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2026 Supreme(SC) 863
SUPREME COURT OF INDIA
MANOJ MISRA, VIJAY BISHNOI, JJ.
Manjula Kapoor - Appellant
Versus
The State Of Himachal Pradesh And Anr. – Respondents
Criminal Appeal No. of 2026 (Arising out of SLP Criminal No. 8240 of 2016)
Decided On : 29-07-2026
For the Petitioner(s): Mr. Ashwani Kumar Dubey, AOR Mr. Devinder Singh Khatana, Adv. Ms. Garima Sharma, Adv.
For the Respondent(s): Mr. Vaibhav Srivastava, AAG Ms. Sugandha Anand, AOR Mr. Chetan Anand Mohapatra, Adv. Ms. E. R. Sumathy, AOR Mr. Harsh, Adv.
Prosecution for cheque dishonour against a corporate entity requires the entity to be impleaded as an accused. Without the entity as a party, the complaint is fundamentally defective and cannot be cured by procedural powers to add parties after the prescribed statutory limitation period has expired.
Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 and 141 - Code of Criminal Procedure, 1973 - Section 319 - Dishonour of cheque - Prosecution of a corporate entity - Commission of the offence by the corporate entity represents a condition precedent to attract vicarious liability of its directors - Arraigning the corporate entity as an accused is mandatory for maintaining the prosecution. (Paras 10, 11)
(B) Prosecution - Maintainability - Failure to include the corporate entity as an accused renders the complaint fundamentally defective and prevents the court from taking valid cognizance of the matter. (Paras 14, 15)
(C) Procedural Powers - The power of a court to summon additional parties cannot be utilized to circumvent the mandatory limitation period for filing a complaint when the initial application suffers from an incurable fatal defect. (Paras 15, 16)
Facts of the case:
A complaint under the statutes governing cheque dishonour was filed against an individual who was an authorized signatory of a company, without impleading the company itself. During the trial, the accused challenged the proceedings, arguing that the complaint was not maintainable without the company as a party. The lower appellate court refused to quash the proceedings, instead directing the trial court to use its procedural powers to add the company as a second accused.
Findings of Court:
The court determined that the company, as the drawer of the cheque, is a necessary party to the prosecution. Because the offense by the juristic person is the foundation for vicarious liability, the absence of the company in the complaint creates a fatal legal defect that cannot be rectified by adding them later once the statutory limitation period has expired.
Issues: Whether an individual can be prosecuted for cheque dishonour without impleading the issuing organization, and whether a court can invoke procedural powers to introduce the organization as a party after the limitation period for filing the complaint has passed.
Ratio Decidendi: Commission of an offense by the corporate entity is a mandatory condition precedent for the vicarious liability of others. Consequently, a complaint that fails to implead the primary corporate entity is fundamentally void, and procedural powers cannot be used to bypass mandatory filing requirements once the period of limitation has elapsed.
Result: Appeal allowed; impugned orders set aside, and the complaint along with all consequential proceedings quashed.
| Table of Content |
|---|
| 1. procedural background and factual context of the appeal. (Para 1 , 2 , 3 , 4) |
| 2. summary of rival contentions regarding defect in ni act complaints. (Para 5 , 6 , 7) |
| 3. mandatory requirement to implead company as accused in section 138/141 ni act. (Para 8 , 9 , 10 , 11) |
| 4. inapplicability of section 319 crpc to cure fatal limitation defects in ni act complaints. (Para 12 , 13 , 14 , 15) |
| 5. quashing of proceedings due to jurisdictional and procedural fatal defects. (Para 16 , 17 , 18) |
JUDGMENT :
MANOJ MISRA, J.
1. Leave granted.
2. Appellant filed a petition under Section 482 of the Code of Criminal Procedure, 19731[CrPC] read with Article 227 of the Constitution of India in the High Court of Himachal Pradesh at Shimla2[The High Court] for quashing proceedings of Complaint Case No. 25/1 of 2009, titled Pankaj Sharma v. Manjula Kapoor), in the Court of Judicial Magistrate3[Judicial Magistrate 1st Class, Barsar, Hamirpur (State of Himachal Pradesh)/ Trial Court] under Section 138 of Negotiable Instruments Act, 18814[NI Act]. By the impugned order dated 19.09.2016, the High Court, though declined the prayer to quash the proceedings, directed the Trial Court to suo motu issue notice to M/s Cine Prime Entertainment5[Hereinafter referred to as the Company] under Section 319 of CrPC and, after impleading it as accused No.2, commence trial de novo against the Company, as per provisions of sub-section (4) of Section 319 of CrPC, and bring it to its logical conclusion expeditiously and in accordance with law.
Facts:
3. In brief, the facts are as follows:
(i) Pankaj Sharma (i.e., Respondent No.2) filed a complaint under Section 138 of NI Act against the accused-appellant, inter alia, alleging that the Company owed Rs. 5,00,000 to the complainant in lieu of services rendered by him; the accused-appellant is one of the directors and authorised signatory of the Company; in discharge of the liability of the Company, a cheque of Rs. 5,00,000, duly signed by the accused-appellant, as authorised signatory of the Company, was issued to the complainant, which returned unpaid with remark ‘payment stopped by drawer’; thereafter, the complainant served a notice of demand on the accused-appellant; despite service of the notice, the accused-appellant failed to make the requisite payment.
(ii) The learned Judicial Magistrate took cognizance on the complaint and summoned the appellant under Section 138 of NI Act vide order dated 30.01.2010. Thereafter, trial commenced.
(iii) When the proceedings were at the stage of recording statement of accused under Section 313 CrPC, the accused-appellant filed a petition before the High Court for quashing the proceedings on the ground that the cheque in question was drawn on the account maintained by the Company and, therefore, without impleading the Company as an accused, the complaint was liable to be quashed in the light of decision of this Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661.
(iv) The High Court accepted the legal position settled by this Court in Aneeta Hada (supra), but took the view that, since from the evidence led in the course of trial it appeared that the offence was committed by the Company, the Trial Court could have taken recourse to the powers under Section 319 of CrPC to arraign the Company as accused No.2. Accordingly, vide the impugned order, the High Court directed the Trial Court to act in terms supra.
4. Aggrieved by the order of the High Court, this appeal has been filed.
Submissions on behalf of the Appellant:
5. On behalf of the appellant, it is submitted that it is no longer res integra that where an offence punishable under Section 138 of NI Act is committed by a company, without impleading the company as an accused, the complaint against the director, or any person, who, at the time the offence was committed, was in-charge of, and responsible to the company for conduct of its business, is not maintainable.7[Aneeta Hada (supra)] Besides, Section 1
