SUPREME COURT OF INDIA – NEGOTIABLE INSTRUMENTS ACT SECTION 138 – PROSECUTION OF PERSON IN CHARGE OF A COMPANY IS NOT POSSIBLE IN THE ABSENCE OF THE COMPANY AS AN ACCUSED
Supreme Court of India
Date of Judgement: 27.04.2012
In this Criminal Appeal the common proposition of law that has emerged for consideration is whether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act without the company being arraigned as an accused.
These two appeals were initially heard by a two-Judge Bench and there was difference of opinion between the two learned Judges in the interpretation of Sections 138 and 141 of the Negotiable Instruments Act and, therefore, the matter has been placed before the three judges bench.
The core issue that has emerged in these Appeals is whether the company could have been made liable for prosecution without being impleaded as an accused and whether the directors could have been prosecuted for offences punishable under the aforesaid provisions without the company being arrayed as an accused.
The Hon’ble Supreme Court has held that for maintaining the prosecution under Section 141 of the Negotiable Instruments Act, arraigning of a company as an accused is imperative.
