Supreme Court Annual Digest 2022- Negotiable Instruments Act

Section 3 - Banker

Negotiable Instruments Act, 1881 - Section 3 - ‘Banker’ includes any person acting as a banker and any post office savings bank. In terms of this section, a post office savings bank is a banker under the NI Act. (Para 11) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 8 - “Holder”

Negotiable Instruments Act, 1881 - Section 8 - A holder means a person (i) entitled to possession of a promissory note, bill of exchange or a cheque, and (ii) entitled to sue the maker, acceptor or indorser of the instrument for the recovery of the amount due thereon in his name - The requirements of Section 8 are two -fold, and both requirements have to be satisfied. (Para 15) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Negotiable Instruments Act, 1881; Section 8 and 9 - An obligation has been imposed on the transferee of the promissory notes, to be deemed to be a ‘Holder in due course’, that the notes should have been acquired in good faith; after exercising reasonable care and caution about the holder’s title. (Para 11.2) Small Industries Development Bank of India v. Sibco Investment Pvt. Ltd., 2022 LiveLaw (SC) 7 : (2022) 3 SCC 56

Section 10 - “Payment in due course”

Negotiable Instruments Act, 1881 - Section 10 - Definition of ‘payment in due course’ - Ascertainment of whether the act of payment is in good faith and without negligence is by examination of the circumstances in which payment is made. In other words, antecedent and present circumstances should not afford a reasonable ground for believing that the person to whom payment is made is not entitled to receive payment of the amount mentioned.9 While it would not be advisable or feasible to strait -jacket the circumstances, albeit value of the instrument, other facts that would raise doubts about the reliability and identity of the person entitled to receive payment and genuineness of the instrument in the payer’s mind are relevant considerations. (Para 17) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Negotiable Instruments Act, 1881 - Section 10 - Definition of ‘payment in due course’ - The requirement in Section 10 that the payment should be in both good faith and without negligence is cumulative. Thus, mere good faith is not sufficient. (Para 17) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Negotiable Instruments Act, 1881 - Section 10 - General Clauses Act, 1897 - Section 3(22) - Section 3(22) of the General Clauses Act which defines ‘good faith’ as an act done honestly, whether done negligently or not, is not sufficient to hold that the payment made was ‘payment in due course’ under the NI Act. (Para 18) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 13 - “Negotiable instrument”

Negotiable Instruments Act, 1881 - Section 13 - Different principles apply for discharge from liability when the negotiable instrument is payable to bearer or has been indorsed in blank, in which case payment must be made in terms of Section 10, whereas when the negotiable instrument is payable to order, the maker, acceptor or endorser would be discharged from liability when payment is made to the ‘holder’ of the instrument. (Para 14) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Negotiable Instruments Act, 1881 - Section 13 - Kisan Vikas Patra Rules, 1988 - Kisan Vikas Patras (KVPs) are negotiable instruments in terms of Section 13 of the NI Act - It cannot be said that the KVPs are simple bearer instruments payable to anyone who presents the same for encashment and discharge. (Para 12, 29) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 15 - Indorsement

Negotiable Instruments Act, 1881 - Sections 15 and 16 - ‘Indorsement’, ‘indorsee’, ‘indorser’ and ‘indorsement in blank’ and ‘in full’ - Indorsement for the purpose of negotiation is made by the maker or holder of the negotiable instrument when he signs on the back or face of thereof, on a slip of paper annexed thereto or on a stamp paper for the purpose of negotiation. The person signing is called the indorser. If the instrument is signed by the indorser in his name only, it is an indorsement in blank. If the indorser also specifies the person to whom payment is to be made, the indorsement is said to be ‘in full’, and the person so specified is called the indorsee. (Para 12) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 78 - To whom payment should be made

Negotiable Instruments Act, 1881 - Sections 8 and 78 - Payment made to a person in possession of the instrument, but not entitled to receive or recover the amount due thereon in his name, is not a valid discharge. (Para 15) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 118 - Presumptions as to negotiable instruments

Negotiable Instruments Act, 1881; Section 118(a) - Presumption - Every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration. Frost International Ltd. v. Milan Developers & Builders, 2022 LiveLaw (SC) 340 : (2022) 8 SCC 633

Negotiable Instruments Act, 1881; Sections 118, 138, 139 - Once a cheque is issued and upon getting dishonoured a statutory notice is issued, it is for the accused to dislodge the legal presumption available under Sections 118 and 139 resply of the N.I. Act. Yogesh Jain v. Sumesh Chadha, 2022 LiveLaw (SC) 879

