Holding

A cheque drawn on a corporate account can attract liability under Section 138 only against the company as drawer, and a director or authorised signatory cannot be held liable in his personal capacity unless the company is first arraigned and convicted, making Section 141 applicable.

Summary

The complainant lent Rs 7,00,000 to the accused and later received a cheque of Rs 8,45,000, signed by the accused in his capacity as Director of Shilabati Hospital Pvt. Ltd., drawn on the company's bank account. The cheque bounced for insufficient funds and the complainant issued a statutory notice under Section 138 of the Negotiable Instruments Act, 1881. The trial court and Sessions Court convicted the accused, but the Calcutta High Court quashed the conviction, holding that prosecution could not proceed against an authorised signatory unless the company, as the drawer, was impleaded. The Supreme Court examined whether a director who signs a cheque on behalf of a company can be held liable under Section 138 absent the company's arraignment, and clarified the scope of Sections 138, 139, 141 and the doctrine of lex non cogit ad impossibilia. It held that only the drawer of the cheque – the company – can be prosecuted under Section 138, and vicarious liability under Section 141 attaches only after the company is held liable. Consequently, the appeal was dismissed and the High Court’s order upheld.

Issues considered

The cheque was signed by a director acting as authorised signatory of a company; can the director be prosecuted under Section 138 of the NI Act in his personal capacity?
Is vicarious liability under Section 141 applicable when the company, as drawer, is not impleaded as an accused?
Does the doctrine of lex non cogit ad impossibilia allow the complainant to proceed against the director despite the absence of the company as a party?
How should the expression ‘on an account maintained by him’ in Section 138 be interpreted with respect to corporate accounts?

Legislation cited

Code of Criminal Procedure, 1973s. 142, s. 397, s. 401, s. 482
Negotiable Instruments Act, 1881s. 138, s. 139, s. 141, s. 142, s. 255(2), s. 30, s. 31, s. 7

Headnote

Issue for Consideration The dishonoured cheque in question was signed by respondent- accused, in his capacity as Director and Authorised Signatory of the Company Shilabati Hospital Pvt. Ltd., on the account maintained by the Company with Standard Chartered Bank. By the impugned order, the High punishable u/s.138 of Negotiable Instruments Act, 1881 holding that in absence of the company being arraigned as an accused, the complaint against the respondent-accused was not maintainable; whether the High Court committed any error in passing the impugned order is the question for

Subjects

Section 138 NI ActCheque dishonourVicarious liabilityAuthorized signatoryCorporate liabilityLex non cogit ad impossibiliaPresumption under Section 139Director liability

Judgment

[2024] 12 S.C.R. 1946 : 2024 INSC 1024

Bijoy Kumar Moni
v.
Paresh Manna & Anr.
(Criminal Appeal No. 5556 of 2024)
20 December 2024
[J.B. Pardiwala* and R. Mahadevan, JJ.]

Issue for Consideration
The dishonoured cheque in question was signed by respondent-
accused, in his capacity as Director and Authorised Signatory of the
Company Shilabati Hospital Pvt. Ltd., on the account maintained
by the Company with Standard Chartered Bank. By the impugned
order, the High Court acquitted respondent-accused of offence
punishable u/s.138 of Negotiable Instruments Act, 1881 holding
that in absence of the company being arraigned as an accused, the
complaint against the respondent-accused was not maintainable;
whether the High Court committed any error in passing the
impugned order is the question for determination.

Headnotes†
Negotiable Instruments Act, 1881 – ss.138, 139 and 141 –
Dishonour of Cheque – Cheque issued on behalf of company
by its authorised signatory – Whether prosecution could
not proceed against such authorised signatory, unless the
company was arraigned as an accused – Whether prosecution
could proceed against the accused in his personal capacity –
Whether benefit of exception embodied in doctrine of lex non
cogit ad impossibilia could be extended to the complainant:
Held:1. Although it can be understood that the complainant had
no occasion to believe that the cheque was drawn upon the bank
account of Shilabati Hospital as the debt was one which was taken
by the accused in his personal capacity, yet a bare perusal of the
cheque shows that the cheque was signed by the accused in the
capacity of the Director of the Shilabati Hospital Pvt. Ltd. as the
same bears both the stamp of the director as well as the hospital – In
case of a cheque issued on behalf of a company by its authorised
signatory, prosecution cannot proceed against the such authorised
signatory or other post-holders of the company as described under
*Author
[2024] 12 S.C.R. 1947

Bijoy Kumar Moni v. Paresh Manna & Anr.

Section 141 of the NI Act, unless the company who is the drawer
of the cheque is arraigned as an accused in the complaint case
filed before the magistrate – Further, vicarious liability can only
be affixed against the directors, authorised signatories, etc. of the
company after the company is held liable for the commission of
offence under Section 138. [Paras 49, 50]
2.1. It is the case of the complainant that the cheque was issued
in discharge of the personal liability of the accused towards the
complainant, and hence there was no occasion for it to implead the
company as an accused – However, even if the cheque might have
been issued for the discharge of personal liability of the accused
towards the complainant, had the company Shilabati Hospital Pvt.
Ltd. been arraigned as an accused in the complaint case before
the Trial Court, it would have remained open to the complainant to
establish with the aid of the presumption under Section 139 that
the cheque issued by the company was in discharge of a legally
enforceable debt – However, in the absence of the drawer of the
cheque having been arraigned as an accused, it was rightly held by
the High Court that no prosecution could have proceeded against
the accused in his personal capacity – The only way by which the
accused could be held liable was under Section 141 of the NI Act,
however the same could not have been done in the absence of
the company being arraigned as an accused. [Paras 51, 55]
2.2. As specified in a three-Judge Bench decision in Aneeta Hada,
the only exception to the above general rule is embodied in the
doctrine of lex non cogit ad impossibilia which means that the law
doesn’t compel the impossible – Thus, it is only in those cases
where the impleadment of the company is not possible due to
some legal impediment that this general rule can be exempted –
In the facts on hand, it cannot be said that there was any legal
difficulty in impleading Shilabati Hospital Pvt. Ltd. as an accused
in the complaint case filed by the complainant – Thus, even the
benefit of the exception cannot be extended to the complainant
in the present case. [Para 56]
3. It is the drawer Company which must be first held to be the
principal offender under Section 138 of the NI Act before culpability
can be extended, through a deeming fiction, to the other Directors
or persons in-charge of and responsible to the Company for the
conduct of its business – In the absence of the liability of the drawer
Company, there would naturally be no requirement to hold the other
persons vicariously liable for the offence committed under Section
1948 [2024] 12 S.C.R.

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138 of the NI Act – It is only the drawer of the cheque who can
be held liable for an offence under Section 138 of the NI Act – An
authorised signatory acting on behalf of the principal cannot be
said to be the “drawer” of the cheque “on an account maintained
by him with a banker” under Section 138. [Paras 62, 66]
4.1. In the case on hand, the accused was prosecuted in his
individual capacity and not in his capacity of being the Director of
the Shilabati Hospital Pvt. Ltd. Although it is undisputed that the
accused signed the cheque in question, yet as the cheque was
drawn not on an account maintained by him with a Banker but was
issued on an account maintained by the hospital, the requirement
of Section 138 of the Act cannot be said to have been complied
with. [Para 69]
4.2. It would have been altogether a different situation if the accused
was prosecuted in his capacity as a Director of the Shilabati
Hospital – In such a scenario, the cheque drawn by him on an
account maintained by the Company would have satisfied the
requirement of Section 138 of the Act but as the accused has been
proceeded against for an offence under Section 138 of the Act in
his individual capacity and inasmuch as the cheque dishonoured
for insufficiency of funds was drawn on the account maintained by
the Company, namely, Shilabati Hospital Pvt. Ltd., and not by the
accused herein, no offence could be said to have been committed
under Section 138 of the Act – The High Court rightly held that in
the absence of the principal offender having been arraigned as
an accused, prosecution for the commission of an offence under
Section 138 of the NI Act could not have proceeded against the
accused. [Para 70]
5.1. The requirement of Section 138 of the NI Act is that for
fastening criminal liability on the accused, the cheque which was
dishonoured for insufficiency of funds etc., must have been drawn
on an account maintained by the accused – The mere fact that
the cheque signed by the accused in his capacity as a “Director”
of the Company would in the normal course be honoured by the
Bank to which it was presented does not satisfy the statutory
requirement of Section 138 of the Act. [Para 71]
5.2. Section 138 of the Act exposes the person who has drawn
the cheque and which has been returned for insufficiency of funds
to criminal liability – The provision, therefore, must be construed
strictly – However, such a strict construction should not result
[2024] 12 S.C.R. 1949

Bijoy Kumar Moni v. Paresh Manna & Anr.

in defeating the very purpose for which the provision has been
enacted – At the same time, the statutory provisions creating penal
liability cannot be stretched too far to embrace the persons and
situations patently excluded from its purview as discernible from
clear and unequivocal language used in the provision. [Para 72]
5.3. Section 138 of the NI Act clearly postulates that the 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 the language of the statute if Section 138 of the 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 the cheque
is returned for insufficiency of funds – Such an interpretation will
lead to absurd and wholly unintended results. [Para 73]
5.4. However, the peculiar factual situation of the present case
and the plight of the complainant is not lost upon us – The option
of bringing civil action against the accused or the hospital will be
of no avail to the complainant as the claims are hopelessly time
barred – Further, it is also not open for the complainant to initiate
proceedings under Section 138 of the NI Act afresh by impleading
Shilabati Hospital Pvt. Ltd. as an accused as the time period
prescribed for issuance of statutory notice under Section 138 has
long expired. [Para 74]
5.5. It is trite law that an act may constitute an offence under more
than one statute – The encashment of the cheque for an amount of
Rs 7,00,000/- issued by the complainant in favour of the accused
[i.e. amount borrowed by him from the complainant] stood proved
during the course of the trial – Further, the conduct of the accused
in not replying to the statutory notice of dishonour of cheque issued
by the lawyer for the complainant and in not taking the plea of the
cheque having been drawn on the account of the company in his
capacity as a Director during the course of trial undoubtedly raises
questions as regards his dishonest intention in not repaying the
amount borrowed by him from the complainant. [Para 75]
5.6. In such circumstances, although it is not possible to hold the
accused liable for the offence under Section 138 of the NI Act,
yet the possibility of him having committed the offence of cheating
cannot be ruled out – Prima facie, the mens rea (guilty mind) of
the accused speaks for itself – It is left open to the complainant to
approach the jurisdictional police station and lodge an appropriate
1950 [2024] 12 S.C.R.

