International Private Ltd., which, on presentation, returned dishonoured for insufficiency of funds.
3. The petitioner alone is made accused in Annexure-B complaint. Even though the cheque was signed by the petitioner in the capacity of authorised signatory for the company, the company is not arraigned as an accused in Annexure-B complaint.
4. In Aneeta Hada v. Godfather Travels &
Tours Pvt. Ltd. [ 2012 (5) SCC 661 ], it was held in paragraph 59 by the three- Judge Bench of the Apex Court is :
“In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V.Parekh which is a three-Judge Bench decision.”
5. When the company is not arraigned as an accused in Annexure-B private complaint, the proceedings have become patently illegal and therefore, all further proceedings in S.T.No.5567/2015 of the Judicial First Class Magistrate's Court-II, Kollam, on the basis of Annexure-B complaint, as against the petitioner, are liable to be quashed.
In the result, this Crl.M.C. is allowed and all further proceedings in S.T.No.5567/2015 of the Judicial First Class Magistrate's Court-II, Kollam, on the basis of Annexure-B complaint, as against the petitioner, are hereby quashed.
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