Section 131 - Non-liability of banker receiving payment of cheque

Negotiable Instruments Act, 1881 - Sections 131 and 131A - The standard of care expected from a collecting banker does not require him to subject the cheque to a minute and microscopic examination, yet disregarding circumstances about the cheque, which on the face of it gives rise to suspicion, may amount to negligence on the part of the collecting banker. Further, the question of good faith and negligence is to be judged from the standpoint of the true owner towards whom the banker owes no contractual liability but statutory duty by these provisions - Allegations of negligence against the paying banker could provide no defence for the collecting banker who has not collected the amount in good faith and without negligence. (Para 20) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351

Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the account.

Negotiable Instruments Act, 1881 - Section 138 and 142 - A.C. Narayanan vs. State of Maharashtra & Anr. (2014) 11 SCC 790 - The employment of the terms "specific assertion as to the knowledge of the power of attorney holder" and such assertion about knowledge should be "said explicitly" as stated in A.C. Narayanan (supra) cannot be understood to mean that the assertion should be in any particular manner, much less only in the manner understood by the accused in the case. All that is necessary is to demonstrate before the learned Magistrate that the complaint filed is in the name of the "payee" and if the person who is prosecuting the complaint is different from the payee, the authorisation therefor and that the contents of the complaint are within his knowledge. What can be treated as an explicit averment, cannot be put in a straitjacket but will have to be gathered from the circumstance and the manner in which it has been averred and conveyed, based on the facts of each case. The manner in which a complaint is drafted may vary from case to case and would also depend on the skills of the person drafting the same which by itself, cannot defeat a substantive right. However, what is necessary to be taken note of is as to whether the contents as available in the pleading would convey the meaning to the effect that the person who has filed the complaint, is stated to be authorized and claims to have knowledge of the same. In addition, the supporting documents which were available on the record by themselves demonstrate the fact that an authorized person, being a witness to the transaction and having knowledge of the case had instituted the complaint on behalf of the "payee" company and therefore, the requirement of Section 142 of N.I. Act was satisfied. (Para 17, 14) TRL Krosaki Refractories Ltd. v. SMS Asia Pvt. Ltd., 2022 LiveLaw (SC) 196 : AIR 2022 SC 1315 : (2022) 7 SCC 612

Negotiable Instruments Act, 1881 - Section 138 and 142 - Code of Criminal Procedure, 1973 - Section 482 - Entertaining a petition under Section 482 to quash the order taking cognizance by the Magistrate would be unjustified when the issue of proper authorisation and knowledge can only be an issue for trial. (Para 17) TRL Krosaki Refractories Ltd. v. SMS Asia Pvt. Ltd., 2022 LiveLaw (SC) 196 : AIR 2022 SC 1315 : (2022) 7 SCC 612

Negotiable Instruments Act, 1881 - Section 138 and 142 - When a company is the payee of the cheque based on which a complaint is filed under Section 138 of N.I. Act, the complainant necessarily should be the Company which would be represented by an employee who is authorized. Prima­facie, in such a situation the indication in the complaint and the sworn statement (either orally or by affidavit) to the effect that the complainant (Company) is represented by an authorized person who has knowledge, would be sufficient - Such averment and prima facie material is sufficient for the learned Magistrate to take cognizance and issue process. If at all, there is any serious dispute with regard to the person prosecuting the complaint not being authorized or if it is to be demonstrated that the person who filed the complaint has no knowledge of the transaction and, as such that person could not have instituted and prosecuted the complaint, it would be open for the accused to dispute the position and establish the same during the course of the trial. (Para 17) TRL Krosaki Refractories Ltd. v. SMS Asia Pvt. Ltd., 2022 LiveLaw (SC) 196 : AIR 2022 SC 1315 : (2022) 7 SCC 612

Negotiable Instruments Act, 1881, Section 138 - Even when the Criminal Court refers the matter under Section 138 of the Negotiable Instruments Act in order to make it executable, it will be treated as if it were a decree. New Okhla Industrial Development Authority (Noida) v. Yunus, 2022 LiveLaw (SC) 123 : AIR 2022 SC 847 : (2022) 9 SCC 516