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FIR against the accused – If the complainant lodges an FIR,
the concerned police officer in-charge of the police station shall
investigate the same in accordance with law. [Paras 76, 77]

Negotiable Instruments Act, 1881 – s.138 – Penal provision –
Has to be strictly construed:
Held: Section 138 of the NI Act being penal in nature has to be
strictly construed and advertence to the object behind its enactment
can only be made to supplement the language employed in the
text of the statute and not to supplant it or render it overly broad
and susceptible to misuse. [Para 68]

Negotiable Instruments Act, 1881 – ss.138 and 141 – Scope –
Liability and vicarious liability:
Held: It is only the drawer of the cheque who can be held liable
under Section 138 – Section 141 is an exception to this scheme
of the NI Act and provides for vicarious liability of persons other
than the drawer of the cheque in cases where the drawer of the
cheque under Section 138 is a corporate person. [Para 39]

Negotiable Instruments Act, 1881 – ss.7 and 138 – Expression
“on an account maintained by him with a banker” used in
s.138 – Meaning of:
Held: The expression describes the relationship between the
account holder and the banker – This relationship is fundamental
to the application of Section 138 – The act of maintaining an
account is exclusively tied to the account holder and does not
extend to any third party whom the account holder may authorize
to manage the account on its behalf – Therefore, any delegation
of authority to manage the account does not alter the intrinsic
relationship existing between the account holder and the banker
as envisaged under the NI Act. [Para 45]

Negotiable Instruments Act, 1881 – ss.7, 138 and 141 – Whether
authorized signatory of a company falls within the ambit of
the expression “drawer”:
Held: Corporate persons like companies, which are mere legal
entities and have no soul, mind or limb to work physically, discharge
their functions through some human agency recognised under
the law to work – Therefore, if some function is discharged by
[2024] 12 S.C.R. 1951

Bijoy Kumar Moni v. Paresh Manna & Anr.

such human agency for and on behalf of the company it would
be an act of the company and not attributable to such human
agent – One such instance of discharge of functions could be the
authority to manage the bank accounts of the company, issue
and sign cheques on its behalf, etc. which may be delegated to
an authorised signatory – However, such authorisation would not
render the authorised signatory as the maker of those cheques –
It is the company alone which would continue to be the maker of
these cheques, and thus also the drawer within the meaning of
Section 7 of the NI Act – The authorised signatory is merely the
physical limb that signs and makes the cheque on behalf of the
company’s incorporeal personality – The company, for all purposes,
continues to remain the drawer of the cheques. [Paras 45, 46]

Negotiable Instruments Act, 1881 – Cheque drawn upon a joint
account – Liability upon account holders of a joint account –
Discussed:
Held: A company vis-à-vis its authorised signatory stands on a
completely different footing as compared to account holders of a
joint account – In the former, it is only the company which holds an
account with the banker, whereas in the latter, each joint account
holder can be said to hold an account with the banker – Thus,
while in the case of a cheque drawn on the account of the company
the authorised signatory cannot be held to be the drawer, in the
case of a cheque drawn upon a joint account, each account holder
affixing his signature to the cheque may be said to have drawn
such a cheque. [Para 47]

Negotiable Instruments Act, 1881 – s.138 – “any debt or other
liability” appearing in s.138 of the Act – Scope of:
Held: Section 138 of the NI Act does not envisage that only
those cases where a cheque issued towards the discharge of the
personal liability of the drawer towards the payee gets dishonoured
would come within the ambit of the provision – The expression
“of any debt or other liability” appearing in Section 138 when read
with the Explanation to the provision is wide enough to bring any
debt or liability which is legally enforceable within its fold – Thus,
the requirement under the provision is that the debt or any other
liability has to be legally enforceable and the emphasis is not on
the existence of such debt or other liability between the drawer
and the payee – Even those cases where a person assumes the
1952 [2024] 12 S.C.R.

Supreme Court Reports

responsibility of discharging the 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 the drawee, would be covered by Section 138 if the payee
is able to establish that there was some sort of an arrangement
by way of which the debt was assumed by the drawer. [Para 52]

Case Law Cited
P.J. Agro Tech Ltd. and Others v. Water Base Ltd. [2010] 9 SCR
119 : (2010) 12 SCC 146; Jugesh Sehgal v. Shamsher Singh
Gogi [2009] 10 SCR 857 : (2009) 14 SCC 683; Shri Gurudatta
Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao Deshmukh
and Others [2024] 7 SCR 1211 : 2024 SCC OnLine SC 1800;
N. Harihara Krishnan v. J. Thomas [2017] 9 SCR 324 : (2018)
13 SCC 663; Aparna A. Shah v. Sheth Developers (P) Ltd.
[2013] 7 SCR 69 : (2013) 8 SCC 71; Anil Sachar and Another v.
Shree Nath Spinners Private Limited and Others [2011] 9 SCR
328 : (2011) 13 SCC 148; ICDS Ltd. v. Beena Shabeer and
Another [2002] Supp. 1 SCR 488 : (2002) 6 SCC 426; Aneeta
Hada v. Godfather Travels and Tours Private Limited [2012] 5
SCR 503 : (2012) 5 SCC 661; Anil Gupta v. Star India Private
Limited and Another [2014] 8 SCR 183 : (2014) 10 SCC 373;
Ashok Shewakramani and Others v. State of Andhra Pradesh
and Another (2023) 8 SCC 473; NEPC Micon Limited and
Others v. Magma Leasing Limited [1999] 2 SCR 932 : (1999)
4 SCC 253 – relied on.
Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd.
and Others [2000] 1 SCR 1120 : (2000) 2 SCC 745; Himanshu v.
B. Shivamurthy and Another [2019] 1 SCR 991 : (2019) 3 SCC
797; Mainuddin Abdul Sattar Shaikh v. Vijay D. Salvi [2015] 6
SCR 1033 : (2015) 9 SCC 622; Raghu Lakshminarayanan v.
Fine Tubes [2007] 4 SCR 885 : (2007) 5 SCC 103 – referred to.
P.N. Salim v. P.J. Thomas & Another, 2004 SCC Online Ker 269;
Hashmikant M. Seth v. State of Gujarat & Anr., 2004 SCC Online
Guj 300 – approved.
P. Sarvana Kumar v. S.P. Vijaya Kumar, 2022 SCC Online Mad
1387 – disapproved.

List of Acts
Negotiable Instruments Act, 1881.
[2024] 12 S.C.R. 1953

Bijoy Kumar Moni v. Paresh Manna & Anr.

List of Keywords
Section 138 of Negotiable Instruments Act, 1881; Dishonour of
Cheque; Vicarious liability; Company; Section 141 of Negotiable
Instruments Act, 1881; Section 139 of Negotiable Instruments
Act, 1881; Any debt or other liability; Debt; Drawer of the cheque;
Account maintained by him; Authorised signatory; Accused in his
personal capacity; Doctrine of lex non cogit ad impossibilia; Cheque
drawn upon a joint account.

Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
5556 of 2024
From the Judgment and Order dated 19.03.2024 of the High Court
at Calcutta in CRR No. 887 of 2019

Appearances for Parties
Uddyam Mukherjee, Swapnil Pattanayak, Agnibha Chatterjee,
Advs. for the Appellant.
Gaurav Kejriwal, Abhijit Sengupta, Navneet Singh, Kunal Chatterji,
Ms. Maitrayee Banerjee, Rohit Bansal, Ms. Mrinalini Mukherjee,
Advs. for the Respondents.

Judgment/Order of the Supreme Court

Judgment

J.B. Pardiwala, J.
For the convenience of exposition, the present judgment is divided
into the following parts:
INDEX*

A. FACTUAL MATRIX ............................................................. 2
i. Proceedings before the Trial Court ............................. 6
ii. Proceedings before the Sessions Court ..................... 11
iii. Proceedings before the High Court ............................. 16

*Ed. Note: Pagination as per the original Judgment.
1954 [2024] 12 S.C.R.

Supreme Court Reports

B. SUBMISSIONS ON BEHALF OF THE APPELLANT / 19
COMPLAINANT ..................................................................

C. SUBMISSIONS ON BEHALF OF THE RESPONDENT / 20
ACCUSED ...........................................................................

D. ANALYSIS .......................................................................... 22

i. Section 138 of the NI Act .............................................. 22

ii. Whether authorized signatory of a company falls within 29
the ambit of the expression “drawer”? ............................

iii. Meaning of the expression “on an account maintained 34
by him” used in Section 138 of the NI Act ........................

iv. Scope of the expression “any debt or other liability” 40
appearing in Section 138 of the NI Act ...........................

v. Section 141 of the NI Act ............................................. 48

E. CONCLUSION ................................................................... 55

1. Leave granted.
2. This appeal arises from the judgment and order dated 19.03.2024
passed by the High Court at Calcutta in Criminal Revision No. 887 of
2019 by which the High Court allowed the criminal revision application
preferred by the respondent herein (original accused) and thereby
quashed and set aside the judgment and order of conviction passed
by the Trial Court and affirmed by the Sessions Court for the offence
punishable under Section 138 of the Negotiable Instruments Act,
1881 (for short, the “NI Act”).
3. For the sake of convenience, the appellant herein shall be referred
to as the complainant and the respondent herein shall be referred
to as the accused.
4. Since these proceedings arise from a private complaint, the respondent
no. 2, that is, the State of West Bengal, although represented by Mr.
Kunal Chatterji, has no role to play.
[2024] 12 S.C.R. 1955

Bijoy Kumar Moni v. Paresh Manna & Anr.

A. FACTUAL MATRIX
5. The facts giving rise to this appeal may be summarised as under:
a. The case of the complainant is plain and simple. According
to him, for the purpose of operating his trade loan account,
he would frequently visit the U.B.I. Raghunathpur Branch and
it is during one such visit sometime in the month of January,
2006 that he came to be introduced to the accused by one
Ashoke Mondal who was the Manager of the said branch.
Thereafter, the accused maintained amicable relations with
the complainant through telephonic conversations.
b. In February 2006, the accused was in need of some financial
assistance and in such circumstances, he approached the
complainant with a request that a particular amount may
be lent to him with a promise to repay on demand.
c. Accordingly, the complainant issued a bearer cheque for
an amount of Rs.7,00,000/- (Rupees Seven Lakh only)
which indisputably was encashed by the accused.
d. Upon the complainant requesting the accused to repay
the amount referred to above, he issued a cheque dated
28.04.2006 drawn on the Standard Chartered Bank, N.S.
Road, Kolkata for the amount of Rs.8,45,000/- (Rupees
Eight lakh forty five thousand only). It is the case of the
complainant that Rs. 7,00,000/- was lent by him by way
of a bearer cheque and Rs. 1,45,000/- was subsequently
lent in cash. That is how the accused issued a cheque
of Rs. 8,45,000/- for the purpose of discharging his debt
towards the complainant.
e. However, the said cheque was signed by him in his
capacity as a Director of Shilabati Hospital Pvt. Ltd. and
was drawn upon the bank account maintained in the name
of the hospital.
f. There is a stamp of Shilabati Hospital Pvt. Ltd. on the
cheque and beneath the signature of the accused there
is a stamp of the Director.
g. It is not in dispute that the cheque in question came to be
dishonoured for want of sufficient funds.
1956 [2024] 12 S.C.R.

Supreme Court Reports

h. In such circumstances, the complainant issued a statutory
notice to the accused under Section 138 of the NI Act
dated 14.08.2006 calling upon him to make the payment
within 15 days of the receipt of the notice.
6. The statutory notice referred to above is reproduced herein below:

“ DATE: 14/8/2006
To
Sri Paresh Manna
C/o SHILABATI HOSPITAL PVT. LTD.
P.O. CHATAL, Distt. Peschim Midnapur
Dear Sir,
Under the instructions of my client Sri Bijay Kumar Moni
son of Sri Mursrimohan Nond, resident of Raghunathpur,
P.O./P.S. Raghunathpur, Distt. Purulia. I do hereby serve
you this notice to the following effect.
That my client had been introduced to you by Sri
Achoke Mondal, Branch Manager United Bank of India,
Raghunathpur Branch some time in the month of February,
2008.
That my client was also informed by Sri Ashok Mondal
that you are contemplating to start a -Nursing Home with
huge investment at Raghunathpur.
That taking advantage of the said introduction by Sri
Ashok Mandal you - approached my client for a sum of
Rs. 8,45,000/- (eight lakhs forty five thousand) only to be
repaid within a very short period.
That my client very innocently acceded to your request and
arranged to handover a sum of Rs. 8,45,000/- (eight lakh
forty five thousand) out of the said sum of Rs. 7,00,000/-
(Seven lakhs) was given to you by my client through cheque
No. 951764 on his trade loan A/C maintained with U.B.I.
Raghunathpur Branch on 28.02.06 and the rest amount
was paid by my client to you in cash.
[2024] 12 S.C.R. 1957

Bijoy Kumar Moni v. Paresh Manna & Anr.

