Case Title: Dilip Hariramani v. Bank of Baroda [Criminal Appeal 767 of 2022]
A bench of Justices Ajay Rastogi and Sanjiv Khanna held that criminal liability for cheque bounce cases under Section 138 of the Negotiable Instruments Act (NI Act) cannot be fastened on a person merely because he was a partner at the firm that had taken the loan or had stood as a guarantor for such a loan.
The Court opined that vicarious liability in criminal law in terms of Section 141 of the NI Act, cannot be fastened merely because of civil liability that falls on partner of a firm.
“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 day-to-day business of the company or firm…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,” the Court held.
Pertinently, the Court held that 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, is made vicariously liable and punished,” the Court said in its judgment.
Source: Barandbench
