Case Note & Summary
The judgment concerns two criminal applications filed by officers of the Maharashtra State Electricity Board (MSEB) seeking quashing of criminal proceedings initiated against them under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, for dishonour of cheques issued by MSEB to Datar Switchgear Limited. The applicants were officers of MSEB, a body corporate, and were arrayed as accused in the complaint filed by the respondent company. The core issue was whether the complaint contained specific averments that the applicants were in charge of and responsible for the conduct of the business of MSEB at the time of the offence, as required under Section 141 of the Act. The court examined the complaint and found that it merely described the applicants by their designations (e.g., Technical Member, Chief Engineer) without alleging that they were responsible for the day-to-day affairs of the board or that they had any role in the issuance of the cheques. The court held that vicarious liability under Section 141 cannot be imposed without such specific averments. Relying on settled law, the court quashed the proceedings against the applicants, observing that continuing the prosecution would be an abuse of process. The court allowed both applications and set aside the process issued against the applicants.
Headnote
A) Criminal Law - Negotiable Instruments Act - Vicarious Liability - Section 141 - Requirement of Specific Averment - For prosecution of directors/officers under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, the complaint must contain specific averments that the accused was in charge of and responsible for the conduct of the business of the company at the time of the offence. Mere description of the accused as a director or officer is insufficient to attract vicarious liability. (Paras 5-10) B) Criminal Procedure - Quashing of Proceedings - Section 482 CrPC - Abuse of Process - Where the complaint lacks necessary averments to make out a prima facie case against the accused, the High Court may exercise its inherent powers under Section 482 of the Code of Criminal Procedure, 1973, to quash the proceedings to prevent abuse of the process of court. (Paras 11-15)
Issue of Consideration
Whether criminal proceedings under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, can be sustained against officers of a company without specific allegations that they were in charge of and responsible for the conduct of the business of the company at the time of the offence.
Final Decision
Both criminal applications are allowed. The criminal proceedings against the applicants in the complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, are quashed and set aside.
Law Points
- Vicarious liability under Section 141 of Negotiable Instruments Act requires specific averment of being in charge of and responsible for conduct of business
- Quashing of criminal proceedings for lack of prima facie case
- Section 482 CrPC inherent powers to prevent abuse of process
