DILIP HARIRAMANI VS BANK OF BARODA CASE

DILIP HARIRAMANI VS BANK OF BARODA SUPREME COURT CASE

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 767 OF 2022
(ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. 641 OF 2021)
DILIP HARIRAMANI ..... APPELLANT
VERSUS
BANK OF BARODA ..... RESPONDENT
J U D G M E N T
SANJIV KHANNA, J.
Leave granted.
2. The issues raised in this appeal by the appellant, Dilip Hariramani,
challenging his conviction under Section 1381
 read with Section
1 138. Dishonour of cheque for insufficiency, etc., of funds in the account.—Where any cheque
drawn by a person on an account maintained by him with a banker for payment of any amount of
money to another person from out of that account for the discharge, in whole or in part, of any debt or
other liability, is returned by the bank unpaid, either because of the amount of money standing to the
credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to
be paid from that account by an agreement made with that bank, such person shall be deemed to
have committed an offence and shall, without prejudice to any other provision of this Act, be punished
with imprisonment for a term which may extend to two years, or with fine which may extend to twice
the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months*
from the
date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in writing, to the
drawer of the cheque, within thirty days of the receipt of information by him from the bank
regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to
the payee or as the case may be, to the holder in due course of the cheque within fifteen
days of the receipt of the said notice.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 1 of 17
141 of the Negotiable Instruments Act, 1881,2
 are covered by the
decisions of this Court on the aspects of (i) vicarious criminal
liability of a partner; and (ii) whether a partner can be convicted
and held to be vicariously liable when the partnership firm is not
an accused tried for the primary/substantive offence.
3. We are not required to refer to the facts extensively. Suffice it is to
notice that the respondent before us – Bank of Baroda, had
granted term loans and cash credit facility to a partnership firm –
M/s. Global Packaging3 on 04th October 2012 for Rs.
6,73,80,000/-. It is alleged that in part repayment of the loan, the
Firm, through its authorised signatory, Simaiya Hariramani, had
issued three cheques of Rs. 25,00,000/- each on 17th October
2015, 27th October 2015 and 31st October 2015. However, the
cheques were dishonoured on presentation due to insufficient
funds. On 04th November 2015, the Bank, through its Branch
Manager, issued a demand notice to Simaiya Hariramani under
Section 138 of the NI Act. On 07th December 2015, the respondent
Bank, through its Branch Manager, filed a complaint under Section
138 of the NI Act before the Court of Judicial Magistrate,
Balodabazar, Chhattisgarh, against Simaiya Hariramani and the
Explanation.— For the purposes of this section, “debt or other liability” means a legally
enforceable debt or other liability.
2 Hereinafter referred to as the ‘NI Act’.
3 Hereinafter referred to as ‘the Firm’.
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appellant. The Firm was not made an accused. Simaiya
Hariramani and the appellant, as per the cause title, were shown
as partners of the Firm. Paragraph 8 of the complaint, which
relates to the vicarious culpability, states:
“8. That, both accused No. 1 and accused No. 2 are
partners of the indebted firm. Accused No. 1, as a
partner of the debtor firm, issued a under the obligation
of the debtor firm. Thus, under Section 20 of the
Partnership Act 1932, accused No. 2 is equally
responsible for the underlying authority and liability of
the deemed partners.”
Other than the paragraph mentioned above, no other
assertion or statement is made to establish the vicarious liability of
the appellant.
4. The respondent Bank had produced as witness - Prashant Kumar
Gartia (PW-1), who was posted as the Branch Manager of the
respondent and had deposed that the Firm was a partnership firm
with Simaiya Hariramani as its partner. The Firm had availed term
loans and cash credit and gave three cheques of Rs. 25,00,000/-
each, which were dishonoured due to ‘insufficient funds’. Even
after the demand notice (Exhibit P-04), the accused had not
deposited the amount. Thereby, a complaint under Section 138 of
the NI Act was filed. In his cross-examination, PW-1 admitted that
the demand notice had not been issued to the Firm and that no
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loan had been obtained by Dilip Hariramani and Simaiya
Hariramani in their individual capacity.