That you in discharge of your existing legal debts and
outstanding liabilities had issued A/C. payee cheque
No.997309 in favour of my client on 28.04.06 for Rs.
8,45,000/- (eight lakhs forty five thousand) against your
account maintained in standard chartered Bank, 19, N.S.
Road, Kolkata-700001. That as per your instruction my client
had presented the said cheque for encashment through his
banker, U.B.I. Raghunathpur Branch on 22.07.06.
That my client had received back the cheque refused by
you with the bank unpaid issue memo dated 27.07.06 that
the same has returned due to insufficient fund.
That as per instruction of my client I am sending this
demand notice to you with the intimation that you must
pay back to my client the sum of 8,45,000/- (eight lakhs
forty-five thousand) within 15 days from the date of receipt
of the notice, failing which my client will be constrained to
take recourse to law without any further intimation.
Thanking you,
Yours faithfully,
Sd/- Arun Kumar Moni
Advocate
Dt. 14-08-06”
7. It is not in dispute that the accused upon receipt of the above notice
failed to give any appropriate reply to the complainant.
8. In such circumstances, the complainant was left with no other
option but to file a private complaint in the Court of the A.C.J.M.
at Raghunathpur, District Purulia for the offence punishable under
Section 138 of the NI Act which came to be registered as Complaint
Case No. 39 of 2006.

i. Proceedings before the Trial Court
9. As the facts of this case are little peculiar, we deem it necessary to
reproduce the entire complaint as under:
“In the Court of the A.C.J.M. at Raghunathpur, District
Purulia.
Complaint Case No. 39 of 2006.
1958 [2024] 12 S.C.R.

Supreme Court Reports

Bijoy Kumar Moni son of Sri Murari Mohan Moni, resident
of Raghunathpur, P.O. & P.S. Raghunathpur, Dist. Purulia.
…Complainant
-Versus-
Paresh Manna son of not known c/o. Shilabati Hospital
Pvt. Ltd., P.O. Chatal, P.S. Ghatal, District East Midnapur.
…Accused Person
Offence committed: U/s. 138 of Negotiable Instrument
Act, 1881.
Date of occurrence: Since August, 2006 onwards.
Name of witnesses:
1. Sri Ashoke Mondal s/o. Naba Kumar Mondal, Manager
of U.B.I Raghunathpur Branch, Dist. Purulia.
2. Sanjoy Ganguly s/o. Late Dhirendranath Ganguly.
3. Shyamapada Kumbhakar, s/o. Late Gopal Chandra
Kumbhakar both of Raghunathpur, P.O. & P.S.
Raghunathpur, Dist. Purulia.
The humble petition on behalf of the complainant
Most respectfully showeth:
1. That the complainant hails from a very respectable family
of Raghunathpun, District Purulia and he has been engaged
in construction enterprise and considering his credibility
and goodwill the local U.B.I. Raghunathpur Branch has
provided him with a trade loan account bearing A/C No. 9.
2. That the complainant in operating his trade loan account
has very often visits to the U.B.I. Raghunathpur Branch
and thus a close tie grew up with the Branch Manager,
Sri Ashoke Mondal.
3. That sometime in the month of January, 2006 the
complainant along with witness No. 2 had met the Branch
Manager, U.B.I. Raghunathpur Branch and there he noticed
the accused present in his chamber. Sri Ashoke Mondal
introduced the accused to the complainant saying that the
[2024] 12 S.C.R. 1959

Bijoy Kumar Moni v. Paresh Manna & Anr.

latter is an established personality in construction work at
Raghunathpur and is a solvent party having trade loan A/C
in his Branch. Sri Mondal also informed the complainant
that he knows the accused personally and he is the owner
of a renowned nursing home styled “Shilabati” Hospital Pvt.
Ltd. of Ghatal, East Midnapur. Sri Mondal also apprised
the complainant that the accused is contemplating to
start a nursing home Project at Raghunathpur with huge
investments.
4. That the complainant innocently believed all the
narration of Sri Mondal. Accused also taking advantage of
such introduction grew familiar with the complainant and
also apprised him in details his contemplated project at
Raghunathpur and sought for complainant’s co-operation
in as much as he is a man of the locality. The Complainant
was greatly impressed by the talking of the accused and
assured to cooperate with him in all respect.
5. That the accused thereafter kept close contact with the
complainant and over phone from Ghatal. On 28.02.2006
the complainant along with witnesses Nos. 2 and 3 had
come to the U.B.I. Raghunathpur Branch and there the
accused met him and informed that he is in dire need of
Rs. 7,00,000/- (Seven Lacs) only for a couple of months
for incidental expenses relating to his contemplated
project. Complainant innocently believed the accused and
issued a cheque No. 951764 on his trade loan A/C for Rs.
7,00,000/- in favour of the accused on 28.02.06.
6. That the accused withdrew the sum of Rs. 7,00,000/-
and shortly thereafter the accused again approached the
complainant for another sum of Rs. 1,45,000/- (One Lac
forty five thousand) in presence of the witnesses Nos. 2
and 3. Complainant was hesitant to accede to such request
of the accused but latter due to repeatedly insistence the
complainant arranged for the sum on the promise of the
accused to repay the entire sum very shortly.
7. That the complainant accordingly paid Rs. 1,45,000/- to
the accused in presence of Witnesses Nos. 2 and 3 in the
early part of March, 2006.
1960 [2024] 12 S.C.R.

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8. That the accused thereafter started avoiding the
complainant. However, on 28.04.2006 the accused in
discharge of his existing debt and liabilities issued in
favour of the complainant at Raghunathpur a cheque
bearing No. 997309 for Rs. 8,45,000/- (Eight Lac forty five
thousand) on his A/C maintained in Chartered Bank, N.S.
Road Kolkata. However the accused while handing over
the said cheque requested the complainant not to present
the same for encashment before third week of July, 2006.
9. That the complainant as per the instructions of the
accused presented the Cheque No. 997309 dated
28.4.2006 for encashment on 22.07.2006 through his
Banker U.B.I. Raghunathpur Branch. The said cheque
bounced and the complainant received back the cheque
along with unpaid item nemo, of standard chartered Bank
dated 27.7.06 through his Banker on 03.08.2006 with the
note “Insufficient funds.
10. That the complainant thereupon through his Lawyer
Sri Arun Kumar Moni of Raghunathpur Court had issued
a demand notice to the accused dated 14.08.2006. It was
sent under registered Post with A/D on 16.08.2006 and it
was duly received on behalf of the accused on 19.08.2006
as per the endorsement appearing on the A/D card.
11. That the accused even inspite of the receipt of
the demand notice failed to pay Rs. 8,45,000/- to the
Complainant. However he kept on giving false and frivolous
excuses to the complainant over phone and through Sri
Ashok Mondal Branch Manager, Raghunathpur U.B.I.
Branch that he would repay the sum soon.
12. That the accused had with fraudulent intention
prevailed! Accused had upon the complainant with the tacit
support of Sri Ashoke Mondal to part with Rs. 8,45,000/-
(Eight Lac forty five thousand) and he also with malafide
intention issued the cheque knowing fully well that the
same would never get cleared.
13. That the accused has thus committed an offence U/s.
138 of the Negotiable Instrument Act, 1881 and is liable
to be prosecuted and punished in accordance with law.
[2024] 12 S.C.R. 1961

Bijoy Kumar Moni v. Paresh Manna & Anr.

14. That the complainant is filing the Cheque No. 997309
along with unpaid item memo. issued by the Bank, Postal
receipt A/D card and office copy of the demand notice. It
is therefore most respectfully prayed that your Honour will
be pleased to take cognisance of the offence and issue
process against the accused to stand his trial in the court
of law in accordance with law.
AND
For this act of kindness, your petitioner as in duty bound
shall ever pray.
Affidavit
Sd/-illegible
28/8/2023”
10. During the trial, the complainant entered the box and led oral evidence.
He was cross examined by the defence counsel appearing for the
accused. It appears that the accused also examined himself and as
his witness the Branch Manager was also examined.
11. In the further statement of the accused recorded under Section 313
of the Criminal Procedure Code, 1973 (for short “the Cr.P.C.”), the
Trial Court put a specific question:
“11; P.W.1 Sri Bijoy Kr Moni, has stated in his examination-
in-chief that, since thereafter you started avoiding the
complainant. However, on 28/04/06 you in discharge of your
existing debts and liabilities issued a cheque bearing No.
997309 for Rs. 8,45,000/- on your account maintained in
chartered Bank. N.S Road. Kolkata. Do you have anything
to say about this statement?”
12. To the aforesaid Question No. 11, the accused replied that he had
issued the cheque as a security towards a loan transaction.
13. The Question No. 21 in the further statement of the accused reads
thus:
“21) Qus:- P.W.1 Sri Bijoy Kumar Moni, further stated
during in his evidence that, you have prevailed upon the
complainant by gaining his confidence took Rs.8,45,000/-
1962 [2024] 12 S.C.R.

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and thereafter issued cheque no. 997309 to him with the
knowledge that there is no sufficient fund in the account.
What do you have to say about his statement?”
14. To the aforesaid question, the answer of the accused was that the
cheque was issued by the company as a security towards some
mortgage.
15. Upon appreciation of the oral as well as documentary evidence, the Trial
Court vide Judgment and Order dated 19.07.2017 held the accused
guilty of the offence punishable under Section 138 of the NI Act. The
operative part of the order passed by the Trial Court reads thus:
“That the convict Paresh Manna is sentenced to suffer
simple Imprisonment for one year. The convict is further
sentenced to pay compensation amounting to Rs.
10,00,000 (Ten lakhs only) to the complainant namely
Bijoy Kumar Moni within two months from the date of this
order, in default of payment of which the convict is liable
to further suffer rigorous imprisonment for two months.”

ii. Proceedings before the Sessions Court
16. The accused, aggrieved by the order of conviction and sentence
passed by the Trial Court, went in appeal before the Sessions Court.
The Sessions Court affirmed the findings recorded by the Trial
Court and dismissed the appeal vide Judgment and Order dated
22.02.2019. The operative part of the order passed by the Sessions
Court reads thus:
“Accordingly it is ordered that the Criminal appeal no 03/17
be and the same is dismissed on contest.
The impugned judgment and order of conviction dt.
19.07.17 passed by Ld. Judicial Magistrate, 1” Court,
Raghunathpur in C.Case no. 39/06 (TR No. 315/06) is
hereby affirmed.
The stay of operation of judgment and order of conviction
dt. 19.07.17 is thus vacated.
The appellant is directed to surrender before the Trial Court
to serve out the sentence as directed within a month from
the date of delivery of judgment.”
[2024] 12 S.C.R. 1963

Bijoy Kumar Moni v. Paresh Manna & Anr.

17. At this stage, we may also reproduce some of the findings recorded
by the Sessions Court:
“In the case in hand before the Trial Court according to the
ocular version of DW 1, the appellant himself, he tried to
convince that he did not take any money in his personal
capacity. Now we find the clear picture about the transaction
in respect of cheque no. 951764 from evidence of DW 2,
the manager of UBI, Raghunathpur branch, the banker
of the respondent/complainant, who was brought by the
accused/ appellant to adduce evidence on his behalf. In
course of the ocular evidence the original cheque no.
951764 dt. 28.02.06 amounting to Rs. 7,00,000/- was
identified and proved by DW 2 and he admitted at the
time of cross examination that on 28.02.06 the sum of Rs.
7,00,000/- was debited to the accused/ appellant.
Throughout the trial the accused/appellant did not place any
document or did not adduce any evidence that he, being
the Director of Shilabati Hospital Private Ltd., had joint
account with the company and that was operated by him
for any transaction with that company. Being questioned
about getting the confidence of the respondent/complainant
to get the entire amount of Rs. 8,45,000/- and subsequent
issuance of cheque bearing no. 997309 in discharging
the liability of repayment, the accused/appellant took the
plea that the said cheque was issued from the company
as security of mortgage. But again to the utter surprise in
course of trial no document of any mortgage was produced
by him to establish the fact that the cheque bearing no.
997309 was issued in discharging the liability as security
and the company was liable also for that ground. The
appellant tried to shift the onus upon the respondent/
complainant, but he could not succeed to that effect. In my
considered opinion I am constrained to take into account
the plea of the accused that the company was also the
accused of that case ad thus the ruling relied upon by
the accused/ appellant do not render any support to the
contention of him.
In this regard I would like to refer the observation of Hon’ble
Apex Court as reported in 2010 AIR SCW 4616 and as
1964 [2024] 12 S.C.R.

