Siby Thomas Vs. Somany Ceramics Ltd. - (Supreme Court) (10 Oct 2023)

Vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied

MANU/SC/1117/2023

Banking

Present Appeal is directed against the order passed by the High Court, as per the impugned order, the High Court declined to quash the complaint qua the Appellant in exercise of the power under Section 482 of the Code of Criminal Procedure, 1973 ('Cr.PC').

Thus, in the light of the dictum laid down in Ashok Shewakramaniand Ors. v. State of Andhra Pradesh and Anr., it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the Negotiable Instruments Act, 1881 (NI Act), are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company.

A bare perusal of Section 141(1) of the NI Act, would reveal that only that 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 alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished.

The averments in the complaint filed by the Respondent are not sufficient to satisfy the mandatory requirements Under Section 141(1) of the NI Act. Since the averments in the complaint are insufficient to attract the provisions Under Section 141(1) of the NI Act, to create vicarious liability upon the Appellant, he is entitled to succeed in this appeal. The Appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482 of CrPC. The impugned order is set aside. Appeal stands allowed.

Tags : SUPREME COURT VICARIOUS LIABILITY