The Supreme Court observed that a High Court can quash a cheque case only if it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques. "Vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners 'qua' the firm.", the bench comprising Justices Surya Kant and JB Pardiwala observed.

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The High Court quashed a cheque case against the accused (partner of a firm) on the ground that there was nothing to indicate in what manner the accused herein was in­charge and responsible for the day­to­day affairs of the firm so as to make her vicariously liable for the alleged offence with the aid of Section 141 of the NI Act. The High Court held that merely by reciting the words used under Section 141 of the NI Act in the complaint no vicarious liability can be fastened on the firm's partner.

Code of Criminal Procedure, 1973 ; Section 482 - Negotiable Instruments Act, 1881 ; Section 138,141 - High Court should not interfere under Section 482 of the Code at the instance of an accused unless it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques - If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court. (Para 47)

Negotiable Instruments Act, 1881; Section 138,141 - Vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners 'qua' the firm. This would make them liable to face prosecution but it does not lead to an automatic conviction. On the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. (Para 47)

Negotiable Instruments Act, 1881; Section 138,141 - The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned - It is essential for the person to whom statutory notice is issued under Section 138 of the NI Act to give an appropriate reply. The person concerned is expected to clarify his or her stance. If the person concerned has some unimpeachable and incontrovertible material to establish that he or she has no role to play in the affairs of the company/firm, then such material should be highlighted in the reply to the notice as a foundation. (Para 44)

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