DILIP HARIRAMANI versus BANK OF BARODA

Citation: [2022] 4 S.C.R. 615 · Decided: 09-05-2022 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 8 · see the full citation network in Lexace

Judgment (excerpt)

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DILIP HARIRAMANI
v.
BANK OF BARODA
(Criminal Appeal No. 767 of 2022)
MAY 09, 2022
[AJAY RASTOGI AND SANJIV KHANNA, JJ.]
Negotiable Instruments Act, 1881: s. 138 r/w s.141 –
Dishonour of cheque – Vicarious liability of partner – On facts,
cheque issued by authorised signatory of the partnership firm to
the Bankfor part payment of loan - Dishonour of cheque due to
insufficient funds – Complaint u/s. 138 r/w 141 against appellant
and other, being partner of firm – Firm not made an accused –
Conviction by trail court and High Court – On appeal, held : s. 141
impose vicarious liability by deeming fiction which presupposes and
requires the commission of the offence by the company or firm as a
principal accused, to make them liable and convicted as vicariously
liable – Appellant did not issue any cheque, which had been
dishonoured, in his personal 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, the conviction of the appellant
has to be set aside – 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 – Thus, the appellant’s
conviction u/s. 138 r/w 141 set aside.
Allowing the appeal, the Court
HELD: 1.1 Sub-section (1) to Section 141 of the Negotiable
Instruments Act, 1881 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 the conduct of its business’
[2022] 4 S.C.R. 615
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SUPREME COURT REPORTS
[2022] 4 S.C.R.
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 sub- section (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. [Para 7][624-B-F]
1.2 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
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.
[Para 8][624-F-H; 625-A-B]
1.3 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 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
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responsible for the conduct of the affairs of the firm, the conviction
of the app

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