5. By judgment dated 19th February 2019, the appellant and Simaiya
Hariramani were convicted by the Judicial Magistrate First Class,
Balodabazar, Chhattisgarh, under Section 138 of the NI Act and
sentenced to imprisonment for six months. They were also asked
to pay Rs. 97,50,000/- as compensation under Section 357(3)4
 of
the Code of Criminal Procedure, 1973 and, in default, suffer
additional imprisonment for one month. An appeal preferred by the
appellant and Simaiya Hariramani challenging their conviction was
dismissed by the Sessions Judge, Balodabazar, Chhattisgarh,
vide judgment dated 21st November 2019, albeit the appellate
court modified the sentence awarded to imprisonment till the rising
of the court and at the same time, enhanced the compensation
amount under Section 357(3) from Rs. 97,50,000/- to Rs.
1,20,00,000/- with the stipulation that the appellant and Simaiya
Hariramani shall suffer additional imprisonment for three months
in case of failure to pay.
6. The appellant and Simaiya Hariramani challenged the judgment
before the High Court of Chhattisgarh, which has been dismissed
4 357(3): When a Court imposes a sentence, of which fine does not form a part, the Court may, when
passing judgment, order the accused person to pay, by way of compensation, such amount as may
be specified in the order to the person who has suffered any loss or injury by reason of the act for
which the accused person has been so sentenced
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by the impugned judgment dated 12th October 2020. The
impugned judgment primarily relies upon the decision of this Court
in Monaben Ketanbhai Shah and Another v. State of Gujarat
and Others5 and observes that the liability under the NI Act is only
upon the partners who are responsible for the firm for conduct of
its business. In the present case, both the appellant and Simaiya
Hariramani had furnished guarantees of the amount borrowed by
the Firm from the Bank. The exact reasoning given by the High
Court reads as under:
“15. The only question raised in this revision petition is
that the prosecution of the applicants in personal
capacity, was not maintainable, appears to be out of
place in view of the discussions, which has been made
hereinabove. It is liability of a person as a partner of a
firm, that has to be given emphasis. Lapse to make a
proper mention in the cause title of the complaint
would not by itself dis-entitle, the complainant, who
has a claim to make and who has entitlement to file a
complaint against the partners of the firm. The cause
title of the complaint of course does not mention other
description of the applicant, but the body of the plaint
clearly mentions that the applicants are the partners of
M/s. Global Packaging.
16. Section 141 of the Act of 1881 provides as to who
shall be deemed as guilty and it mentions the person
concerned not a company or the firm. Therefore, the
complaint filed against the applicants was not against
the provisions of law or against the provision under
Section 141 of the Act of 1881.”
7. Before we refer to the pertinent legal ratio in the case of Aneeta
Hada v. Godfather Travels and Tours Private Ltd.,
6
 we would
5 (2004) 7 SCC 15
6 (2012) 5 SCC 661
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like to refer to an earlier apposite judgment of this Court in State
of Karnataka v. Pratap Chand and Others,
7
 in which case
prosecution had been initiated under the Drugs and Cosmetics
Act, 1940 against a partnership firm and its partners. Reference
was made to Section 348
 of the Drugs and Cosmetics Act, which is
pari materia to Section 141 of the NI Act. Therefore, for the sake
of convenience and for deciding the present appeal, we will
reproduce Section 141 of the NI Act:
“141. Offences by companies.—(1) 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:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that
the offence was committed without his knowledge, or
7 (1981) 2 SCC 335
8 34. Offences by companies.—(1) Where an offence under this Act has been committed by 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:
Provided that nothing contained in this sub-section shall render any such person liable to any
punishment provided in this Act if he proves that the offence was committed without his knowledge or
that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act
has been committed by a company and it is proved that the offence has been committed with the
consent or connivance of, or is attributable to any neglect on the part of, any director, manager,
secretary or other officer of the company, such director, manager, secretary or other officer shall also
be deemed to be guilty of that offence and shall be liable to be proceeded against and punished
accordingly.