Negotiable Instruments Act, 1881, Section 138 - It is surprising that on the one hand, the bank managers have specifically deposed that no such bank account was opened and maintained in their bank while on the other hand the cheque drawn by the respondent in favour of the appellant, was returned with the remark "account frozen" in respect of the same cheque. The bank account has been mentioned on the cheque and the endorsement to the effect "Account Frozen" will presuppose that an account existed". Vikram Singh v. Shyoji Ram, 2022 LiveLaw (SC) 223

Negotiable Instruments Act, 1881; Section 138 - Complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause (c) of the proviso to Section 138 is not maintainable, the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the court of sufficient cause. (Para 5-9) Gajanand Burange v. Laxmi Chand Goyal, 2022 LiveLaw (SC) 682

Negotiable Instruments Act, 1881; Section 138 - Expeditious disposal of cases - Establishment of pilot courts presided over by retired judges in 5 districts of 5 states with the highest pendency (namely, Maharashtra, Rajasthan, Gujarat, Delhi and Uttar Pradesh) directed - Guidelines covering the pilot study issued. In Re: Expeditious Trial of Cases under Section 138 of N.I. Act, 1881, 2022 LiveLaw (SC) 508 : AIR 2022 SC 2481

Negotiable Instruments Act, 1881; Section 138 - For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation - If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque - When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted. (Para 30) Dashratbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, 2022 LiveLaw (SC) 830 : AIR 2022 SC 4961

Negotiable Instruments Act, 1881; Section 138 - Supreme Court imposes Rs 5 lakhs cost on convict who agreed to settle the dispute only after 10 years of litigation - Court cites wastage of precious judicial time and tyranny of justice caused to complainant. Santhosh J. v. V. Narasimha Murthy, 2022 LiveLaw (SC) 874

Negotiable Instruments Act, 1881; Section 138 - Though a post- dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made out. (Para 16) Dashratbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, 2022 LiveLaw (SC) 830 : AIR 2022 SC 4961

Negotiable Instruments Act, 1881; Section 138 - Transfer Petition filed by a woman-accused seeking transfer of cheque bounce complaint - A complaint under Section 138 cannot be transferred as per the convenience of the accused - Being a woman and senior citizen, she can always seek exemption from personal appearance - Directed Trial Judge to favourable consider application if made by the petitioner for grant of exemption - The Trial Judge shall compel the petitioner to appear only when her presence is absolutely mandatory for the conduct of the trial. S. Nalini Jayanthi v. M. Ramasubba Reddy, 2022 LiveLaw (SC) 880

Negotiable Instruments Act, 1881; Section 138 - Whether on similar set of allegations of fact the accused can be tried for an offence under NI Act which is special enactment and also for offences under IPC unaffected by the prior conviction or acquittal and, the bar of Section 300(1) Cr.P.C. would attract for such trial? - Referred to larger bench. J. Vedhasingh v. R.M. Govindan, 2022 LiveLaw (SC) 669 : AIR 2022 SC 3772

Negotiable Instruments Act, 1881; Section 138 and 141 - Moratorium - Liability of natural persons like a Director of the Company - The moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 would apply only to the corporate debtor and that the natural persons mentioned in Section 141 of the Act would continue to be statutorily liable under the provisions of the Act. Narinder Garg v. Kotak Mahindra Bank, 2022 LiveLaw (SC) 428 : 2022 (7) SCALE 162

Negotiable Instruments Act, 1881; Section 138, 141 - The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions, resulting in enactment of Sections 138 and 141 of the NI Act has to be borne in mind - A complaint should also not be read with a pedantically hyper technical approach to deny relief under Section 482 of the Cr.P.C. to those impleaded as accused, who do not have any criminal liability in respect of the offence alleged in the complaint. (Para 39) Sunita Palita v. Panchami Stone Quarry, 2022 LiveLaw (SC) 647 : AIR 2022 SC 3548 : (2022) 10 SCC 152

Negotiable Instruments Act, 1881; Section 138, 141 - The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned - It is essential for the person to whom statutory notice is issued under Section 138 of the NI Act to give an appropriate reply. The person concerned is expected to clarify his or her stance. If the person concerned has some unimpeachable and incontrovertible material to establish that he or she has no role to play in the affairs of the company/firm, then such material should be highlighted in the reply to the notice as a foundation. (Para 44) S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, 2022 LiveLaw (SC) 772 : AIR 2022 SC 4883

