Top News Headlines 10th May 2022: No Vicarious Liability Under Section 141 NI Act Merely By Virtue Of Being Partner At A Firm Which Took Loan

No Vicarious Liability Under Section 141 NI Act Merely By Virtue Of Being Partner At A Firm Which Took Loan: SC

• In Dilip Hariramani vs Bank of Baroda the Hon’ble Apex Court has held that criminal liability under section 138 NI Act for cheque bounce cases cannot be fastened on a person merely because he was a partner at the firm that had taken the loan, or that he stood as a guarantor for such a loan. 
• Thus, the vicarious liability in terms of section 141 of the Act cannot be fastened merely because of a civil liability which falls upon a partner of the firm.
• In the instant case, the Bank of Baroda (respondent) had granted term loans and cash credit facility to a partnership firm M/s Global Packaging. In part repayment of the loan, the firm, through its authorised signatory, Simaiya Hariraman, had issued three cheques which were dishonoured due to insufficient funds. 
• The Bank then filed a complaint under section 138 NI Act before the Court of Judicial Magistrate against Simaiya Hariramani and the appellant. The firm was not made an accused in the case. The two were shown as partners in the firm. 
• At the outset, the Apex Court observed that the respondent bank had admitted that the appellant had not issued any of the three cheques in his personal capacity or otherwise as a partner. 
• The Court referred to the case of Girdhari Lal Gupta vs DH Mehta and anr wherein it was observed that a partner on whom vicarious liability can be imposed under the NI Act refers to a person who is in overall control of the day to day activities and business of the firm. Thus, in absence of evidence to establish that the appellant was responsible for the conduct of the affairs of the firm towards the issuance of the cheques, the conviction had to be set aside. 
• The Court also observed that the Partnership Act and the Indian Contract Act create civil liabilities in which the appellant may still be liable as per the Recovery of Debts Due to Banks and Financial Institutions Act of 1993, but vicarious liability in criminal law as per section 141 of the NI Act cannot be fastened merely due to a civil liability. 
• Reference was also made to the case of Sharad Kumar Sanghi vs Sangita Rane (2015) SCC wherein it was observed that unless the company ot the firm has committed the offence as a principal accused, the persons mentioned in 141 NI Act cannot be made liable and convicted vicariously. Thus, the vicarious liability arises only when the company or the firm commits the offence as a primary offender. 
• Thus, the appeal was allowed and appellant’s conviction under section 138 r/w 141 of NI Act was set aside. 

Will Re-examine And Reconsider Section 124A IPC: Centre Tells SC

• In the ongoing proceedings challenging the validity of Section 124A of IPC in the case titled SG Vombatkere vs Union of India the Centre has filed an affidavit in the Apex Court on Monday, informing that it has chosen to re-examine and reconsider section 124A of IPC which criminalises sedition.
• This affidavit has come just two days after the Centre had defended the sedition law and had urged the SC to dismiss the pleas challenging it. 
• The Centre submitted that there are divergent views expressed in the public domain by various academicians, jurists, intellectuals and citizens regarding this offence. 
• To justify this decision, the Centre has cited the Prime Minister’s notion that at a time when our country is marking 75 years of its independence, it intends to work towards shedding the colonial baggage. It was in this spirit that the Centre had scrapped over 1500 outdated laws since 2015. It had also ended over 25,000 compliance burdens which were causing unnecessary hurdles to the citizens. Various offences have also been decriminalised in pursuance of the aforementioned goal. 
• Thus the affidavit read that “ The GOI being fully cognizant of various views being expressed on the subject of sedition and also having considered the concerns of civil liberties and human rights, while committed to maintain and protect the sovereignty and integrity of this great nation, has decided to re-examine and reconsider the provisions of section 124A of IPC which can be done only before the competent forum.”
• The Centre said that the SC may not invest time in examining the validity of section 124A, whose validity was upheld in Kedarnath Singh vs State of Bihar (1962) and be pleased to await the exercise of reconsideration to be undertaken by the Union government, before a forum where such consideration is constitutionally permitted. 
• The arguments in the case would be heard today on the legal question of whether the pleas challenging the colonial era penal law on sedition be referred to a larger bench for reconsidering the 1962 verdict of a five-judge bench in Kedar Nath vs State of Bihar. 

Child Adopted Directly From Biological Parent Without Following Procedure Given In Juvenile Justice ( Care and Protection of Children) Act, 2015, Not An Offence U/s 80: Karnataka HC 

• A Single Bench of the Hon'ble  Karnataka HC held that a person has not committed an offense u/s 80 if a child has been taken by adoption is not an orphan, abandoned, or surrendered child.
• In the instant case,  Banu Begum w/o Khajasab @ Mehboobsab and ors v State of Karnataka, accused no. 1 gave birth to twin babies. Accused No.3 and Accused No. 4 were married and issueless and had expressed their intend to adopt Accused No. 1’s daughter. A deed of adoption of Rs. 20 stamp paper was executed. 
• The learned Magistrate took cognizance of the offence punishable u/s 80 of Juvenile Justice ( Care and Protection of Children) Act, 2015 and issued summons to the petitioners. 
• The counsel for petitioner alleged that child taken by adoption was not an orphan, abandoned or surrendered child and hence did not constitute commission of offence punishable u/s 80 of the Act. 
• Whereas, the learned High Court Government Pleader submitted that the accused took the child in adoption without proper following the procedure given in the Act and hence had committed an offence u/s 80 of the Act.
• The Hon’ble Karnataka HC held that though the accused took the child in adoption without following the prescribed procedure in the Act but the child taken in adoption was not an orphaned, abandoned or surrendered child. Hence, the accused has not committed any offence u/s 80 and declared the case was without any substance and dismissed the same.