Case title: Dilip Hariramani v. Bank of Baroda [Criminal Appeal 767 of 2022]
A bench of judges Ajay Rastogui and Sanjiv Khanna held that criminal liability for cases of NSF checks under section 138 of the Negotiable Instruments Act (NI Act) cannot be imposed on a person simply because he was an associate of the business who contracted the loan or guaranteed such a loan.
The Court held that vicarious liability under criminal law under Article 141 of the NI Act, cannot be determined simply because of the civil liability incumbent on the partner of a company.
“Vicarious liability under subsection (1) of section 141 of the NI Act may arise where the person has overall control over the day-to-day operations of the business or enterprise… Vicarious liability under subsection (2) arises where the offense is committed with the consent, connivance or is attributable to the negligence of a director, manager, secretary or other officer of the society, “ the Court upheld.
Relevantly, the Court held that the provisions of Section 141 impose vicarious liability by considering the fiction that presupposes and requires the commission of the offense by the corporation or enterprise.
“Therefore, unless the company or enterprise committed the offense as the principal defendant, the persons mentioned in paragraph (1) or (2) would not be liable and convicted as liable for the fact of Section 141 of the NI Act extends vicarious criminal liability to officers associated with the corporation or enterprise when one of the two requirements of Section 141 has been satisfied, which (which) person(s) then, by considering the fiction, is vicariously liable and punished” said the Court in its judgment.