Gujarat High Court Rules Complaint Under Section 138 of Negotiable Instruments Act Requires Company to be Joined as Party Accused

In a significant ruling, the Gujarat High Court, presided over by Justice Nisha M. Thakore, clarified the maintainability of complaints under Section 138 of the Negotiable Instruments Act. The court held that for such prosecutions, it is necessary to join the company as a party accused.

According to the judgment, "Maintaining the prosecution under Section 141 of the Act necessitates the inclusion of the company as an accused. The other categories of offenders can only be brought under vicarious liability if the company is named as an accused." The court emphasized the importance of strict compliance with the law, stating that "the complaint is dismissed for non-maintainability in the absence of the company being joined as a party accused" [Para 9].

The court further clarified that a company, as a juristic person, cannot be held criminally liable without being arraigned as an accused. It highlighted the need for specific averments in the complaint to make the accused individuals vicariously liable. However, directors or officers signing cheques on behalf of the company are exempt from this requirement. The person sought to be made liable must be in charge of and responsible for the company's conduct at the relevant time [Para 12].

Decided on: 06.06.2023

Ravi Chetwani Proprietor of M/s Laxmi Store vs State of Gujarat