Case Note & Summary
The petitioner, Lokmat Media Private Limited, a newspaper publishing company, filed multiple writ petitions under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of criminal complaints filed against it under Section 138 of the Negotiable Instruments Act, 1881. The respondents were individuals who had received cheques from employees of the petitioner company, which were dishonoured. The respondents filed complaints against the petitioner company and its employees. The petitioner contended that the cheques were not issued by the company but by its employees without any board resolution or authorisation, and therefore the company could not be held vicariously liable under Section 141 of the Negotiable Instruments Act. The court examined the provisions of Section 141, which deals with offences by companies, and noted that for a company to be liable, there must be a specific resolution or authorisation by the board of directors for the issuance of cheques. In the absence of such authorisation, the employees cannot bind the company. The court found that the complaints did not disclose any prima facie case against the petitioner company and were an abuse of process of law. Accordingly, the court allowed the writ petitions and quashed the criminal complaints against the petitioner company.
Headnote
A) Criminal Law - Negotiable Instruments Act - Vicarious Liability - Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - Quashing of Complaints - The petitioner company challenged multiple criminal complaints filed by respondents for dishonour of cheques issued by its employees. The court examined whether the company could be vicariously liable when the cheques were not issued by the company itself but by employees without board resolution or authorisation. Held that in the absence of any resolution or authorisation by the company, the employees cannot bind the company, and the company cannot be held vicariously liable under Section 141. The complaints were quashed against the petitioner company. (Paras 1-10) B) Criminal Law - Negotiable Instruments Act - Authorisation - Section 141 of the Negotiable Instruments Act, 1881 - Requirement of Specific Authorisation - The court noted that for a company to be liable under Section 141, there must be a specific resolution or authorisation by the board of directors for the issuance of cheques. In the present case, no such resolution was produced, and the cheques were issued by employees in their individual capacity. Held that without authorisation, the company cannot be made vicariously liable. (Paras 5-8) C) Criminal Law - Quashing of Complaints - Inherent Powers - Section 482 of the Code of Criminal Procedure, 1973 - Abuse of Process - The court exercised its inherent powers under Section 482 CrPC to quash the complaints as they were an abuse of process of law. The complaints did not disclose any prima facie case against the petitioner company. (Paras 9-10)
Issue of Consideration
Whether a company can be held vicariously liable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, for dishonour of cheques issued by its employees without proper authorisation or resolution.
Final Decision
The court allowed the writ petitions and quashed the criminal complaints against the petitioner company.
Law Points
- Vicarious liability
- Negotiable Instruments Act
- 1881
- Section 138
- Section 141
- Criminal complaint
- Quashing
- Authorisation
- Cheque dishonour
