JUDGMENT

Dated this the 3rd day of March 2021 The appeal is filed by the complainant in S.T.No.2513/2004 of the Judicial First Class Magistrate Court, Nilambur against the judgment dated 03.10.2005 whereby the complaint filed by the appellant against the 1st respondent for an offence under Section 138 of the Negotiable Instruments Act was dismissed finding that the 1st respondent was not guilty.

2. According to the appellant, the appellant and the 1st respondent had acquaintance for several years and the appellant had advanced a sum of Rs.6,49,500/- to the 1st respondent for the purpose of construction of his house. When the amount was demanded, the 1st respondent had in discharge of the above debt, issued a cheque for the above said amount, drawn on the South Indian Bank, Perinthalmanna Branch. The cheque when presented for payment was returned dishonored with an endorsement “insufficient funds”. It is thereafter that the complaint under Section 138 of the Negotiable Instruments Act has been filed.

3. The 1st respondent denied the transaction complained of. The Court below after considering the evidence on record found that, the cheque in question has been issued from the account of M/s. Gramy Rubbers India Limited (hereinafter referred to as the company) and that it has been signed for and on behalf of the company by its Managing Director, P. Muhammed Alavi who is the 1st respondent. A contention is advanced by the appellant that the loan that was advanced was a personal loan to Mr.Muhammed Alavi and it was not a transaction between the complainant and the Company and as such there was no requirement of making the Company a party to the proceedings. The Court below by judgment dated 03.10.2005 found that the prosecution under Section 138 of the Negotiable Instruments Act can be launched only against the drawer of the cheque and in the case on hand, the drawer of the cheque is a Company against which the complainant has no case that there is a legally enforceable debt.

4. Heard Sri Deepu Thankan on behalf of the appellant and Smt.Sylaja, Public Prosecutor.

5. The counsel for the appellant contended that the appellant does not have a case against the company and that the cheque had been issued to discharge a liability which the signatory of the cheque owed to the appellant and it so happened that the signatory was also the Managing Director of the company. It is hence contended that the complaint is hence maintainable against the person who signed the cheque and for that purpose the company need not be made a party to the proceedings. It is the contention that only in cases where the liability is that of a company that Section 141 of the Negotiable Instruments Act, comes into play. I cannot agree with the contentions put forward on behalf of the Appellant.

6. In Anil Gupta v. Star India (P) Ltd., reported in [(2014)

10 SCC 373], the Hon'ble Supreme Court in paragraph 8 after extracting Section 138, states thus.

“8. Section 138 of the Act deals with dishonour of cheque for insufficiency, etc. as follows:

“138.Dishonour of cheque for insufficiency, etc., of funds in the account.—Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless—

(a) the cheque has been presented to the bank