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relied upon by the side of respondent. It has been observed
by Hon’ble Apex Court that: “Negotiable Instruments Act (26
of 1881), S. 138- Dishonour of cheque Complaint- Tenable
only against drawer of cheque-Cheque drawn by employee
of appellant-company on his personal account- Even if
it be for discharging dues of appellant- company and its
Directors-Appellant-company and its Directors cannot be
made liable under 5. 138.”
From a bare reading of S.138 of NI Act the first and
foremost ingredient is that the person who is to be made
liable should be the drawer of the cheque and should have
drawn the cheque 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 discharging whole or
part, of any debt or any liability.
At the time of his examination u/s 313 Cr.P.C when
the memory of the appellant was shattered by putting
question about issuance of cheque bearing no. 997309
amounting to Rs. 8,45,000/- from his account maintained
at Chattered Bank, NS Road, Kolkata, he admitted about
such issuance of cheque but placed another story about
such issuance of that cheque as loan security. As I have
already held, throughout the trial the accused/ appellant
never bothered to prove anything to substantiate his
proposition that there was any agreement between
him and the complainant/ respondent about his taking
loan for any purpose or that he received the amount
vide cheque no. 951764 on behalf of the company i.e.
Shilabati Nursing Home Private Ltd.
In this regard I would like to refer to the observation of
Hon’ble Apex Court as reported in 2015 AIR SCW 4015
and as relied upon by the side of respondent. It has
been observed by Hon’ble Apex Court that: “Negotiable
Instruments Act (26 of 1881), S. 138- Dishonour of cheque-
Liability Cheque drawn by respondent in his personal
capacity and not by company of which he is Managing
Director Company is not liable even if it is for discharging
dues of company Respondent being drawer of cheque is
alone liable for offence under S. 138,” “Presumptions are
[2024] 12 S.C.R. 1965

Bijoy Kumar Moni v. Paresh Manna & Anr.

devices by use of which the Courts are enabled and entitled
to pronounce on an issue notwithstanding that there is no
evidence or insufficient evidence. Under the Evidence Act
all presumptions must come under one or the other class
of the three classes mentioned in the Act, namely, (1)
‘may presume (rebuttable), (2) ‘shall presume (rebuttable)
and (3) ‘conclusive presumptions’ (irrebuttable). The term
‘presumptions’ is used to designate inference, affirmative
or dis-affirmative of the existence of a fact, conveniently
called the ‘presumed fact drawn by a judicial tribunal, by
a process of probable reasoning from some matter of fact,
either judicially noticed or admitted or established by legal
evidence to the satisfaction of the tribunal. Presumptions
literally means ‘taking as true without examination or
proof....” (2009) 2 SCC 513.
To disprove the presumption, the accused should
bring on record such facts and circumstances, upon
consideration of which, the Court may either believe that
the consideration and the debt did not exist or there non
existence was so probable that a prudent man would
under the circumstances of the case, act upon the plea
that they did not exist. Something which is probable has
to be brought on record for getting the burden of proof
shifted to the complainant.
In the present case in hand the appellant at the time of
adducing evidence as DW 1, denied the fact of taking
the cheque amount of Rs. 7,00,000/- and liquid cash
of Rs. 1,45,000/- totaling Rs. 8,45,000/- In his personal
capacity, but by producing D.W 2, the branch manager
of UBI, Raghunathpur branch, he tilted the entire case in
support of the prosecution/complainant as because said
DW 2 admitted on going through the documents (Exbt.
C and Exbt. D) that on 28.02.06 a sum of Rs. 7,00,000/-
was debited to the appellant and that was the case of the
complainant/ respondent that on 28.02.06 he issued the
cheque bearing no. 951764 amounting to Rs. 7,00,000/-
in favour of the appellant. During the course of trial the
appellant/ accused failed to shift the burden of proof upon
the respondent/ complainant that he was falsely implicated
1966 [2024] 12 S.C.R.

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and the company was the essential party to face the trial
also and thus I am of the view that the rulings relied upon
by the appellant do not render any help and support to
succeed with his contention.
After perusal of the evidence on record and the entire
judgment, I am constrained to hold that ld. Trial Court
was wrong thereby observing the appellant guilty for the
commission of offence u/s 138 of NI Act, rather going
through the entire judgment, I find that Id. Trial Court
meticulously described the finding for holding the appellant
guilty for commission of the offence and rightly passed
the order of conviction, and thus I find that this Appellate
Court has no scope to make any interference with the
order of conviction.
Upon my above observation the criminal appeal fails & is
hereby dismissed.
C.F. paid is found correct.”

iii. Proceedings before the High Court
18. The accused being dissatisfied with the dismissal of his appeal by
the Sessions Court invoked the revisional jurisdiction of the High
Court under Section 401 read with Section 397 of the Cr.P.C.
19. The High Court allowed the revision application and acquitted the
accused on the ground that the offence as alleged could be said
to have been committed by the company, that is Shilabati Hospital
Pvt. Ltd., which is a separate legal entity. It further observed that
as the cheque was drawn by the accused for and on behalf of
the company in his capacity as one of the Directors, he could
have been held vicariously liable for the alleged offence in terms
of Section 141 of the NI Act, but only if the company was made
an accused and held guilty. According to the High Court, as the
company was not arraigned as an accused person, the accused
as a Director of the said company could not be held vicariously
liable for the offence.
20. The High Court placed reliance on the decision of this Court in
Himanshu v. B. Shivamurthy and Another reported in (2019)
3 SCC 797 and held that in the absence of the company being
[2024] 12 S.C.R. 1967

Bijoy Kumar Moni v. Paresh Manna & Anr.

arraigned as an accused, the complaint against the accused
could not be held to be maintainable. It observed that although
the complainant was entitled to the benefit of the presumption
under Section 139 of the NI Act as the accused had failed in
rebutting the presumption cast upon him, yet in the absence of
compliance with the requirements necessary for the applicability
of vicarious liability as provided under Section 141, the accused
could not have been convicted as a sole accused in the absence
of the company being arraigned as an accused and convicted as
the principal offender first. The observations made by the High
Court are reproduced hereinbelow:
“27. The Company is neither a party nor was any notice
served upon the Company of which the petitioner as
director issued the cheque.
28. The petitioner is the sole accused/opposite party in
the complaint case, having signed the cheque as Director
of the company, for and on its behalf.
xxx xxx xxx
30. The facts in the present case is very similar to the
case, in Himanshu vs. B. Shivamurthy & Anr. (Supra).
xxx xxx xxx
31. In the present case:-
a) The company has not been made an accused nor was
any notice served upon the company, though the cheque
was issued on behalf of the company.
b) The petitioner has been made an accused as the person,
who signed and issued the cheque.
32. Therefore, in the absence of the company being
arraigned as an accused, a complaint against the petitioner
is not maintainable Himanshu vs. B. Shivamurthy & Anr.
(supra).
xxx xxx xxx
37. In the present case the presumption is clearly in favour
of the complainant and the petitioner has not been able
to rebut the said presumption under Section 139 N.I. Act.
1968 [2024] 12 S.C.R.

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But there is no compliance under Section 141 N.I. Act and
as such the proceedings in the present case is clearly not
maintainable.”
21. In view of the aforesaid, the High Court set aside the order of the
Sessions Court which had upheld the order of conviction passed by
the Trial Court. The operative part of the impugned order passed by
the High Court is extracted hereinbelow:
“40. The Judgment and Order dated February 22, 2019
passed by the Court of the Learned Additional Sessions
Judge, Raghunathpur at Purulia, in connection with
Criminal Appeal No. 03 of 2017 thereby affirming the
Judgment and Order dated July 19, 2017 passed by the
Learned Magistrate, 1 Court, Raghunathpur, Purulia in C.
Case No. 39 of 2006 under Section 138 of the Negotiable
Instruments Act, 1881 thereby convicting the petitioner
under Section 255(2) of the Code of Criminal Procedure,
1973 for Commission of offence punishable under Section
138 of the Negotiable Instruments Act, 1881 and sentencing
the petitioner to suffer simple imprisonment for one year
and to pay compensation of Rs. 10 lakhs to the Opposite
Party no.2 within two months from the date of the Order,
in default, to suffer rigorous imprisonment of further two
months, is hereby set aside/quashed.”
22. The complainant being dissatisfied with the judgment and order
passed by the High Court acquitting the accused of the alleged
offence, has come up before this Court with the present appeal.

B. SUBMISSIONS ON BEHALF OF THE APPELLANT /
COMPLAINANT
23. Mr. Uddyam Mukherjee, the learned counsel appearing for the
complainant, vehemently submitted that the High Court committed
an egregious error in acquitting the accused on the ground that he
could not have been held vicariously liable for the offence said to
have been committed by the company in the absence of the company
being prosecuted and punished.
24. According to the learned counsel, the transaction in question was
between the accused and the complainant. The company was not at
[2024] 12 S.C.R. 1969

Bijoy Kumar Moni v. Paresh Manna & Anr.

all in picture. He submitted that there is nothing on record to indicate
that the accused had borrowed the amount for the company or on
behalf of the company.
25. He submitted that although the cheque in question might have been
issued by the accused containing a stamp of the hospital on it and
signed by him in his capacity as a Director of the company, yet the
said cheque was issued in discharge of his personal debt.
26. He further submitted that even before the Trial Court, it was not the
defence of the accused that he had issued the cheque to discharge
the debt of the company. He led no evidence worth the name in this
regard. On the contrary, his defence was that the cheque was issued
by way of a security towards a loan transaction and the same had
been misused by the complainant.
27. In such circumstances, referred to above, the learned counsel prayed
that there being merit in his appeal, the same be allowed and the
impugned judgment and order passed by the High Court be set aside.

C. SUBMISSIONS ON BEHALF OF THE RESPONDENT /
ACCUSED
28. On the other hand, Mr. Gaurav Kejriwal the learned counsel appearing
for the accused, while opposing this appeal, submitted that no error
not to speak of any error of law could be said to have been committed
by the High Court in passing the impugned order.
29. According to him, it is well-settled that if the accused is to be held
vicariously liable for the offence alleged to have been committed by
the company, then in the absence of company being prosecuted, no
vicarious liability can be fastened on the Director of the company
who is said to have drawn the cheque in question. He submitted
that there is no possibility of any doubt arising as regards whether
the cheque in question was drawn upon the account maintained
by the company as the cheque was duly stamped with the stamp
of the company. It was the responsibility of the complainant to
exercise due diligence and issue a statutory notice to the drawer
of the cheque, that is Shilabati Hospital Pvt. Ltd.
30. He would submit that all throughout the defence of his client was that
the cheque was issued by way of security towards a loan transaction
and not in discharge of any legally enforceable debt.
1970 [2024] 12 S.C.R.

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31. In such circumstances, referred to above, the learned counsel prayed
that there being no merit in the appeal the same may be dismissed.