Explanation.—For the purposes of this section—
(a) “company” means a body corporate, and includes a firm or other association of
individuals; and
(b) “director” in relation to a firm means a partner in the firm.
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that he had exercised all due diligence to prevent the
commission of such offence.
Provided further that where a person is nominated as a
Director of a company by virtue of his holding any office
or employment in the Central Government or State
Government or a financial corporation owned or
controlled by the Central Government or the State
Government, as the case may be, he shall not be liable
for prosecution under this chapter.
(2) Notwithstanding anything contained in sub-section
(1), where any offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other officer
of the company, such director, manager, secretary or
other officer shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and
punished accordingly.
Explanation.—For the purposes of this section,—
(a) “company” means any body corporate and includes
a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in
the firm.”
Sub-section (1) to Section 141 of the NI Act states that where a
company commits an offence, 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, as well as the
company itself, shall be deemed to be guilty of the offence. The
expression ‘every person’ is wide and comprehensive enough to
include a director, partner or other officers or persons. At the same
time, it follows that a person who does not bear out the
requirements of ‘in charge of and responsible to the company for
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the conduct of its business’ is not vicariously liable under Section
141 of the NI Act. The burden is on the prosecution to show that
the person prosecuted was in charge of and responsible to the
company for conduct of its business. The proviso, which is in the
nature of an exception, states that a person liable under subsection (1) shall not be punished if he proves that the offence was
committed without his knowledge or that he had exercised all due
diligence to prevent the commission of such offence. The onus to
satisfy the requirements and take benefit of the proviso is on the
accused. Still, it does not displace or extricate the initial onus and
burden on the prosecution to first establish the requirements of
sub-section (1) to Section 141 of the NI Act. The proviso gives
immunity to a person who is otherwise vicariously liable under
sub-section (1) to Section 141 of the NI Act.9
8. Sub-section (2) to Section 141 of the NI Act states that
notwithstanding anything contained in sub-section (1), where a
company has committed any offence under the Act, and it is
proved that such an offence has been committed with the consent
or connivance of, or is attributable to any neglect on the part of
any director, manager, secretary or other officers of the company,
then such director, manager, secretary or other officers of the
9 S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, (2005) 8 SCC 89, para 4 and 9.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 8 of 17
company shall also be deemed to be guilty of that offence and
shall be liable to be proceeded against and punished accordingly.
Sub-section (2) to Section 141 of the NI Act does not state that the
persons enumerated, which can include an officer of the company,
can be prosecuted and punished merely because of their status or
position as a director, manager, secretary or any other officer,
unless the offence in question was committed with their consent or
connivance or is attributable to any neglect on their part. The onus
under sub-section (2) to Section 141 of the NI Act is on the
prosecution and not on the person being prosecuted.
9. In Pratap Chand (supra), specific reference was made to the
Explanation to Section 34 of the Drugs and Cosmetics Act, which
states that for Section 34, a ‘company’ means a body corporate
and includes a firm or association of individuals, and a ‘director’ in
relation to a firm means a partner in the firm. Thereafter, the
conviction of the second respondent, one of the partners in the
firm therein, was quashed on the ground that he cannot be
convicted merely because he has the right to participate in the
firm's business in terms of the partnership deed. Thus,
notwithstanding the legal position that a firm is not a juristic
person, a partner is not vicariously liable for an offence committed
by the firm, unless one of the twin requirements are satisfied and
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established by the prosecution. This Court gave the following
reasoning:
“7. It is seen that the partner of a firm is also liable to be
convicted for an offence committed by the firm if he was
in charge of, and was responsible to, the firm for the
conduct of the business of the firm or if it is proved that
the offence was committed with the consent or
connivance of, or was attributable to any neglect on the
part of the partner concerned. In the present case the
second respondent was sought to be made liable on the
ground that he along with the first respondent was in
charge of the conduct of the business of the firm.
