MAINUDDIN ABDUL SATTAR SHAIKHversusVIJAY D. SALVI

                   (2015] 6 S.C.R. 1033


          MAINUDDIN ABDUL SATTAR SHAIKH                        A
                             v.
                      VIJAY D. SALVI
            (Criminal Appeal No.1472 of 2009)
                                                               B
                      JULY 06, 2015
            [PINAKI CHANDRA GHOSE AND
                UDAY UMESH LALIT, JJ.]
     Negotiable Instruments Act, 1881:                         c
     s. 138 - Dishonour of cheque - Liability - Apµellant
booked a flat proposed to be developed by company and
gave cheque to the Director-respondent of the company -
Project did not materialize - Respondent drew a cheque of
                                                                0
same amount in favour of appellant of an account maintained
by him with his banker towards refund of the booking amount
- Dishonour of said cheque - Appellant filed complaint ul
s. 138 against respondent- Trial court acquitted respondent
on the ground that the company was not made party and as E
respondent was made accused in his personal capacity, he
was not liable to make payment for the company - High
Court upheld the order of the trial court - On appeal, held:
As per s. 138, the person who draws a cheque on an account
maintained by him for paying the payee alone attracts liability F
- Since respondent was the drawer of the cheque, he was
liable in his personal capacity when the company was not
made a party to the complaint.

     Allowing the appeal, the Court                            G
     HELD: The essentials for attracting a liability under
Section 138 of NI Act are 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 H
                            1033
1034      SUPREME COURT REPORTS                [2015] 6 S.C.R.


 A by him with a Banker for payment of any amount of
   money to another person from out of that account for
   discharge in whole or part, of any debt or other liability.
   In the present case, it is an admitted fact that the drawer
   of the cheque was the respondent, who had drawn the
 B cheque on a bank account maintained by him towards
   the refund of the booking amount. Therefore, he was
   the drawer of the cheque. About the liability under
   Section 138, where the cheque drawn by the employee
   of the appellant company on his personal account, even
 C 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.
   Going by the strict interpretation of the provision the
   drawer which in the present case is the respondent is
 0
   liable under Section 138 of the N.I. Act. In the light of the
   position which the respondent in the present case held,
   the respondent be made liable under Section 138 of the
   NI Act, even though the Company had not been named
 E in the notice or the complaint. There was no necessity
   for the appellant to prove that the said respondent was
   incharge of the affairs of the company, by virtue of the
   position he held. [Paras 9 to 13) [1038-D-G; 1039-C-D;
   1040-D-F]
 F
       P. J. Agro Tech Limited and Ors. v. Water Base Limited
       2010 (9) SCR 119: (2010) 12 SCC 146; National Small
       Industries Corporation Ltd. v. Harmeet Singh Paintal
       and Anr. 2010 (2) SCR 805: (2010) 3 SCC 330; R.
       Vijayan v. Baby and Anr. 2012 (14) SCR 712: (2012)
 G
       1 sec 260 - relied on.

                       Case Law Reference
  2010 (9) SCR 119              relied on.          Para 10
H 2010 (2) SCR 805              relied on.          Para 12
  2012 (14) SCR 712             relied on.          Para 14
     MAINUDDIN ABDUL SATTAR SHAIKH v. V!JAY                 1035
                   D. SALVI

    CRIMINAL APPELLATE JURISDICTION : Criminal A
Appeal No. 1472 of 2009.

     From the Judgment and Order dated 09.10.2007 in
Criminal Application No. 646 of 2006 of the High Court of
Judicature at Bombay.                                         B

     Jatin Zaveri, Neel Kamal Mishra for the Appellant.

     Manish Mohan, Puja Sarkar, Ugra Shankar Prasad for
the Respondent.
                                                              c
     The Judgment of the Court was delivered by

      PINAKI CHANDRA GHOSE, J. 1. This appeal, by
 special leave, has been filed against the judgment and order
dated 9.10.2007 passed by the High Court of Judicature at D
Bombay in Criminal Application No.646 of 2006, whereby
the High Court has refused leave to appeal against the.
judgment of the Trial Court, to the appellant herein.