D. ANALYSIS
32. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the only question that
falls for our consideration is whether the High Court committed any
error in passing the impugned order.

i. Section 138 of the NI Act
33. Section 138 of the NI Act is contained in the Chapter XVII which was
inserted vide Section 4 of the Banking, Public Financial Institutions
and Negotiable Instruments Laws (Amendment) Act, 1988. Chapter
XVII of the NI Act, which consists of Sections 138 to 147, inter alia
provides for penalties in case of dishonour of certain cheques for
insufficiency of funds in the accounts. Paragraph (xi) of the Statement
of the Objects and Reasons specifies the legislative intent behind
introduction of Chapter XVII to the NI Act in the following words:
“(xi) to enhance the acceptability of cheques in settlement
of liabilities by making the drawer liable for penalties in case
of bouncing of cheques due to insufficiency of funds in the
accounts or for the reason that it exceeds the arrangements
made by the drawer, with adequate safeguards to prevent
harassment of honest drawers.”
34. Section 138 of the NI Act reads as under:
“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 agreement 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
[2024] 12 S.C.R. 1971

Bijoy Kumar Moni v. Paresh Manna & Anr.

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 within a
period of six months from the date on which it is drawn or
within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque,
as the case may be, makes a demand for the payment of
the said amount of money by giving a notice; in writing, to
the drawer of the cheque, within thirty days of the receipt
of information by him from the bank regarding the return
of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment
of the said amount of money to the payee or, as the case
may be, to the holder in due course of the cheque, within
fifteen days of the receipt of the said notice.
Explanation.—For the purposes of this section, “debt of
other liability” means a legally enforceable debt or other
liability.”
35. This Court in Kusum Ingots & Alloys Ltd. v. Pennar Peterson
Securities Ltd. and Others reported in (2000) 2 SCC 745 explained
the ingredients which are to be satisfied for making out a case under
Section 138 of the NI Act in the following manner:
“10. On a reading of the provisions of Section 138 of
the NI Act it is clear that the ingredients which are to be
satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain
amount of money to another person from out of that account
for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity, whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either
because the amount of money standing to the credit of
1972 [2024] 12 S.C.R.

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the account is insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that account
by an agreement made with the bank;
(iv)the payee or the holder in due course of the cheque
makes a demand for the payment of the said amount of
money by giving a notice in writing, to the drawer of the
cheque, within 15 days of the receipt of information by him
from the bank regarding the return of the cheque as unpaid;
(v) the drawer of such cheque fails to make payment of
the said amount of money to the payee or the holder in
due course of the cheque within 15 days of the receipt of
the said notice.”
36. In the case on hand, the cheque in question came to be signed by the
accused, in his capacity as the Director and Authorised Signatory of
the Company Shilabati Hospital Pvt. Ltd., on the account maintained
by the Company with the Standard Chartered Bank. Hence, the
question that falls for our determination is whether the accused could
be said to be covered by the expression “account maintained by him”
as it appears in Section 138 of the NI Act. In other words, could it
be said that the accused was “maintaining” the bank account upon
which the dishonoured cheque had been drawn.
37. Section 6 of the NI Act inter alia defines a “cheque” as a bill of
exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand. Section 7 defines the “drawer”
as the maker of a bill of exchange or cheque and “drawee” as the
person thereby directed to pay. Sections 30 and 31 of the NI Act
respectively define the liability of the drawer and the drawee of a
cheque as follows:
“30. Liability of drawer.—The drawer of a bill of exchange
or cheque is bound, in case of dishonour by the drawee
or acceptor thereof, to compensate the holder, provided
due notice of dishonour has been given to, or received
by, the drawer as hereinafter provided.
31. Liability of drawee of cheque.—The drawee of a cheque
having sufficient funds of the drawer in his hands properly
applicable to the payment of such cheque must pay the
cheque when duly required so to do, and , in default of
[2024] 12 S.C.R. 1973

Bijoy Kumar Moni v. Paresh Manna & Anr.

such payment, must compensate the drawer for any loss
or damage caused by such default.”
38. The proviso (b) to Section 138 provides that the payee or the holder
of the cheque which has been dishonoured must give a written
notice to the drawer of the cheque within 30 days of the receipt of
information from the bank that the cheque has been returned as
unpaid. Further proviso (c) provides that if the drawer of the cheque
makes the payment of the amount mentioned in the cheque within
15 days of receiving the notice mentioned in proviso (b), then he
cannot be held liable under Section 138.
39. What invariably follows from a perusal of the aforesaid provisions
is that it is only the drawer of the cheque who can be held liable
under Section 138. Section 141 is an exception to this scheme of
the NI Act and provides for vicarious liability of persons other than
the drawer of the cheque in cases where the drawer of the cheque
under Section 138 is a corporate person.
40. The question as to whether a person who was not the drawer of
the cheque upon an account maintained by him could be held to
be liable for an offence under Section 138 of the NI Act fell for the
consideration of this Court in the case of P.J. Agro Tech Ltd. and
Others v. Water Base Ltd. reported in (2010) 12 SCC 146. The
Court construed the provision strictly and answered the question in
the negative. The relevant observations are reproduced hereinbelow:
“11. From the submissions made on behalf of the
respective parties, it is quite apparent that the short point
for decision in this appeal is whether a complaint under
Section 138 of the 1881 Act would be maintainable against
a person who was not the drawer of the cheque from an
account maintained by him, which ultimately came to be
dishonoured on presentation.
xxx xxx xxx
13. From a reading of the said section, it is very clear that
in order to attract the provisions thereof a cheque which
is dishonoured will have to be drawn by a person on an
account maintained by him with the banker for payment
of any amount of money to another person from out of
1974 [2024] 12 S.C.R.

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that account for the discharge, in whole or in part of any
debt or other liability. It is only such a cheque which is
dishonoured which would attract the provisions of Section
138 of the above Act against the drawer of the cheque.
14. In the instant case, the cheque which had been
dishonoured may have been issued by Respondent 11
for discharging the dues of Appellant 1 Company and its
Directors to Respondent 1 Company and the respondent
Company may have a good case against Appellant 1
Company for recovery of its dues before other fora, but it
would not be sufficient to attract the provisions of Section
138 of the 1881 Act. The appellant Company and its
Directors cannot be made liable under Section 138 of the
1881 Act for a default committed by Respondent 11. An
action in respect of a criminal or a quasi-criminal provision
has to be strictly construed in keeping with the provisions
alleged to have been violated. The proceedings in such
matters are in personam and cannot be used to foist an
offence on some other person, who under the statute was
not liable for the commission of such offence.”
(Emphasis supplied)

41. In Jugesh Sehgal v. Shamsher Singh Gogi reported in (2009) 14
SCC 683, this Court emphasised on the importance of the dishonoured
cheque having been drawn by the accused person on an account
held in his name for the offence to be made out and held thus:
“22. As already noted hereinbefore, in Para 3 of the
complaint, there is a clear averment that the cheque in
question was issued from an account which was non-
existent on the day it was issued or that the account from
where the cheque was issued “pertained to someone
else”. As per the complainant’s own pleadings, the bank
account from where the cheque had been issued, was not
held in the name of the appellant and therefore, one of
the requisite ingredients of Section 138 of the Act was not
satisfied. Under the circumstances, continuance of further
proceedings in the complaint under Section 138 of the Act
against the appellant would be an abuse of the process
[2024] 12 S.C.R. 1975

Bijoy Kumar Moni v. Paresh Manna & Anr.

of the court. In our judgment, therefore, the decision of
the High Court cannot be sustained.”
(Emphasis supplied)

42. The aforesaid discussion makes it clear that as per the legislative
scheme it is only the drawer of the cheque who is sought to be
made liable for the offence punishable under Section 138 of the NI
Act. Thus, the next question that requires consideration is whether
a Director of a company, who is also the authorised signatory, to
sign and issue cheques on its behalf could be said to be the drawer
of a cheque drawn upon the bank account held in the name of the
company. In other words, whether such an authorised signatory could
be said to “maintain” the bank account upon which the dishonoured
cheque has been drawn for the reason that such a person has the
authority to enter into transactions using the bank account of the
company and also look after the day-to-day functioning of the bank
account of the company.

ii. Whether authorized signatory of a company falls within
the ambit of the expression “drawer”?
43. This Court in one of its recent decisions in the case of Shri Gurudatta
Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao Deshmukh and
Others reported in 2024 SCC OnLine SC 1800 had the occasion to
consider the issue of whether the authorised signatory of a company
who had signed a cheque drawn on the bank account of the company
and which got dishonoured subsequently could be held to be liable
for the payment of interim compensation under Section 143A of
the NI Act. This Court while answering the issue in the negative,
applied the doctrine of separate corporate personality and held that
it is only the drawer of the cheque who could be held to be liable
for the payment of interim compensation under Section 143A of the
NI Act and the authorised signatory of a company cannot be said
to be the drawer of the cheque. The relevant observations made by
the Court are reproduced hereinbelow:
“13. The appellant has challenged the judgment and order
of the High Court dated March 29, 2023 as well as the
relied upon judgment and order dated March 8, 2023. The
present appeal is filed assailing the correctness of these
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orders vis-a-vis the larger question of law, as framed by
the High Court:
“Whether the signatory of the cheque, authorised
by the ‘company’, is the ‘drawer’ and whether
such signatory could be directed to pay interim
compensation in terms of section 143A of the
Negotiable Instruments Act, 1881 leaving aside the
company?”
xxx xxx xxx
28. The High Court’s interpretation of section 7 of the
Negotiable Instruments Act, 1881 accurately identified
the “drawer” as the individual who issues the cheque.
This interpretation is fundamental to understanding
the obligations and liabilities under section 138 of the
Negotiable Instruments Act, 1881, which makes it clear that
the drawer must ensure sufficient funds in their account at
the time the cheque is presented. The appellants’ argument
that directors or other individuals should also be liable
under section 143A misinterprets the statutory language
and intent. The primary liability, as correctly observed
by the High Court, rests on the drawer, emphasizing the
drawer’s responsibility for maintaining sufficient funds.
29. The general rule against vicarious liability in criminal
law underscores that individuals are not typically held
criminally liable for acts committed by others unless
specific statutory provisions extend such liability. Section
141 of the Negotiable Instruments Act, 1881 is one such
provision, extending liability to the company’s officers for the
dishonour of a cheque. The appellants’ attempt to extend
this principle to section 143A, to hold directors or other
individuals personally liable for interim compensation, is
unfounded. The High Court rightly emphasised that liability
under section 141 arises from the conduct or omission
of the individual involved, not merely their position within
the company.
30. The distinction between legal entities and individuals
acting as authorized signatories is crucial. Authorised
[2024] 12 S.C.R. 1977

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signatories act on behalf of the company but do not assume
the company’s legal identity. This principle, fundamental to
corporate law, ensures that while authorised signatories
can bind the company through their actions, they do not
merge their legal status with that of the company. This
distinction supports the High Court’s interpretation that the
drawer under section 143A refers specifically to the issuer
of the cheque, not the authorised signatories.
31. The principle of statutory interpretation, particularly
in relation to sections 143A and 148, was also correctly
applied by the High Court. The court emphasised that
when statutory language is clear and unambiguous, it
should be given its natural and ordinary meaning. The
legislative intent, as discerned from the plain language
of the statute, aims to hold the drawer accountable. The
appellants’ argument for a broader interpretation to include
authorised signatories under section 143A contradicts this
principle and would lead to an unjust extension of liability
not supported by the statutory text.”
(Emphasis supplied)