Section 23-C of the Foreign Exchange Regulation Act,
1947 which was identically the same as Section 34 of
the Drugs and Cosmetics Act came up for interpretation
in G.L. Gupta v. D.H. Mehta, (1971) 3 SCC 189 where it
was observed as follows:
“What then does the expression ‘a person incharge and responsible for the conduct of the affair
of a company’ means? It will be noticed that the
word ‘company’ includes a firm or other
association, and the same test must apply to a
director in-charge and a partner of a firm in-charge
of a business. It seems to us that in the context a
person ‘in-charge’ must mean that the person
should be in overall control of the day to day
business of the company or firm. This inference
follows from the wording of Section 23-C(2). It
mentions director, who may be a party to the policy
being followed by a company and yet not be incharge of the business of the company. Further it
mentions manager, who usually is in charge of the
business but not in overall charge. Similarly the
other officers may be in charge of only some part
of business.”
10. We would also refer to the summarisation of law on Section 141
by this Court in National Small Industries Corporation Limited
v. Harmeet Singh Paintal and Another,10 to the following effect:
10 (2010) 3 SCC 330: The case dealt with challenge to a summoning order. Withal, interference by
the courts at the stage of summoning order is restricted/limited.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 10 of 17
“39. From the above discussion, the following principles
emerge:
(i) The primary responsibility is on the complainant to
make specific averments as are required under the law
in the complaint so as to make the accused vicariously
liable. For fastening the criminal liability, there is no
presumption that every Director knows about the
transaction.
(ii) Section 141 does not make all the Directors liable for
the offence. The criminal liability can be fastened only
on those who, at the time of the commission of the
offence, were in charge of and were responsible for the
conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company
registered or incorporated under the Companies Act,
1956 only if the requisite statements, which are required
to be averred in the complaint/petition, are made so as
to make the accused therein vicariously liable for
offence committed by the company along with
averments in the petition containing that the accused
were in charge of and responsible for the business of
the company and by virtue of their position they are
liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be
pleaded and proved and not inferred.
xx xx xx
 (vii) The person sought to be made liable should be in
charge of and responsible for the conduct of the
business of the company at the relevant time. This has
to be averred as a fact as there is no deemed liability of
a Director in such cases.”
11. In the present case, we have reproduced the contents of the
complaint and the deposition of PW-1. It is an admitted case of the
respondent Bank that the appellant had not issued any of the
three cheques, which had been dishonoured, in his personal
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capacity or otherwise as a partner. In the absence of any evidence
led by the prosecution to show and establish that the appellant
was in charge of and responsible for the conduct of the affairs of
the firm, an expression interpreted by this Court in Girdhari Lal
Gupta v. D.H. Mehta and Another11 to mean ‘a person in overall
control of the day-to-day business of the company or the firm’, the
conviction of the appellant has to be set aside.12 The appellant
cannot be convicted merely because he was a partner of the firm
which had taken the loan or that he stood as a guarantor for such
a loan. The Partnership Act, 1932 creates civil liability. Further, the
guarantor's liability under the Indian Contract Act, 1872 is a civil
liability. The appellant may have civil liability and may also be
liable under the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 and the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002.
However, vicarious liability in the criminal law in terms of Section
141 of the NI Act cannot be fastened because of the civil liability.
Vicarious liability under sub-section (1) to Section 141 of the NI
Act can be pinned when the person is in overall control of the dayto-day business of the company or firm. Vicarious liability under
sub-section (2) to Section 141 of the NI Act can arise because of
11 (1971) 3 SCC 189
12 State of Karnataka v. Pratap Chand and Others, (1981) 2 SCC 335.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 12 of 17
the director, manager, secretary, or other officer's personal
conduct, functional or transactional role, notwithstanding that the
person was not in overall control of the day-to-day business of the
company when the offence was committed. Vicarious liability
under sub-section (2) is attracted when the offence is committed
with the consent, connivance, or is attributable to the neglect on
the part of a director, manager, secretary, or other officer of the
company.