Negotiable Instruments Act, 1881; Section 138, 141 - Vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners 'qua' the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction - On the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. (Para 47) S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, 2022 LiveLaw (SC) 772 : AIR 2022 SC 4883

Negotiable Instruments Act, 1881; Section 138, 56 - When a part- payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part payment. If the unendorsed cheque is dishonoured on presentation, the offence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment. (Para 29) Dashratbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, 2022 LiveLaw (SC) 830 : AIR 2022 SC 4961

Negotiable Instruments Act, 1881; Section 138,139 - The Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption - In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint - Quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence. (Para 16, 11, 13) Rathish Babu Unnikrishnan v. State, 2022 LiveLaw (SC) 413 : 2022 (6) SCALE 794

Negotiable Instruments Act, 1881; Section 138,141 - High Court should not interfere under Section 482 of the Code at the instance of an accused unless it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques - If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court. (Para 47) S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, 2022 LiveLaw (SC) 772 : AIR 2022 SC 4883

Negotiable Instruments Act, 1881; Sections 138, 139 - A drawer handing over a cheque signed by him is liable unless it is proved by adducing evidence at the trial that the cheque was not in discharge of a debt or liability. The evidence of a hand-writing expert on whether the accused had filled in the details in the cheque would be immaterial to determining the purpose for which the cheque was handed over. Therefore, no purpose is served by allowing the application for adducing the evidence of the hand-writing expert - The presumption which arises on the signing of the cheque cannot be rebutted merely by the report of a hand-writing expert. Even if the details in the cheque have not been filled up by drawer but by another person, this is not relevant to the defense whether cheque was issued towards payment of a debt or in discharge of a liability. (Para 4, 17) Oriental Bank of Commerce v. Prabodh Kumar Tewar, 2022 LiveLaw (SC) 714

Negotiable Instruments Act, 1881; Sections 138, 139 - Appeal against concurrent conviction in a cheque bounce case - Partly allowed - Upheld the conviction - Directed that sentence of imprisonment of one year vacated - Accused appellant sentenced to fine of Rs.5,000/- which he will deposit within a period of one month in the Trial Court. Tedhi Singh v. Narayan Dass Mahant, 2022 LiveLaw (SC) 275 : (2022) 6 SCC 735

Negotiable Instruments Act, 1881; Sections 138, 139 - At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity - However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents, by pointing to the materials produced by the complainant himself, or through the cross examination of the witnesses of the complainant. (Para 9) Tedhi Singh v. Narayan Dass Mahant, 2022 LiveLaw (SC) 275 : (2022) 6 SCC 735

Negotiable Instruments Act, 1881; Sections 138, 139 - Theory of 'probable defence' - The accused is not expected to discharge an unduly high standard of proof - All which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist - It becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence. (Para 7, 9) Tedhi Singh v. Narayan Dass Mahant, 2022 LiveLaw (SC) 275 : (2022) 6 SCC 735

Negotiable Instruments Act, 1881; Sections 138, 141 - For maintaining the prosecution under Section 141 of NI Act, arraigning of the company as an accused is imperative and non-impleadment of the company would be fatal for the complaint. (Para 19-21) Pawan Kumar Goel v. State of U.P., 2022 LiveLaw (SC) 971

Negotiable Instruments Act, 1881; Sections 138, 141 - Whether it is necessary to specifically state in the complaint that the person accused was in charge of, or responsible for the conduct of the business of the company - the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable. (Para 26-31) Pawan Kumar Goel v. State of U.P., 2022 LiveLaw (SC) 971

Negotiable Instruments Act, 1881; Sections 138, 141, 142 - Whether the amendment in the complaint and the impleadment of an additional accused subsequent to filing of the complaint is pemissible? The argument that an additional accused can be impleaded subsequent to the filing of the complaint merits no consideration, once the limitation prescribed for taking cognizance of the offence under Section 142 of NI Act has expired. More particularly, in view of the fact that neither any effort was made by the petitioner at any stage of the proceedings to arraign the company as an accused nor any such circumstances or reason has been pointed out to enable the Court to exercise the power conferred by proviso to Section 142, to condone the delay for not making the complaint within the prescribed period of limitation. (Para 22-23) Pawan Kumar Goel v. State of U.P., 2022 LiveLaw (SC) 971

