Petitioner’s Status as an Authorized Signatory Isn’t Sufficient to Invoke Vicarious Liability for the Offence u/s 138 of the NI Act

Case Details: Mrs. Mithlesh Gupta v. National Industrial Corporation Ltd. - [2024] 162 taxmann.com 56 (HC-Delhi)

Judiciary and Counsel Details

• • Navin Chawla, J.
  • T.V. George, Adv. for the Petitioner.
  • Vikas Kumar & Ayush Kapur, Advs. for the Respondent.

Facts of the Case

In the instant case, the accused proprietorship firm represented through another accused and petitioner was engaged in distribution and marketing of Indian Made Foreign Liquor (I.M.F.L).

The representative accused on behalf of accused proprietorship firm approached complainant and offered their services for promotion, marketing and maximizing sale of Complainant’s brands.

The Complainant agreed to take services of accused proprietorship firm and accordingly a distributorship agreement was signed by and between complainant and accused proprietorship firm.

During the course of business, it was alleged by complainant that accused proprietorship firm had an outstanding balance against which it issued cheque but on presentation, said cheque was dishonoured. Resultantly, complaint under section 138 of the Negotiable Instruments Act, 1881 was filed against accused proprietorship firm, representative and petitioner.

High Court Held

The High Court noted that, in complaint, complainant itself had pleaded that cheque in question was signed by accused representative as proprietor of accused proprietorship firm.

Further, in complaint, petitioner had been arrayed as another accused on premise that she was authorized signatory of accused proprietorship firm and that she signed distributorship between accused proprietorship firm and complainant along with accused representative.

The High Court held that it was not sufficient to invoke vicarious liability of offence under Section 138 of NI Act, in terms of Section 141 of NI Act, on petitioner. Further, complaint against petitioner could not be sustained, and accordingly, same was to be quashed as against petitioner.