2024 Supreme(SC) 1233

SUPREME COURT OF INDIA
J.B. PARDIWALA, R. MAHADEVAN, JJ.
Bijoy Kumar Moni – Appellant
Versus
Paresh Manna & Anr. – Respondents
Criminal Appeal No. 5556 OF 2024 (Arising out of SLP (Crl) No. 13133/2024)
Decided on : 20-12-2024

IMPORTANT POINTS
(1) Dishonour of cheque – Offence by company – It is drawer Company which must be first held to be principal offender under Section 138 of NI Act before culpability can be extended, through a deeming fiction, to other Directors or persons in-charge of and responsible to Company for conduct of its business – In absence of liability of drawer Company, there would naturally be no requirement to hold other persons vicariously liable for offence committed under Section 138 of NI Act – Authorised signatory is merely physical limb that signs and makes cheque on behalf of company’s incorporeal personality.
(2) A company vis-à-vis its authorised signatory stands on a completely different footing as compared to account holders of a joint account.
(3) Section 138 of NI Act does not envisage that only those cases where a cheque issued towards discharge of personal liability of drawer towards the payee gets dishonoured would come within ambit of provision – Expression “of any debt or other liability” appearing in Section 138 when read with Explanation to provision is wide enough to bring any debt or liability which is legally enforceable within its fold.
(4) Dishonour of cheque – Section 138 of NI Act must be construed strictly – However, such a strict construction should not result in defeating very purpose for which provision has been enacted.

Headnote:

(A) Negotiable Instruments Act, 1881 – Sections 138 and 141 – Dishonour of cheque – Offence by company – Whether authorized signatory of a company falls within ambit of expression “drawer” – Cheque in question came to be signed by accused, in his capacity as Director and Authorised Signatory of Company, on account maintained by Company – As per legislative scheme it is only drawer of cheque who is sought to be made liable for offence punishable under Section 138 of NI Act – It is only by virtue of Section 141 that certain persons other than drawer of cheque can be made liable for offence in cases where offence under Section 138 is committed by a company and not an individual person – Any delegation of authority to manage account does not alter intrinsic relationship existing between account holder and banker as envisaged under NI Act – If some function is discharged by such human agency for and on behalf of company it would be an act of company and not attributable to such human agent – It is company alone which would continue to be maker of these cheques and also drawer within meaning of Section 7 of NI Act. (Paras 36, 42, 44 and 45)

(B) Negotiable Instruments Act, 1881 – Sections 138 and 141 – Dishonour of cheque – Offence by company – Whether authorized signatory of a company falls within ambit of expression “drawer” – It is drawer Company which must be first held to be principal offender under Section 138 of NI Act before culpability can be extended, through a deeming fiction, to other Directors or persons in-charge of and responsible to Company for conduct of its business – In absence of liability of drawer Company, there would naturally be no requirement to hold other persons vicariously liable for offence committed under Section 138 of NI Act – Authorised signatory is merely physical limb that signs and makes cheque on behalf of company’s incorporeal personality – Company, for all purposes, continues to remain drawer of cheques – Even vicarious liability created under Section 138 of NI Act would not be attracted in respect of a Director or an employee of Company who resigns and severs his connections with company unless complainant is able to bring his case within purview of sub-Section (2) of Section 141, by proving that offence had been committed with his consent or connivance or was otherwise attributable to any neglect on his part – A company vis-à-vis its authorised signatory stands on a completely different footing as compared to account holders of a joint account – While in case of a cheque drawn on account of company authorised signatory cannot be held to be drawer, in case of a cheque drawn upon a joint account, each account holder affixing his signature to cheque may be said to have drawn such cheque. (Paras 46, 47, 62 and 66)

(C) Negotiable Instruments Act, 1881 – Section 138 – Criminal Procedure Code, 1973 – Section 482 [Bharatiya Nagarik Suraksha Sanhita, 2023 – Section 528] – Dishonour of cheque – “any debt or other liability” – Scope of – Section 138 of NI Act does not envisage that only those cases where a cheque issued towards discharge of personal liability of drawer towards the payee gets dishonoured would come within ambit of provision – Expression “of any debt or other liability” appearing in Section 138 when read with Explanation to provision is wide enough to bring any debt or liability which is legally enforceable within its fold – Requirement under the provision is that debt or any other liability has to be legally enforceable and emphasis is not on existence of such debt or other liability between drawer and the payee – Even those cases where a person assumes the responsibility of discharging debt of some other person, and in furtherance thereof draws a cheque on an account maintained by him, which subsequently gets dishonoured upon being presented before drawee, would be covered by Section 138 if payee is able to establish that there was some sort of an arrangement by way of which debt was assumed by drawer – In absence of drawer of cheque having been arraigned as accused, it was rightly held by High Court that no prosecution could have proceeded against accused in his personal capacity – Even benefit of exception cannot be extended to complainant in present case – Accused was prosecuted in his individual capacity and not in his capacity of being Director of Company – Requirement of Section 138 of Act cannot be said to have been complied with – However, an act may constitute an offence under more than one statute – Encashment of cheque for amount of Rs 7,00,000/- issued by complainant in favour of accused stood proved during course of trial – Conduct of accused in not replying to statutory notice of dishonour of cheque and in not taking plea of the cheque having been drawn on account of company in his capacity as a Director during course of trial raises questions as regards his dishonest intention in not repaying amount borrowed by him from complainant – Although it is not possible to hold accused liable for offence under Section 138 of NI Act, yet possibility of him having committed offence of cheating cannot be ruled out – Prima facie, mens rea (guilty mind) of accused speaks for itself – Option of bringing civil action against accused or hospital will be of no avail to complainant as claims are hopelessly time barred – It is open to complainant to approach jurisdictional police station and lodge appropriate FIR against accused. (Paras 52, 55, 56, 69, 70, 74, 75, 76 and 77)

(D) Negotiable Instruments Act, 1881 – Section 138 – Dishonour of cheque – Section 138 of Act exposes the person who has drawn cheque and which has been returned for insufficiency of funds to criminal liability – The provision must be construed strictly – However, such a strict construction should not result in defeating very purpose for which provision has been enacted – Section 138 of NI Act clearly postulates that cheque returned for insufficiency of funds should have been drawn by a person on an account maintained by him – It will amount to doing violence to language of statute if Section 138 of Act is interpreted to mean that even if a person draws a cheque on an account not maintained by him, he shall be liable if cheque is returned for insufficiency of funds – Such an interpretation will lead to absurd and wholly unintended results. (Paras 72 and 73)

Facts of the case:

Present appeal arises from judgment and order dated 19.03.2024 passed by High Court at Calcutta in Criminal Revision No. 887 of 2019 by which High Court allowed criminal revision application preferred by respondent herein (original accused) and thereby quashed and set aside judgment and order of conviction passed by Trial Court and affirmed by Sessions Court for the offence punishable under Section 138 of Negotiable Instruments Act, 1881.

Findings of Court:

Conduct of accused in not replying to statutory notice of dishonour of cheque issued by Lawyer for complainant and in not taking plea of cheque having been drawn on account of company in his capacity as a Director during course of trial undoubtedly raises questions as regards his dishonest intention in not repaying amount borrowed by him from complainant.

Result : Appeal dismissed.