MONABEN KETANBHAI SHAH Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Leave granted.

(2.) The second respondent has filed a complaint against five accused under Section 138 of the Negotiable Instruments Act, 1881 (for short, "the Act") alleging dishonour of a cheque, the accused having stopped payment thereof. Out of five, three accused are ladies. On an application filed by the said accused, inter alia, alleging that the complaint does not fulfill the ingredients of Section 141 of the Act, the Magistrate directed their discharge holding that there are no allegations in the complaint, making out an offence against them. The order of the Magistrate was, however, set aside by the Sessions Judge. The learned Sessions Judge held that no doubt, it is not specifically mentioned in the complaint that all the accused were in-charge of the business but merely non-mentioning of specific words does not mean that they were not in-charge of the business and in this view came to the conclusion that it was for the accused to establish that they had no knowledge about the transaction or had exercised due diligence. The High Court, by the impugned judgment, has upheld the order of the Sessions Judge insofar as it concerns the appellants. The order of the Sessions Judge insofar as original accused No. 5 is concerned, has been reversed by the High Court and that of the Magistrate restored since the High Court came to the conclusion that accused No. 5 was a student up to 1998 studying at Ahmedabad, and thereafter she got married and went to USA and in these circumstances her case stood on different footing. The remaining two sisters are in appeal on grant of special leave.

(3.) Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in-charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Thus, vicarious liability has been fastened on those who are in-charge of and responsible to the company for the conduct of its business. For the purpose of Section 141, a firm comes within the ambit of a company.