12. The demand notice issued on 04th November 2015 by the Bank,
through its Branch Manager, was served solely to Simaiya
Hariramani, the authorised signatory of the Firm. The complaint
dated 07th December 2015 under Section 138 of the NI Act before
the Court of Judicial Magistrate, Balodabazar, Chhattisgarh, was
made against Simaiya Hariramani and the appellant. Thus, in the
present case, the Firm has not been made an accused or even
summoned to be tried for the offence.
13. The judgment in Dayle De’souza v. Government of India
through Deputy Chief Labour Commissioner (C) and
Another,
13 answered the question of whether a director or a
partner can be prosecuted without the company being prosecuted.
Reference in this regard was made to the views expressed by this
13 2021 SCC OnLine SC 1012
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Court in State of Madras v. C.V. Parekh and Another14 on the
one hand and the divergent view expressed in Sheoratan
Agarwal and Another v. State of Madhya Pradesh15 and Anil
Hada v. Indian Acrylic Ltd.16 This controversy was settled by a
three Judge Bench of this Court in Aneeta Hada (supra), in which,
interpreting and expounding the difference between the
primary/substantial liability and vicarious liability under Section
141 of the NI Act, it has held:
“51. We have already opined that the decision
in Sheoratan Agarwal runs counter to the ratio laid
14 (1970) 3 SCC 491: “3. Learned Counsel for the appellant, however, sought conviction of the two
respondents on the basis of Section 10 of the Essential Commodities Act under which, if the person
contravening an order made under Section 3 (which covers an order under the Iron and Steel Control
Order, 1956), is a company, every person who, at the time the contravention 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 contravention and shall be liable to be
proceeded against and punished accordingly. It was urged that the two respondents were in charge
of, and were responsible to, the Company for the conduct of the business of the Company and,
consequently, they must be held responsible for the sale and for thus contravening the provisions of
clause (5) of the Iron and Steel Control Order. This argument cannot be accepted, because it ignores
the first condition for the applicability of Section 10 to the effect that the person contravening the
order must be a company itself. In the present case, there is no finding either by the Magistrate or by
the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was
made by the Company. In fact, the Company was not charged with the offence at all. The liability of
the persons in charge of the Company only arises when the contravention is by the Company itself.
Since, in this case, there is no evidence and no finding that the Company contravened clause (5) of
the Iron and Steel Control Order, the two respondents could not be held responsible. The actual
contravention was by Kamdar and Vallabhdas Thacker and any contravention by them would not
fasten responsibility on the respondents. The acquittal of the respondents is, therefore, fully justified.
The appeal fails and is dismissed.”
15 (1984) 4 SCC 352: The court held that anyone among : the company itself; every person incharge of and responsible to the company for the conduct of the business; or any director, manager,
secretary or other officer of the company with whose consent or connivance or because of whose
neglect offence had been committed, could be prosecuted alone.
16 (2000) 1 SCC 1:“13. If the offence was committed by a company it can be punished only if the
company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the
persons falling within the second or third category the payee can succeed in the case only if he
succeeds in showing that the offence was actually committed by the company. In such a prosecution
the accused can show that the company has not committed the offence, though such company is not
made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do
not contain a condition that prosecution of the company is sine qua non for prosecution of the other
persons who fall within the second and the third categories mentioned above. No doubt a finding that
the offence was committed by the company is sine qua non for convicting those other persons. But if
a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons
cannot, on that score alone, escape from the penal liability created through the legal fiction
envisaged in Section 141 of the Act.”
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 14 of 17
down in C.V. Parekh which is by a larger Bench and
hence, is a binding precedent. On the aforesaid
ratiocination, the decision in Anil Hada has to be
treated as not laying down the correct law as far as it
states that the Director or any other officer can be
prosecuted without impleadment of the company.
Needless to emphasise, the matter would stand on a
different footing where there is some legal impediment
and the doctrine of lex non cogit ad impossibilia gets
attracted.
xx xx xx
59. 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. Thus,
the view expressed in Sheoratan Agarwal does not
correctly lay down the law and, accordingly, is hereby
overruled. The decision in Anil Hada is overruled with
the qualifier as stated in para 51. The decision in Modi
Distillery has to be treated to be restricted to its own
facts as has been explained by us hereinabove.”