44. In yet one another decision of this Court in the case of N. Harihara
Krishnan v. J. Thomas reported in (2018) 13 SCC 663, while dealing
with the issue of commission of an offence under Section 138 of
the NI Act by a company, the Court observed that Section 138 only
contemplates the drawer of the cheque to be responsible for the
commission of the offence. It is only by virtue of Section 141 that
certain persons other than the drawer of the cheque can be made
liable for the offence in cases where the offence under Section 138
is committed by a company and not an individual person. The Court,
in the facts of the case before it, further held that the identity of the
drawer of the cheque was apparent from the cheque itself and thus
it was not open to the payee/complainant to seek impleadment of the
company, that is, the drawer of the cheque, at a belated stage by filing
an impleadment application when it had instituted the complaint only
against the authorised signatory who had signed the cheque on behalf
of the company. The Court also held that the offence under Section 138
is person specific and in the absence of applicability of the principles
of the Code of Criminal Procedure, 1973, the magistrate cannot take
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cognizance of the complaint unless it is made against the drawer of
the cheque, as it is only the drawer who can be an accused under
Section 138. The relevant observations are reproduced hereinbelow:
“20. The offence under Section 138 of the Act is capable
of being committed only by the drawer of the cheque. The
logic of the High Court that since the offence is already
taken cognizance of, there is no need to take cognizance
of the offence against Dakshin is flawed. Section 141
stipulates the liability for the offence punishable under
Section 138 of the Act when the person committing such
an offence happens to be a company—in other words when
the drawer of the cheque happens to be a company. [...]
xxx xxx xxx
22. The High Court failed to appreciate that the liability
of the appellant (if any in the context of the facts of the
present case) is only statutory because of his legal status
as the Director of Dakshin. Every person signing a cheque
on behalf of a company on whose account a cheque is
drawn does not become the drawer of the cheque. Such
a signatory is only a person duly authorised to sign the
cheque on behalf of the company/drawer of the cheque. If
Dakshin/drawer of the cheque is sought to be summoned
for being tried for an offence under Section 138 of the Act
beyond the period of limitation prescribed under the Act,
the appellant cannot be told in view of the law declared
by this Court in Aneeta Hada [Aneeta Hada v. Godfather
Travels & Tours (P) Ltd. (2012) 5 SCC 661 : (2012) 3 SCC
(Civ) 350 : (2012) 3 SCC (Cri) 241] that he can make
no grievance of that fact on the ground that Dakshin did
not make any grievance of such summoning. It is always
open to Dakshin to raise the defence that the initiation
of prosecution against it is barred by limitation. Dakshin
need not necessarily challenge the summoning order. It
can raise such a defence in the course of trial.
xxx xxx xxx
27. By the nature of the offence under Section 138 of the
Act, the first ingredient constituting the offence is the fact
that a person drew a cheque. The identity of the drawer
[2024] 12 S.C.R. 1979

Bijoy Kumar Moni v. Paresh Manna & Anr.

of the cheque is necessarily required to be known to the
complainant (payee) and needs investigation and would not
normally be in dispute unless the person who is alleged to
have drawn a cheque disputes that very fact. The other facts
required to be proved for securing the punishment of the
person who drew a cheque that eventually got dishonoured
is that the payee of the cheque did in fact comply with
each one of the steps contemplated under Section 138 of
the Act before initiating prosecution. Because it is already
held by this Court that failure to comply with any one
of the steps contemplated under Section 138 would not
provide “cause of action for prosecution”. Therefore, in the
context of a prosecution under Section 138, the concept of
taking cognizance of the offence but not the offender is not
appropriate. Unless the complaint contains all the necessary
factual allegations constituting each of the ingredients of
the offence under Section 138, the Court cannot take
cognizance of the offence. Disclosure of the name of the
person drawing the cheque is one of the factual allegations
which a complaint is required to contain. Otherwise in the
absence of any authority of law to investigate the offence
under Section 138, there would be no person against whom a
court can proceed. There cannot be a prosecution without an
accused. The offence under Section 138 is person specific.
Therefore, Parliament declared under Section 142 that the
provisions dealing with taking cognizance contained in the
CrPC should give way to the procedure prescribed under
Section 142. Hence the opening of non obstante clause
under Section 142. It must also be remembered that Section
142 does not either contemplate a report to the police or
authorise the Court taking cognizance to direct the police
to investigate into the complaint.
(Emphasis supplied)

iii. Meaning of the expression “on an account maintained by
him” used in Section 138 of the NI Act
45. It is of vital importance to understand the import of the expression
“on an account maintained by him with a banker” used in Section 138
1980 [2024] 12 S.C.R.

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of the NI Act. The expression, in our considered opinion, describes
the relationship between the account holder and the banker. This
relationship is fundamental to the application of Section 138. The act
of maintaining an account is exclusively tied to the account holder
and does not extend to any third party whom the account holder
may authorize to manage the account on its behalf. Therefore,
any delegation of authority to manage the account does not alter
the intrinsic relationship existing between the account holder and
the banker as envisaged under the NI Act. Corporate persons like
companies, which are mere legal entities and have no soul, mind
or limb to work physically, discharge their functions through some
human agency recognised under the law to work. Therefore, if some
function is discharged by such human agency for and on behalf of
the company it would be an act of the company and not attributable
to such human agent. One such instance of discharge of functions
could be the authority to manage the bank accounts of the company,
issue and sign cheques on its behalf, etc. which may be delegated
to an authorised signatory. However, such authorisation would not
render the authorised signatory as the maker of those cheques. It is
the company alone which would continue to be the maker of these
cheques, and thus also the drawer within the meaning of Section
7 of the NI Act.
46. The authorised signatory is merely the physical limb that signs
and makes the cheque on behalf of the company’s incorporeal
personality. The company, for all purposes, continues to remain the
drawer of the cheques. If the interpretation as being canvassed by
the complainant is accepted then even an employee of the Company,
who on account of his being an authorized signatory signs a cheque
issued by the Company towards discharge of the debt or other liability
of the Company, would be liable to prosecution and conviction under
Section 138 of NI Act even after he resigns from the company and
is no more in its employment. This certainly could not have been
the intention of the legislature. Even the vicarious liability created
under Section 138 of NI Act would not be attracted in respect of a
Director or an employee of the Company who resigns and severs
his connections with the company, unless the complainant is able to
bring his case within the purview of sub-Section 2 of Section 141,
by proving that the offence had been committed with his consent or
connivance or was otherwise attributable to any neglect on his part.
[2024] 12 S.C.R. 1981

Bijoy Kumar Moni v. Paresh Manna & Anr.

47. We would hasten to add that the above interpretation should not in
any manner be misconstrued to affix liability upon the joint account
holder of an account unless the cheque is shown to have been
made/drawn jointly by such joint account holder. A company vis-à-vis
its authorised signatory stands on a completely different footing as
compared to account holders of a joint account. In the former, it is
only the company which holds an account with the banker, whereas
in the latter, each joint account holder can be said to hold an account
with the banker. Thus, while in the case of a cheque drawn on the
account of the company the authorised signatory cannot be held to
be the drawer, in the case of a cheque drawn upon a joint account,
each account holder affixing his signature to the cheque may be said
to have drawn such a cheque. The position of law on this issue has
been settled by this Court in the case of Aparna A. Shah v. Sheth
Developers (P) Ltd. reported in (2013) 8 SCC 71, wherein it was
observed thus:
“28. We also hold that under Section 138 of the NI Act,
in case of issuance of cheque from joint accounts, a joint
account-holder cannot be prosecuted unless the cheque
has been signed by each and every person who is a
joint account-holder. The said principle is an exception to
Section 141 of the NI Act which would have no application
in the case on hand. The proceedings filed under Section
138 cannot be used as arm-twisting tactics to recover the
amount allegedly due from the appellant. It cannot be said
that the complainant has no remedy against the appellant
but certainly not under Section 138. The culpability attached
to the dishonour of a cheque can, in no case “except in
case of Section 141 of the NI Act” be extended to those on
whose behalf the cheque is issued. This Court reiterates
that it is only the drawer of the cheque who can be made
an accused in any proceeding under Section 138 of the
Act. [...]”
(Emphasis supplied)

48. The expression “on an account maintained by him” has been
construed by a learned Single Judge of the Kerala High Court in
the case of P.N. Salim v. P.J. Thomas & Another reported in 2004
SCC Online Ker 269 to also include those cases where the cheque
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was issued by the drawer after the closure of the account maintained
by him with the bank. The High Court said so having regard to the
underlying object behind the enactment of Section 138. A similar view
was taken by the Gujarat High Court in the case of Hashmikant
M. Seth v. State of Gujarat & Anr. reported in 2004 SCC Online
Guj 300. We are in agreement with both the High Courts on the
understanding of the expression “on an account maintained by him”.
49. We are in seisin of the fact that in the case at hand, the accused had
allegedly borrowed the amount from the complainant on the pretext
that he was in need of financial help regarding some infrastructure
development project he was undertaking. Nothing was brought on
record during the course of the trial which would suggest that there
was some sort of an understanding between the complainant and
the accused that the debt of the accused would be discharged by
the Shilabati Hospital Pvt. Ltd. A perusal of the notice issued by the
complainant to the accused as well as a reading of the complaint
filed by the complainant before the magistrate clearly brings out
that the complainant was under the impression that the cheque was
drawn by the accused in personal capacity upon a bank account
maintained by him with the Standard Chartered Bank. Further, the
defence that the bank account upon which the cheque was drawn
was held in the name of Shilabati Hospital and not in the name of
the accused was taken for the first time in the appeal filed by the
accused before the Sessions Court. Although it can be understood
that the complainant had no occasion to believe that the cheque was
drawn upon the bank account of Shilabati Hospital as the debt was
one which was taken by the accused in his personal capacity, yet a
bare perusal of the cheque shows that the cheque was signed by
the accused in the capacity of the Director of the Shilabati Hospital
Pvt. Ltd. as the same bears both the stamp of the director as well
as the hospital.
50. A catena of decisions of this Court have settled the position of law that
in case of a cheque issued on behalf of a company by its authorised
signatory, prosecution cannot proceed against the such authorised
signatory or other post-holders of the company as described under
Section 141 of the NI Act, unless the company who is the drawer of
the cheque is arraigned as an accused in the complaint case filed
before the magistrate. Further, vicarious liability can only be affixed
against the directors, authorised signatories, etc. of the company
[2024] 12 S.C.R. 1983

Bijoy Kumar Moni v. Paresh Manna & Anr.

after the company is held liable for the commission of offence under
Section 138.
51. It is not the case of the complainant that the cheque in question
was drawn by the accused on a bank account maintained by
him, rather the case is that the cheque was issued in discharge
of the personal liability of the accused towards the complainant,
and hence there was no occasion for it to implead the company
as an accused.

iv. Scope of the expression “any debt or other liability”
appearing in Section 138 of the NI Act
52. Section 138 of the NI Act does not envisage that only those cases
where a cheque issued towards the discharge of the personal liability
of the drawer towards the payee gets dishonoured would come within
the ambit of the provision. The expression “of any debt or other
liability” appearing in Section 138 when read with the Explanation
to the provision is wide enough to bring any debt or liability which
is legally enforceable within its fold. Thus, the requirement under
the provision is that the debt or any other liability has to be legally
enforceable and the emphasis is not on the existence of such debt
or other liability between the drawer and the payee. A number of
decisions of this Court have clarified that even those cases where a
person assumes the responsibility of discharging the 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 the drawee, would be covered by
Section 138 if the payee is able to establish that there was some
sort of an arrangement by way of which the debt was assumed by
the drawer.
53. This Court in the case of Anil Sachar and Another v. Shree Nath
Spinners Private Limited and Others reported in (2011) 13 SCC
148 observed thus:
“15. Upon perusal of the record, we find that the
complainants had established before the trial court that
there was an understanding among the complainants and
the accused that in consideration of supply of goods to M/s
Shree Nath Spinners (P) Ltd., M/s AT Overseas Ltd. was
to make the payment. The aforestated understanding was
1984 [2024] 12 S.C.R.