Negotiable Instruments Act, 1881; Sections 138,139 - Whether the cheque in question had been issued for a time barred debt or not, itself prima facie, is a matter of evidence and could not have been adjudicated in an application filed by the accused under Section 482 of the CrPC. Yogesh Jain v. Sumesh Chadha, 2022 LiveLaw (SC) 879

Negotiable Instruments Act, 1882; Section 138 - SLP against Punjab & Haryana HC judgment which refused petitioner's claim of blanket exemption from personal experience in case under Section 138 NI Act -Dismissed - It is difficult to appreciate that in the case of the present nature, the petitioners seek to avoid appearance even once in terms of the order of the learned Sessions Judge. Mahesh Kumar Kejriwal v. Bhanuj Jindal, 2022 LiveLaw (SC) 394

Negotiable Instruments Act, 1882; Section 138 - The judgment in M/s Bhaskar Industries Ltd. v. M/s Bhiwani Denim Apparels Ltd.: (2001) 7 SCC 401 does not deal with a claim for blanket exemption from personal appearance - Observations therein essentially co-relate with the facts of the said case - In appropriate cases the Magistrate can allow an accused to make even the first appearance through a counsel - Such discretion needs to be exercised only in rare instances and there ought to be good reasons for dispensing with the presence. Mahesh Kumar Kejriwal v. Bhanuj Jindal, 2022 LiveLaw (SC) 394

Section 139 - Presumption in favour of holder

Negotiable Instruments Act, 1881; Section 139 - Presumption under Section 139 includes a presumption that there exists a legally enforceable debt or liability. However, the presumption under Section 139 of the N.I. Act is rebuttable and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. Jain P. Jose v. Santhosh, 2022 LiveLaw (SC) 979

Section 141 - Offences by companies

Negotiable Instruments Act, 1881; Section 141 - Impleadment of all Directors of an Accused Company on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company, without anything more, does not fulfil the requirements of Section 141 of the NI Act - Specific averments have to be made in the pleadings to substantiate the said statement in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company - It would be a travesty of justice to drag Directors, who may not even be connected with the issuance of a cheque or dishonour thereof, such as Director (Personnel), Director (Human Resources Development) etc. into criminal proceedings under the NI Act, only because of their designation. (Para 42-46) Sunita Palita v. Panchami Stone Quarry, 2022 LiveLaw (SC) 647 : AIR 2022 SC 3548 : (2022) 10 SCC 152

Negotiable Instruments Act, 1881; Section 141 - 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. (Para 7) Dilip Hariramani v. Bank of Baroda, 2022 LiveLaw (SC) 457 : AIR 2022 SC 2258

Negotiable Instruments Act, 1881; Section 141 - 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 arises only when the company or firm commits the offence as the primary offender - 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. (Para 11-14) Dilip Hariramani v. Bank of Baroda, 2022 LiveLaw (SC) 457 : AIR 2022 SC 2258

Negotiable Instruments Act, 1881; Section 141 - When the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company - Prefix "Managing" to the word "Director" makes it clear that the Director was in charge of and responsible to the company, for the conduct of the business of the company - A Director or an Officer of the company who signed the cheque renders himself liable in case of dishonour. (Para 30, 37) Sunita Palita v. Panchami Stone Quarry, 2022 LiveLaw (SC) 647 : AIR 2022 SC 3548 : (2022) 10 SCC 152

Negotiable Instruments Act, 1881; Section 141(1) Proviso - 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. (Para 7) Dilip Hariramani v. Bank of Baroda, 2022 LiveLaw (SC) 457 : AIR 2022 SC 2258

Negotiable Instruments Act, 1881; Section 141(2) - The onus under Section 141(2) of the NI Act is on the prosecution and not on the person being prosecuted - Sub-section (2) to Section 141 of the NI Act does not state that the persons enumerated, 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. (Para 8) Dilip Hariramani v. Bank of Baroda, 2022 LiveLaw (SC) 457 : AIR 2022 SC 2258

Section 143A - Power to direct interim compensation

Negotiable Instruments Act, 1881; Section 143A - Failure of accused to pay interim compensation - The amount can be recovered as if it were a fine - The provision nowhere contemplates that an accused who had failed to deposit interim compensation could be fastened with any other disability including denial of right to cross-examine the witnesses examined on behalf of the complainant. (Para 12-14) Noor Mohammed v. Khurram Pasha, 2022 LiveLaw (SC) 652 : AIR 2022 SC 3592 : (2022) 9 SCC 23