N. Mamatha Nagesh vs State of West Bengal

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2026 Supreme(Cal) 70

IN THE HIGH COURT AT CALCUTTA
UDAY KUMAR, J.
N. Mamatha Nagesh –Petitioner
Versus
State of West Bengal And Anr. – Respondent
CRR 2270 of 2025
Decided On : 08-05-2026

Important Points

Criminal liability under the Negotiable Instruments Act is strictly limited to the drawer of the cheque. Vicarious liability does not extend to sole proprietorships. A demand notice failing to claim the exact cheque amount is legally insufficient, and magistrates must strictly conduct mandatory jurisdictional inquiries before summoning residents from outside their jurisdiction.

Subject

Criminal Law - Negotiable Instruments

Act Referred

BHARATIYA NAGARIK SURAKSHA SANHITA: S.528
CRIMINAL PROCEDURE CODE: S.482
NEGOTIABLE INSTRUMENTS ACT: S.138

Headnote

(A) Negotiable Instruments Act, 1881 - Sections 138 and 141 - Code of Criminal Procedure, 1973 - Sections 202 and 482 - Bharatiya Nagarik Suraksha Sanhita, 2023 - Section 528 - Dishonour of cheque - Prosecution of non-signatory spouse - Vicarious liability - Whether Section 141 of NI Act applies to sole proprietorship - Statutory notice under Proviso (b) - Essentiality of demanding total cheque amount - Mandatory gatekeeping duty for out-of-station residents - Quashing of proceedings to prevent abuse of process. (Paras 1, 9, 27-29, 33-35, 41, 47-52)

(B) Criminal Procedure - Quashing of proceedings - Inherent powers of High Court - Suppression of material facts regarding business entity status - Prohibition of using criminal litigation as a tool for extra-legal coercion against non-signatories. (Paras 16, 55-60)

Facts of the case:
The Petitioner, spouse of an individual managing a business as a sole proprietorship, challenged criminal proceedings initiated against her for the dishonour of a cheque, although she was neither the account holder nor the signatory. The complainant attempted to invoke vicarious liability by describing the business entity ambiguously as a proprietorship or partnership, and issued a demand notice claiming only a minor fraction of the total cheque value. The trial court issued summon without the mandatory jurisdictional inquiry required for an accused residing outside the local limits of the court.

Findings of Court:
The court determined that a sole proprietorship lacks a separate legal identity and is not a 'company' under Section 141 of the NI Act, precluding vicarious liability. The statutory notice was found to be 'non-est' as it failed to demand the 'said amount' covered by the cheque. Furthermore, the court held that the magistrate failed in its mandatory 'gatekeeping' duty under Section 202 of the Cr.P.C. to verify the legal nexus before summoning a distant resident, thereby validating the request for quashing the proceedings.

Issues: Whether a non-signatory spouse can be held vicariously liable for a cheque issued by a sole proprietorship; whether a demand notice claiming a fraction of the cheque amount satisfies the statute; and whether the magistrate’s failure to conduct a jurisdictional inquiry warrants quashing.

Ratio Decidendi: Criminal liability under Section 138 is strictly in personam. Section 141 of the NI Act cannot be invoked against a sole proprietorship. A notice must demand the exact amount of the cheque, and the mandatory inquiry under Section 202 is an essential safeguard to protect distant residents from the harassment of groundless litigation.

Result: Criminal Revision Application allowed; proceedings against the Petitioner quashed.

Advocates Appeared:
For the Petitioner: Mr. Dipta Dipak Banerjee

Table of Content
1. procedural background and ex-parte merits adjudication. (Para 1 , 2 , 3)
2. factual matrix of the commercial loan dispute. (Para 4 , 5 , 6 , 7 , 8)
3. points of determination for the revisional application. (Para 9)
4. petitioner's submissions contesting liability and jurisdiction. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16)
5. deemed service and court's authority to decide on merits. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24)
6. inapplicability of section 138 ni act to non-signatories/non-drawers. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31)
7. sole proprietorships excluded from section 141 vicarious liability. (Para 32 , 33 , 34 , 35 , 36 , 37)
8. statutory notice invalidity due to massive demand discrepancy. (Para 38 , 39 , 40 , 41 , 42 , 43 , 44)
9. mandatory section 202 inquiry for non-resident accused. (Para 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52)
10. suppression of material facts constitutes abuse of process. (Para 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60)
11. consolidated summary of legal findings for acquittal. (Para 61)
12. conclusion and final orders quashing proceedings. (Para 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75)

JUDGMENT :

UDAY KUMAR, J.

I. INTRODUCTION

1. The Petitioner, N. Mamatha Nagesh, has moved this Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (corresponding to Section 482 of the Code of Criminal Procedure, 1973), seeking the quashing of proceedings in Case No. CS/35126/2022 currently pending before the Learned 7th Judicial Magistrate at Calcutta. The Petitioner challenges the issuance of process and the continuation of a prosecution initiated by Opposite Party No. 2 (Inditrade Fincorp Limited) for an alleged offence under Section 138 of the Negotiable Instruments Act, 1881.

2. The central grievance of the Petitioner is that she has been impleaded in a commercial dispute despite being a legal stranger to the instrument and the bank account in question. She asserts that the prosecution is not a bona fide pursuit of justice but a strategic attempt to exert psychological pressure on her husband, the primary accused, by dragging a non-signatory spouse into a criminal trial.

3. It is imperative to record the procedural history regarding the representation of the Opposite parties. Despite exhaustive efforts to ensure the presence of the Opposite Party No. 2 (the Complainant), the said party has remained unrepresented. The Opposite Party No. 1 (State), being a formal party, also did not enter an appearance. Consequently, in light of the order of this Court dated February 23, 2026, and the Complainant’s persistent default, this Court has proceeded to decide the matter on its merits, predicated strictly on the "sterling quality" materials available on record and the submissions made by the Petitioner.

II. FACTUAL MATRIX

4. The genesis of the dispute lies in a commercial loan facility extended by the Complainant, a Non-Banking Financial Company (NBFC), to a business concern styled as "Dhathri Fuels." The transaction was a standard business arrangement intended for operational requirements, governed by a credit agreement executed between the lender and the business concern.

5. In purported discharge of the liability arising therefrom, a cheque bearing No. 000448, dated January 18, 2022, was issued in favour of the Complainant. Upon presentation, the instrument was returned unpaid with the remark "insufficient funds." Up to this point, the transaction followed a standard commercial trajectory leading to a default.

6. A crucial link in the factual chain emerges from the legal constitution of "Dhathri Fuels." As per the GST Registration Certificate and bank mandates (Annexure P-3), the entity is a sole proprietorship owned exclusively by Mr. G.V. Nagesh (Accused No. 2). The Petitioner (Accused No. 3) is the wife of the proprietor. Critically, she is neither a partner in the firm, nor an authorized signatory to the bank account, nor is her signature present on the instrument.