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on account of the fact that Directors in both the aforestated
companies were common and the aforestated companies
were sister concerns. In the circumstances, it can be very
well said and it has been proved that in consideration of
supply of goods to M/s Shree Nath Spinners (P) Ltd.,
M/s AT Overseas Ltd. had made the payment. In view
of the above fact, in our opinion, the trial court was not
right when it came to the conclusion that there was no
reason for M/s AT Overseas Ltd. to give the cheques to
the complainants.
xxx xxx xxx
17. The trial court materially erred while coming to a
conclusion that in criminal law no presumption can be
raised with regard to consideration as no goods had been
supplied by the complainants to M/s AT Overseas Ltd.
The trial court ought to have considered the provisions of
Section 139 of the Act, which reads as under:
“139. Presumption in favour of holder.—It shall be
presumed, unless the contrary is proved, that the
holder of a cheque received the cheque, of the nature
referred to in Section 138 for the discharge, in whole
or in part, of any debt or other liability.”
18. According to the provisions of the aforestated section,
there is a presumption with regard to consideration when
a cheque has been paid by the drawer of the cheque. In
the instant case, M/s AT Overseas Ltd. paid the cheque
which had been duly signed by one of its Directors, namely,
Munish Jain. Munish Jain is also a Director in M/s Shree
Nath Spinners (P) Ltd. As stated hereinabove, both are
sister concerns having common Directors. Extracts of
books of accounts had been produced before the trial
court so as to show that both the companies were having
several transactions and the companies used to pay on
behalf of each other to other parties or their creditors.
The above fact strengthens the presumption to the effect
that M/s AT Overseas Ltd. had paid the cheques to the
complainants, which had been signed by Munish Jain,
in consideration of goods supplies to M/s Shree Nath
[2024] 12 S.C.R. 1985

Bijoy Kumar Moni v. Paresh Manna & Anr.

Spinners (P) Ltd. Of course, the presumption referred to
in Section 139 is rebuttable. In the instant case, no effort
was made by Munish Jain or any of the Directors of M/s AT
Overseas Ltd. for rebuttal of the aforestated presumption
and, therefore, the presumption must go in favour of the
holder of the cheques. Unfortunately, the trial court did
not consider the above facts and came to the conclusion
that there was no consideration for the cheques which had
been given by M/s AT Overseas Ltd. to the complainants.”
(Emphasis supplied)

54. In another judgment delivered by this Court in ICDS Ltd. v. Beena
Shabeer and Another reported in (2002) 6 SCC 426, reference
was made to the nature of liability which is incurred by the one who
is a drawer of the cheque and observed that if the cheque is given
towards any liability or debt which might have been incurred even by
someone else, the person who is the drawer of the cheque can be
made liable under Section 138 of the Act. The relevant observations
made therein are reproduced hereinbelow:
“10. The language, however, has been rather specific as
regards the intent of the legislature. The commencement
of the section stands with the words “Where any cheque”.
The abovenoted three words are of extreme significance,
in particular, by reason of the user of the word “any” — the
first three words suggest that in fact for whatever reason if
a cheque is drawn on an account maintained by him with
a banker in favour of another person for the discharge
of any debt or other liability, the highlighted words if
read with the first three words at the commencement of
Section 138, leave no manner of doubt that for whatever
reason it may be, the liability under this provision cannot
be avoided in the event the same stands returned by the
banker unpaid. The legislature has been careful enough
to record not only discharge in whole or in part of any
debt but the same includes other liability as well. This
aspect of the matter has not been appreciated by the
High Court, neither been dealt with or even referred to
in the impugned judgment.
1986 [2024] 12 S.C.R.

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11. The issue as regards the coextensive liability of the
guarantor and the principal debtor, in our view, is totally
out of the purview of Section 138 of the Act, neither the
same calls for any discussion therein. The language of
the statute depicts the intent of the law-makers to the
effect that wherever there is a default on the part of one
in favour of another and in the event a cheque is issued
in discharge of any debt or other liability there cannot be
any restriction or embargo in the matter of application of
the provisions of Section 138 of the Act. “Any cheque” and
“other liability” are the two key expressions which stand
as clarifying the legislative intent so as to bring the factual
context within the ambit of the provisions of the statute.
Any contra-interpretation would defeat the intent of the
legislature. The High Court, it seems, got carried away by
the issue of guarantee and guarantor’s liability and thus
has overlooked the true intent and purport of Section 138
of the Act. The judgments recorded in the order of the
High Court do not have any relevance in the contextual
facts and the same thus do not lend any assistance to
the contentions raised by the respondents.”
(Emphasis supplied)

55. A perusal of the above two decisions indicates that even if the
cheque might have been issued for the discharge of personal
liability of the accused towards the complainant, had the company
Shilabati Hospital Pvt. Ltd. been arraigned as an accused in the
complaint case before the Trial Court, it would have remained open
to the complainant to establish with the aid of the presumption
under Section 139 that the cheque issued by the company was in
discharge of a legally enforceable debt. However, in the absence of
the drawer of the cheque having been arraigned as an accused, it
was rightly held by the High Court that no prosecution could have
proceeded against the accused in his personal capacity. The only
way by which the accused could be held liable was under Section
141 of the NI Act, however the same could not have been done in
the absence of the company being arraigned as an accused. This
position of law has been explained by a number of decisions of
this Court. A three-Judge Bench of this Court in Aneeta Hada v.
[2024] 12 S.C.R. 1987

Bijoy Kumar Moni v. Paresh Manna & Anr.

Godfather Travels and Tours Private Limited reported in (2012)
5 SCC 661 observed thus:
“17. The gravamen of the controversy is whether any
person who has been mentioned in Sections 141(1)
and 141(2) of the Act can be prosecuted without the
company being impleaded as an accused. To appreciate
the controversy, certain provisions need to be referred to.
xxx xxx xxx
58. Applying the doctrine of strict construction, we are
of the considered opinion that commission of offence
by the company is an express condition precedent to
attract the vicarious liability of others. Thus, the words
“as well as the company” appearing in the section
make it absolutely unmistakably clear that when the
company can be prosecuted, then only the persons
mentioned in the other categories could be vicariously
liable for the offence subject to the averments in the
petition and proof thereof. One cannot be oblivious of
the fact that the company is a juristic person and it has
its own respectability. If a finding is recorded against it,
it would create a concavity in its reputation. There can
be situations when the corporate reputation is affected
when a Director is indicted.
59. In view of our aforesaid analysis, we arrive at the
irresistible conclusion that for maintaining the prosecution
under Section 141 of the Act, arraigning of a company as
an accused is imperative. The other categories of offenders
can only be brought in the drag-net on the touchstone of
vicarious liability as the same has been stipulated in the
provision itself. We say so on the basis of the ratio laid
down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri)
97] which is a three-Judge Bench decision. Thus, the view
expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984
SCC (Cri) 620] does not correctly lay down the law and,
accordingly, is hereby overruled. The decision in Anil Hada
[(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with
the qualifier as stated in para 51. The decision in Modi
Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has
1988 [2024] 12 S.C.R.

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to be treated to be restricted to its own facts as has been
explained by us hereinabove.”
(Emphasis supplied)

56. As specified in paragraph 59 of the aforesaid decision, the only
exception to the general rule as laid above is embodied in the
doctrine of lex non cogit ad impossibilia which means that the law
doesn’t compel the impossible. Thus, it is only in those cases where
the impleadment of the company is not possible due to some legal
impediment that this general rule can be exempted. In the facts on
hand, it cannot be said that there was any legal difficulty in impleading
Shilabati Hospital Pvt. Ltd. as an accused in the complaint case filed
by the complainant. Thus, even the benefit of the exception cannot
be extended to the complainant in the present case.
57. In Himanshu v. B. Shivamurthy (supra), the Court was examining
the legality and validity of the order quashing a complaint passed
by the High Court in exercise of its inherent powers under Section
482 of the CrPC in a case where the Director of the company was
arraigned as the sole accused for the dishonour of a cheque drawn
upon the bank account held in the name of the company. Reiterating
the principles laid down in Aneeta Hada (supra), this Court upheld
the decision of the High Court in quashing the complaint case.
58. In yet another decision of this Court in Mainuddin Abdul Sattar
Shaikh v. Vijay D. Salvi reported in (2015) 9 SCC 622, the facts
interestingly were virtually opposite to the facts of the case on hand.
In the said case, the accused, who was the Managing Director of
a company had issued a cheque drawn on his personal account in
discharge of the liability of the company. The cheque later came
to be dishonoured and a private complaint was lodged against the
accused under Section 138 of the NI Act. Both the trial court and the
High Court acquitted the accused on the ground that the company
was not made a party to the proceedings. However, this Court set
aside the order of acquittal and held the accused liable for the offence
under Section 138. It was observed by this Court that as the cheque
was drawn by the accused on an account maintained by him, the
Company or any of its directors could not be made liable for the
offence, even if the cheque was issued by the accused towards the
discharge of the debt of the company. The relevant observations
made by the Court are reproduced hereinbelow:
[2024] 12 S.C.R. 1989

Bijoy Kumar Moni v. Paresh Manna & Anr.

“10. In the present case, it is an admitted fact that the
drawer of the cheque was the respondent, who had
drawn the cheque, bearing No. 075073 for Rs 74,200 on
a bank account maintained by him towards the refund
of the booking amount. Therefore, he was the drawer of
the cheque. The case of the appellant, apart from being
supported by the provision of Section 138 of the NI Act,
also gets buttressed by the judgment in P.J. Agro Tech
Ltd. v. Water Base Ltd. [(2010) 12 SCC 146 : (2010) 4
SCC (Civ) 588 : (2011) 2 SCC (Cri) 164] , where this Court
has dealt with the scope of Section 138 and held that :
(SCC p. 150, para 13)
“13. … it is very clear that in order to attract the
provisions thereof a cheque which is dishonoured
will have to be drawn by a person on an account
maintained by him with the 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. It is only such a cheque which
is dishonoured which would attract the provisions of
Section 138 of the above Act against the drawer of
the cheque.”
11. About the liability under Section 138 of the NI
Act, where the cheque drawn by the employee of the
appellant Company on his personal account, even if it be
for discharging dues of the appellant Company and its
Directors, the appellant Company and its Directors cannot
be made liable under Section 138. Thus, we observe that
in the abovementioned case, the personal liability was
upheld and the Company and its Directors were absolved
of the liability. The logic applied was that the section itself
makes the drawer liable and no other person. […]”
(Emphasis supplied)

v. Section 141 of the NI Act
59. In Aneeta Hada (supra), this Court fortified the view that criminal
liability on account of dishonor of cheque primarily falls on the
1990 [2024] 12 S.C.R.

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drawer company and then extends to its officers only when the
conditions incorporated in Section 141 of the NI Act are satisfied.
While explaining the import of the words “as well as the company”
occurring in the provision, the Court observed that the commission
of an offence by the company is an express condition precedent and
only when the prosecution is maintainable against the Company that
the persons mentioned in the other categories under Section 141
can be vicariously made liable for the offence committed under
Section 138 of the NI Act. The relevant observations are reproduced
hereinbelow:
“53. It is to be borne in mind that Section 141 of the Act
is concerned with the offences by the company. It makes
the other persons vicariously liable for commission of an
offence on the part of the company. As has been stated
by us earlier, the vicarious liability gets attracted when
the condition precedent laid down in Section 141 of the
Act stands satisfied. There can be no dispute that as
the liability is penal in nature, a strict construction of the
provision would be necessitous and, in a way, the warrant.
xxx xxx xxx
58. Applying the doctrine of strict construction, we are
of the considered opinion that commission of offence
by the company is an express condition precedent to
attract the vicarious liability of others. Thus, the words
“as well as the company” appearing in the section make
it absolutely unmistakably clear that when the company
can be prosecuted, then only the persons mentioned in the
other categories could be vicariously liable for the offence
subject to the averments in the petition and proof thereof.
One cannot be oblivious of the fact that the company is a
juristic person and it has its own respectability. If a finding
is recorded against it, it would create a concavity in its
reputation. There can be situations when the corporate
reputation is affected when a Director is indicted.”
(Emphasis supplied)

60. Following the rationale in Aneeta Hada (supra), this Court in Anil
Gupta v. Star India Private Limited and Another reported in (2014)
[2024] 12 S.C.R. 1991

Bijoy Kumar Moni v. Paresh Manna & Anr.