      2. The brief facts necessary to dispose of this appeal E
are that in the year 1999, the appellant had booked a flat at
Khargar Project proposed to be developed by Mis. Salvi
Infrastructure Pvt. Ltd. through the accused-respondent by
paying him Rs.74,200/-. In acknowledgment of the said
amount, the accused respondent issued two receipts to the F
appellant, for a sum of Rs.59,000/- and Rs.14,200/-,
respectively. By the year 2003, as alleged by the appellant,
the aforesaid project of the respondent did not materialize.
After much persuasion, the accused respondent drew cheque
No.075073 for Rs.74,200/- in favour of the appellant, of an G
account maintained by him with his banker towards refund
of the aforesaid booking amount. The cheque was drawn by
the respondent in his individual capacity and not in the
capacity as a Director of Mis. Salvi Infrastructure Pvt. Ltd. or
as Proprietor of Salvi Builders and Developers. When the H
1036       SUPREME COURT REPORTS                  (2015] 6 S.C.R.


 A appellant presented the said cheque on 1.08.2003 to his
   Bank for realization, the same was returned unpaid. Hence,
   the appellant sent notice of demand dated 25.8.2003 through
   his advocate under Section 138(b) of the Negotiable
   Instruments Act, 1881 (hereinafter referred to as "the NI Act"),
 B to the respondent. As the accused respondent failed to pay
   the amount within 15 days of the notice of demand, the
   appellant filed a complaint under Section 138 of the N.I. Act.

         3. The aforesaid complaint filed by the appellant was
 C taken up by the Metropolitan Magistrate, 33'd Court, Ballard
   Pier, Mumbai, and vide his order dated 15.12.2005 passed
   in C.C. No.5194/2003, the Metropolitan Magistrate acquitted
   the respondent. The reasons given for the acquittal of the
   respondent were that the Company M/s. Salvi Infrastructure
 D Pvt. Ltd. was not made the accused and instead the
   respondent was made accused in his personal capacity. The
   cheque could not be said to have been issued for the
   discharge of whole or part of the liability because it exceeded
   the liability. Further, it had not been proved that the
 E respondent was a person liable to make the payment for
   Mis. Salvi Infrastructure Pvt. Ltd.

        4. Being aggrieved by the order passed by the
  Metropolitan Magistrate, the appellant filed an application
F for leave to appeal under Section 378 of Cr.P.C. along with
  a Criminal Application No.646 of 2006 under Section 378(4)
  of Cr.P,C., before the Bombay High Court. The High Court
  by the impugned order dismissed the said application on
  the ground that the reasoning set out by the Trial Court in its
G order did not call for reconsideration.

        5. The appellent is thus before us. Learned counsel
  for the appellant has raised the following grounds in this
  appeal. Learned counsel submits that the Courts below have
H failed to appreciate that under Section 138 of the NI Act, it is
     MAIN UDDIN ABDUL SATTAR SijflKH v. VIJAY                   1037
       D. SALVI [PINAKI CHANDRAl(3HOSE, J.]

the drawer of the cheque who is made. i!lnishable for offence    A
under Section 138 of the NI Act. Further, the Courts below
have failed to appreciate that in the present matter the
cheque in question was drawn by the respondent and not
by the Company of which the respondent is the Managing
Director. The cheque was drawn b'y him in his personal           B
capacity on an account maintained by him with his Banker.
The Courts below have wrongly concluded that notices under
Section 138(b) of the N.I. Act were sent to all the Directors
of the Company. Learned counsel for the appellant
contended that such a conclusion was not supported by any        C
evidence inasmuch as there was only one acknowledgment
card on record, showing receipt of notice under Section
138(b) of the Act, by the respondent. The Courts below did
not appreciate that the accused respondent in his statement      D
under Section 313 Cr.P.C. had admitted that he was paid
Rs. 74,200/- as earnest money and that he had issued receipt
for the same and thus there is no substance in the argument
of the respondent that the cheque for Rs.74,200/- cannot be
said to have been issued for discharge of whole or part of       E
liability, because it exceeded the liability.

      6. The plea taken by the learned counsel for the
respondent in the Court of Metropolitan Magistrate, 33rd
Court, Ballard Pier, Mumbai, was that the Company had not F
been made an accused in the case. As per Section 141 of
the NI Act, if the person committing an offence under Section
138 is a Company, every person who, at the time the offence
was committed, was incharge of, and was responsible to
the Company for the conduct of business of the Company G
as well the Company, shall be liable. In the complaint and
the affidavit, M/s. Salvi Infrastructure Pvt. Ltd. was not made
the accused. Further, it was argued that there was no
averment that the accused was the person incharge of, and
responsible for the affairs of the Company. In that case the H
1038            SUPREME COURT REPORTS               (2015] 6 S.C.R.


 A     accused was mentioned as the said person incharge. In the
       present case, the accused Vijay Salvi was made accused in
       his personal capacity.

        7. We have heard the learned counsel appearing for
 B the parties and have perused the order passed by the
   Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai.