14. The provisions of Section 141 impose vicarious liability by
deeming fiction which presupposes and requires the commission
of the offence by the company or firm. Therefore, unless the
company or firm has committed the offence as a principal
accused, the persons mentioned in sub-section (1) or (2) would
not be liable and convicted as vicariously liable. Section 141 of the
NI Act extends vicarious criminal liability to officers associated with
the company or firm when one of the twin requirements of Section
141 has been satisfied, which person(s) then, by deeming fiction,
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is made vicariously liable and punished. However, such vicarious
liability arises only when the company or firm commits the offence
as the primary offender. This view has been subsequently
followed in Sharad Kumar Sanghi v. Sangita Rane,
17 Himanshu
v. B. Shivamurthy and Another,
18 and Hindustan Unilever
Limited v. State of Madhya Pradesh.
19 The exception carved out
in Aneeta Hada (supra),20 which applies when there is a legal bar
for prosecuting a company or a firm, is not felicitous for the
present case. No such plea or assertion is made by the
respondent.
15. Given the discussion above, we allow the present appeal and set
aside the appellant's conviction under Section 138 read with
17 (2015) 12 SCC 781:“11. In the case at hand as the complainant's initial statement would reflect,
the allegations are against the Company, the Company has not been made a party and, therefore,
the allegations are restricted to the Managing Director. As we have noted earlier, allegations are
vague and in fact, principally the allegations are against the Company. There is no specific allegation
against the Managing Director. When a company has not been arrayed as a party, no proceeding can
be initiated against it even where vicarious liability is fastened under certain statutes. It has been so
held by a three-Judge Bench in Aneeta Hada v. Godfather Travels and Tours (P) Ltd. in the context of
the Negotiable Instruments Act, 1881.”
18 (2019) 3 SCC 797:“13. In the absence of the company being arraigned as an accused, a
complaint against the appellant was therefore not maintainable. The appellant had signed the cheque
as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of
demand being served on the company and without compliance with the proviso to Section 138, the
High Court was in error in holding that the company could now be arraigned as an accused.”
19 (2020) 10 SCC 751: “23. Clause (a) of sub-section (1) of Section 17 of the Act makes the person
nominated to be in charge of and responsible to the company for the conduct of business and the
company shall be guilty of the offences under clause (b) of sub-section (1) of Section 17 of the Act.
Therefore, there is no material distinction between Section 141 of the NI Act and Section 17 of the
Act which makes the company as well as the nominated person to be held guilty of the offences
and/or liable to be proceeded and punished accordingly. Clauses (a) and (b) are not in the alternative
but conjoint. Therefore, in the absence of the company, the nominated person cannot be convicted or
vice versa. Since the Company was not convicted by the trial court, we find that the finding of the
High Court to revisit the judgment will be unfair to the appellant-nominated person who has been
facing trial for more than last 30 years. Therefore, the order of remand to the trial court to fill up the
lacuna is not a fair option exercised by the High Court as the failure of the trial court to convict the
Company renders the entire conviction of the nominated person as unsustainable.”
20 The exception would be when the company itself has ceased to exist or cannot be prosecuted
due to a statutory bar.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 16 of 17
Section 141 of the NI Act. The impugned judgment of the High
Court confirming the conviction and order of sentence passed by
the Sessions Court, and the order of conviction passed by the
Judicial Magistrate First Class are set aside. Bail bonds, if any,
executed by the appellant shall be cancelled. The appellant is
acquitted.21 However, there would be no order as to costs.
......................................J.
AJAY RASTOGI
......................................J.
SANJIV KHANNA
NEW DELHI;
MAY 09, 2022.
21 However, as Simaiya Hariramani has preferred no appeal, we express no opinion in his case.
Criminal Appeal @ SLP (Crl.) No. 641 of 2021 Page 17 of 17

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