10 SCC 373 held that the guilt for the offence under Section 138 is
only deemed upon the other persons who are connected with the
Company as a consequence of Section 141 of the NI Act. Herein,
since the complaint against the respondent Company was not
maintainable, the High Court had quashed the summons issued by
the trial court against the respondent Company. This Court opined
that since the Company was not a party to the proceedings under
Section 138 read with Section 141 of the Act, the proceedings against
the appellant Managing Director also could not be continued with.
The relevant observations are reproduced hereinbelow:
“13. In the present case, the High Court by the impugned
judgment dated 13-8-2007 [Visionaries Media Network v.
Star India (P) Ltd., Criminal Misc. Case No. 2380 of 2004,
decided on 13-8-2007 (Del)] held that the complaint
against Respondent 2 Company was not maintainable
and quashed the summons issued by the trial court
against Respondent 2 Company. Thereby, the Company
being not a party to the proceedings under Section 138
read with Section 141 of the Act and in view of the fact
that part of the judgment referred to by the High Court
in Anil Hada [Anil Hada v. Indian Acrylic Ltd. (2000) 1
SCC 1 : 2001 SCC (Cri) 174] has been overruled by a
three-Judge Bench of this Court in Aneeta Hada [Aneeta
Hada v. Godfather Travels and Tours (P) Ltd. (2012) 5
SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri)
241], we have no other option but to set aside the rest
part of the impugned judgment [Visionaries Media Network
v. Star India (P) Ltd., Criminal Misc. Case No. 2380 of
2004, decided on 13-8-2007 (Del)] whereby the High
Court held that the proceedings against the appellant
can be continued even in absence of the Company. We,
accordingly, set aside that part of the impugned judgment
dated 13-8-2007 [Visionaries Media Network v. Star India
(P) Ltd., Criminal Misc. Case No. 2380 of 2004, decided
on 13-8-2007 (Del)] passed by the High Court so far as
it relates to the appellant and quash the summons and
proceeding pursuant to Complaint Case No. 698 of 2001
qua the appellant.”
(Emphasis supplied)
1992 [2024] 12 S.C.R.

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61. This Court’s decision in Ashok Shewakramani and Others v. State
of Andhra Pradesh and Another reported in (2023) 8 SCC 473
acknowledged the normal rule that there cannot be any vicarious
liability under a penal provision but however, held that Section 141 of
the NI Act is an exception to this rule. It further stated that vicarious
liability would only be fastened when the person who is sought to
be held vicariously liable was “in charge of” and “responsible to
the Company” for the conduct of the business of the Company at
the time when the offence under Section 138 was committed. In
circumstances where such persons are indeed found vicariously
liable, those persons as well as the Company shall be deemed to
be guilty of the offence under Section 138 of the NI Act. The relevant
observations made by the Court are reproduced hereinbelow:
“21. Section 141 is an exception to the normal rule that
there cannot be any vicarious liability when it comes to a
penal provision. The vicarious liability is attracted when the
ingredients of sub-section (1) of Section 141 are satisfied.
The section provides that every person who at the time
the offence was committed was in charge of, and was
responsible to the Company for the conduct of business of
the Company, as well as the Company shall be deemed to
be guilty of the offence under Section 138 of the NI Act.”
(Emphasis supplied)

62. It follows from a conspectus of the aforesaid decisions that it is the
drawer Company which must be first held to be the principal offender
under Section 138 of the NI Act before culpability can be extended,
through a deeming fiction, to the other Directors or persons in-charge
of and responsible to the Company for the conduct of its business.
In the absence of the liability of the drawer Company, there would
naturally be no requirement to hold the other persons vicariously
liable for the offence committed under Section 138 of the NI Act.
63. Before we part with the matter, we deem it necessary to address
the argument advanced by the counsel appearing for the accused
that the object of Section 138 of the NI Act would be defeated
if cases like the present one are held to be excluded from the
ambit of the provision. The counsel placed reliance on a decision
rendered by a learned Single Judge of the Madras High Court in
[2024] 12 S.C.R. 1993

Bijoy Kumar Moni v. Paresh Manna & Anr.

the case of P. Sarvana Kumar v. S.P. Vijaya Kumar reported in
2022 SCC Online Mad 1387. The said decision was rendered in
a petition filed under Section 482 of the Cr.P.C. for quashing of the
private complaint filed against the petitioner therein for the offence
under Section 138 of the NI Act. The petitioner therein, who was
arraigned as the second accused in the complaint, had filed the
petition seeking quashing of the complaint qua him on the ground
that the cheque, which came to be dishonoured, was signed by
him in his capacity as an authorized signatory acting on behalf of
the owner of a proprietorix concern, and thus he could not be said
to have drawn the cheque on an account maintained by him, and
the liability under Section 138 could only be affixed on the owner
of the proprietorix concern. It was also contended by the petitioner
therein that the provisions of Section 141 of the NI Act would have
no applicability to a case involving a proprietorship concern as the
same is not owned by a collection of individuals but a single person.
64. The High Court while rejecting the contention of the petitioner therein,
adverted to the object of Section 138 of the NI Act to hold that the
authorized signatory could be said to be the drawer of the cheque as
he was “maintaining” the account held in the name of the proprietorix
concern and thus could be held liable under Section 138 of the NI Act.
65. We find it difficult to subscribe to the view taken by the High Court
in the aforesaid decision. The High Court referred to an extract from
the 11th Edition of the commentary on the NI Act by Bhashyam and
Adiga wherein the liability of the principal for the acts of the agents
has been discussed and erroneously relied upon it to attribute liability
to the petitioner therein, who was the agent acting on behalf of the
proprietorix concern.
66. The position of law as has been settled by this Court and reiterated
in a legion of decisions is that it is only the drawer of the cheque who
can be held liable for an offence under Section 138 of the NI Act.
Further, this Court has also declared through several pronouncements
on the subject that an authorised signatory acting on behalf of the
principal cannot be said to be the “drawer” of the cheque “on an
account maintained by him with a banker” under Section 138.
67. It is also pertinent to note that the High Court in the aforesaid
decision also referred to the decision of this Court in Raghu
Lakshminarayanan v. Fine Tubes reported in (2007) 5 SCC 103
1994 [2024] 12 S.C.R.

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wherein it was categorically held by this Court that Section 141 of
the NI Act will have no application to proprietorship concerns as
they are owned by individuals and do not have a separate corporate
identity. However, the High Court distinguished the said decision by
holding that although the signatory of a cheque issued on behalf
of a proprietorship concern cannot be said to be vicariously liable
under Section 141 yet he could be held liable in his capacity as the
drawer of the cheque under Section 138 of the NI Act.
68. We find it difficult to approve the line of reasoning adopted by the
High Court in relying upon the object behind the enactment of Section
138 of the Act to liberally interpret the language of Section 138 of
the NI Act so as to include even an authorized signatory within its
ambit. Section 138 of the NI Act being penal in nature has to be
strictly construed and advertence to the object behind its enactment
can only be made to supplement the language employed in the text
of the statute and not to supplant it or render it overly broad and
susceptible to misuse. This Court in P.J. Agro Tech (supra) noted
as under:
“14. … An action in respect of a criminal or a quasi-
criminal provision has to be strictly construed in keeping
with the provisions alleged to have been violated. The
proceedings in such matters are in personam and cannot
be used to foist an offence on some other person, who
under the statute was not liable for the commission of
such offence.”

E. CONCLUSION
69. As discussed above, in the case on hand, the accused was
prosecuted in his individual capacity and not in his capacity of
being the Director of the Shilabati Hospital Pvt. Ltd. Although it is
undisputed that the accused signed the cheque in question, yet as
the cheque was drawn not on an account maintained by him with
a Banker but was issued on an account maintained by the hospital,
the requirement of Section 138 of the Act cannot be said to have
been complied with.
70. It would have been altogether a different situation if the accused was
prosecuted in his capacity as a Director of the Shilabati Hospital. In
such a scenario, the cheque drawn by him on an account maintained
[2024] 12 S.C.R. 1995

Bijoy Kumar Moni v. Paresh Manna & Anr.

by the Company would have satisfied the requirement of Section
138 of the Act but as the accused has been proceeded against for
an offence under Section 138 of the Act in his individual capacity
and inasmuch as the cheque dishonoured for insufficiency of funds
was drawn on the account maintained by the Company, namely,
Shilabati Hospital Pvt. Ltd., and not by the accused herein, no offence
could be said to have been committed under Section 138 of the
Act. The High Court rightly held that in the absence of the principal
offender having been arraigned as an accused, prosecution for the
commission of an offence under Section 138 of the NI Act could not
have proceeded against the accused.
71. As is evident from the discussion in the preceding parts of this
judgment, the requirement of Section 138 of the NI Act is that for
fastening criminal liability on the accused, the cheque which was
dishonoured for insufficiency of funds etc., must have been drawn
on an account maintained by the accused. The mere fact that the
cheque signed by the accused in his capacity as a “Director” of the
Company would in the normal course be honoured by the Bank to
which it was presented does not satisfy the statutory requirement
of Section 138 of the Act.
72. Section 138 of the Act exposes the person who has drawn the
cheque and which has been returned for insufficiency of funds to
criminal liability. The provision, therefore, must be construed strictly.
However, such a strict construction should not result in defeating
the very purpose for which the provision has been enacted as held
by this Court in the case of NEPC Micon Limited and Others v.
Magma Leasing Limited reported in (1999) 4 SCC 253. At the
same time, the statutory provisions creating penal liability cannot
be stretched too far to embrace the persons and situations patently
excluded from its purview as discernible from clear and unequivocal
language used in the provision.
73. Section 138 of the NI Act clearly postulates that the 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
the language of the statute if Section 138 of the 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 the cheque is returned for
insufficiency of funds. Such an interpretation will lead to absurd and
wholly unintended results.
1996 [2024] 12 S.C.R.

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74. However, the peculiar factual situation of the present case and the
plight of the complainant is not lost upon us. We are conscious of
the fact that the option of bringing civil action against the accused or
the hospital will be of no avail to the complainant as the claims are
hopelessly time barred. Further, it is also not open for the complainant
to initiate proceedings under Section 138 of the NI Act afresh by
impleading Shilabati Hospital Pvt. Ltd. as an accused as the time
period prescribed for issuance of statutory notice under Section 138
has long expired.
75. It is trite law that an act may constitute an offence under more than
one statute. The encashment of the cheque for an amount of Rs
7,00,000/- issued by the complainant in favour of the accused stood
proved during the course of the trial. Further, the conduct of the
accused in not replying to the statutory notice of dishonour of cheque
issued by the lawyer for the complainant and in not taking the plea
of the cheque having been drawn on the account of the company
in his capacity as a Director during the course of trial undoubtedly
raises questions as regards his dishonest intention in not repaying
the amount borrowed by him from the complainant.
76. In such circumstances, although it is not possible to hold the accused
liable for the offence under Section 138 of the NI Act, yet the
possibility of him having committed the offence of cheating cannot
be ruled out. Prima facie, the mens rea (guilty mind) of the accused
speaks for itself.
77. We leave it open to the complainant to approach the jurisdictional
police station and lodge an appropriate FIR against the accused. If the
complainant lodges an FIR, the concerned police officer in-charge of
the police station shall investigate the same in accordance with law.
78. In view of the above, the appeal fails and is hereby dismissed.
79. Pending application(s), if any, stand disposed of.

Result of the Case: Appeal dismissed.

†
Headnotes prepared by: Bibhuti Bhushan Bose