Dishonour of Cheque -- Sole Proprietorship -- Section 141 Not Applicable to Family Members
(i) Negotiable Instruments Act, 1881, S.141 -- Dishonour of Cheque -- Sole Proprietorship -- Section 141 creates vicarious liability only in respect of companies, partnership firms and associations of individuals as expressly covered by the Explanation to the provision. A sole proprietorship has no legal identity independent of its proprietor and falls outside the ambit of Section 141. Family members of the proprietor cannot be fastened with vicarious criminal liability on the basis of close familial relationship or alleged participation in the business. (ii) Negotiable Instruments Act, 1881, S.138 -- Dishonour of Cheque -- Liability Confined to Drawer of Cheque -- Criminal liability under Section 138 is strictly confined to the drawer of the dishonoured cheque who maintains the account on which it is drawn. A person who is neither the signatory to the cheque nor the holder of the bank account cannot be prosecuted under Section 138. Where the alleged drawer had died prior to the issuance of the cheques, the banking mandate stood automatically revoked and prosecution of a family member on the basis of pre-signed cheques cannot be sustained under the NI Act.
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