            8. In our opinion, the issue involved in the present case
       is whether the respondent can be made liable in his personal
 c     capacity when the Company has not been made a party to
       the complaint.

           9. From a bare reading of Section 138 of the NI Act,
   the following essentials have to be met for attracting a liability
 D under the Section. The first and foremost being 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
 E discharge in whole or part, of any debt or other liability. We
   see that from the bare text of the Section it has been stated
   clearly that the person, who draws a cheque on an account
   maintained by him, for paying the payee, alone attracts
   liability.
 F
           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
 G 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 Limited and Ors. Vs.
   Water Base Limited,' where this Court has dealt with the
 H     1
           (2010) 12   sec 146
     MAINUDDIN ABDUL SATTAR SHAIKH v. VIJAY                      1039
       D. SALVI [PINAKI CHANDRA GHOSE, J.]

scope of Section 138 and held that it is very clear that in A
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 B
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, C
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 D
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. This Court in P.J. Agro Tech
Limited (supra) noted as under:                                E

  "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                F
  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)          G

Going by the strict interpretation of the provision the drawer
which in the present case is the respondent is liable under
Section 138 of the N.I. Act.
                                                                  H
1040             SUPREME COURT REPORTS                [2015) 6 S.C.R.


 A        12. The Respondent has adduced the argument that
   in the complaint the appellant has not taken the averment
   that the accused was the person incharge of and responsible
   for the affairs of the Company. However, as the respondent
   was the Managing Director of M/s. Salvi Infrastructure Pvt.
 B Ltd. and sole proprietor of Mis. Salvi Builders and
   Developers, there is no need of specific averment on the
   point. This Court has held in National Small Industries
   Corporation Ltd. Vs. Harmeet Singh Paintal and Anr.,2
   as follows:
 c
            Para 39 (v) "If the accused is a Managing Director or a
            Joint Managing Director then it is not necessary to make
            specific averment in the complaint and by virtue of their
            position they are liable to be proceeded with."
 D
                13.Thus, in the light of the position which the
   respondent in the present case held, we are of the view that
   the respondent be made liable under Section 138 of the NI
   Act, even though the Company had not been named in the
 E notice or the complaint. There was no necessity for the
   appellant to prove that the said respondent was incharge of
   the affairs of the company, by virtue of the position he held.
   Thus, we hold that the respondent Vijay D Salvi is liable for
   the offence under Section 138 of the NI Act.
 F
         14. The law laid down by this Court in R. Vijayan Vs.
   Baby and Anr., 3 was to the following effect:

            "As the provisions of Chapter XVII of the Act strcngly
 G          lean towards grant of reimbursement of the loss by
            way of compensation, the courts should, unless there
            are special circumstances, in all cases of conviction,
            uniformly exercise the power to levy fine up to twice
            the cheque amount (keeping in view the cheque amount
 H     2   (201 O> 3 sec 330
       ' (2012) 1 sec 2so
      MAINUDDIN ABDUL SATTAR SHAIKH v. VIJAY                         1041
        D. SALVI [PINAKI CHANDRA GHOSE, J.]

   and the simple interest thereon at 9% per annum as                 A
   the reasonable quantum of loss) and direct payment
   of such amount as compensation. Direction to pay
   compensation by way of restitution in regard to the loss
   on account of dishonor of the cheque should be
   practical and realistic, which would mean not only the             B
   payment of the cheque amount but interest thereon at
   a reasonable rate. Uniformity and consistency in
   deciding similar cases by different courts, not only
   increase the credibility of cheque as a negotiable
   instrument, but also the credibility of courts of justice."        c
We, therefore, award compensation to the extent of twice
the cheque amount and simple interest thereon at 9% per
annum to the complainant. Accordingly, the respondent Vijay
 D Salvi is sentenced to undergo simple imprisonment for a D
period of five months for the offence under Section 138 of
the NI Act. Considering the fact that the cheque amount is
Rs.74,200/-, we direct the respondentVijay D Salvi to pay a
compensation of Rs.1,48,400/- (Rupees one lakh forty-eight
thousand four hundred only) with simple interest thereon at E
9% per annum, to the complainant-appellant. In default of
payment of the said compensation, the respondent will have
to undergo simple imprisonment for a period of six months.

      15. Accordingly, this appeal is allowed and the                 F
impugned order passed by the High Court as also the order
passe_d by the Metropolitan Magistrate, 33'd Court, Ballard
Pier, Mumbai, are set aside. We direct that the respondent
shall be taken into custody forthwith to undergo the sentence.
                                                                      G
Devika Gujral                                      Appeal allowed.