SHRI GURUDATTA SUGARS MARKETING PVT. LTD.versusPRITHVIRAJ SAYAJIRAO DESHMUKH & ORS.

                [2024] 7 S.C.R. 1211 : 2024 INSC 551

             Shri Gurudatta Sugars Marketing Pvt. Ltd.
                                  v.
               Prithviraj Sayajirao Deshmukh & Ors.
                (Criminal Appeal Nos. 3070-3071 of 2024)
                                 24 July 2024
           [Vikram Nath* and Prashant Kumar Mishra, JJ.]

                           Issue for Consideration
       Whether the signatory of the cheque, authorized by the “Company”,
       is the “drawer” and whether such signatory could be directed to pay
       interim compensation in terms of section 143-A of the Negotiable
       Instruments Act, 1881 leaving aside the company. The High Court
       answered the question in the negative.

                                  Headnotes†
       Negotiable Instruments Act, 1881 – ss.138, 141, 143-A –
       Appellant company entered into several agreements with C
       Ltd. and made advance payments for supply of sugar – C
       failed to supply – In order to discharge the liability, two
       cheques were issued by respondent nos.1 to 3 (directors of C)
       in favour of the appellant and the same were dishonoured
       due to insufficiency of funds – Appellant issued notice –
       Again payments were not made – Appellant preferred a
       complaint before the Judicial Magistrate – In the meantime,
       C was admitted into CIRP – Appellant filed an application
       u/s. 143-A, NI Act against respondent Nos. 1 to 3 seeking
       interim compensation – Judicial Magistrate directed each of
       the respondents to pay 4% of the total cheque amount as
       interim compensation – The said order was challenged by the
       respondent nos.1 to 3 before the High Court – The High Court
       allowed the application preferred by the respondent Nos. 1
       to 3 herein and set aside the order of interim compensation
       passed by the Judicial Magistrate – Correctness:
       Held: The High Court’s interpretation of Section 7 of the NI Act
       accurately identified the “drawer” as the individual who issues the
       cheque – This interpretation is fundamental to understanding the
       obligations and liabilities u/s. 138 of the NI Act, which makes it


* Author
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    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 u/s. 143-A
    misinterprets the statutory language and intent – 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 NI Act 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 143-A, to hold directors
    or other individuals personally liable for interim compensation, is
    unfounded – The High Court rightly emphasized that liability u/s. 141
    arises from the conduct or omission of the individual involved, not
    merely their position within the company – The distinction between
    legal entities and individuals acting as authorized signatories is
    crucial – Authorized 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 authorized
    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 u/s. 143-A
    refers specifically to the issuer of the cheque, not the authorized
    signatories – The High Court’s decision to interpret ‘drawer’ strictly
    as the issuer of the cheque, excluding authorized signatories,
    is well-founded – This interpretation aligns with the legislative
    intent, established legal precedents, and principles of statutory
    interpretation – The primary liability for an offence u/s. 138 lies
    with the company, and the company’s management is vicariously
    liable only under specific conditions provided in Section 141 – The
    appellants’ submissions are thus rejected, and the High Court’s
    judgment is upheld – Thus, the question of law put before this
    Court is answered in negative. [Paras 28, 29, 30, 35]

                              Case Law Cited
    Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. [2012] 5
    SCR 503 : (2012) 5 SCC 661 – held inapplicable.
    Nazir Ahmad v. King Emperor, AIR 1936 Privy Council 253;
    Central Bank of India v. Ravindra [2001] Supp. 4 SCR 323 :
    (2002) 1 SCC 367; Noor Mohammed v. Khurram Pasha [2022] 6
    SCR 860 : (2022) 9 SCC 23; N. Harihara Krishnan v. J. Thomas
[2024] 7 S.C.R.                                                                1213

              Shri Gurudatta Sugars Marketing Pvt. Ltd. v.
                 Prithviraj Sayajirao Deshmukh & Ors.

     [2017] 9 SCR 324 : (2018) 13 SCC 663; K.K. Ahuja v. V.K. Vohra
     [2009] 9 SCR 1144 : (2009) 10 SCC 48 – referred to.

                                  List of Acts
     Negotiable Instruments Act, 1881; Code of Criminal Procedure,
     1973; Insolvency and Bankruptcy Code, 2016.

                              List of Keywords
     Section 138 of Negotiable Instruments Act, 1881; Section 141 of
     Negotiable Instruments Act, 1881; Section 143-A of Negotiable
     Instruments Act, 1881; Signatory of cheque; Dishonour of cheque
     due to insufficiency of funds; Interim compensation; Vicarious liability
     in criminal law; Distinction between legal entities and individuals
     acting as authorized signatories; Authorized signatories of company;
     Interpretation of ‘drawer’; Primary liability u/s.138 lies with company.

                             Case Arising From
     CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos. 3070-
     3071 of 2024
     From the Judgment and Order dated 08.03.2023 and 29.03.2023 of
     the High Court of Judicature at Bombay in CRLA No. 967 of 2022
                          Appearances for Parties
     D.P. Singh, Manu Mishra, Ms. Shreya Dutt, Iman Khera, Ms. Sonam
     Gupta, Advs. for the Appellant.
     Siddharth Dave, Sr. Adv., Ramchandra Madan, Ms. Tanisha Kaushal,
     Aaditya Aniruddha Pande, Siddharth Dharmadhikari, Bharat Bagla,
     Sourav Singh, Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey,
     Advs. for the Respondents.
                 Judgment / Order of the Supreme Court

                                  Judgment
     Vikram Nath, J.
1.   Leave granted.
2.   The present Appeals are filed challenging the judgments and orders
     passed by the Bombay High Court, dated 08.03.2023 and 29.03.2023
     in CRLA 967/2022, whereby the High Court allowed the Criminal
     Application filed by the present respondents thereby setting aside
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       the order of the Judicial Magistrate directing the interim payment
       under Section 143-A, Negotiable Instruments Act, 18811 to be paid
       by the respondents – directors of the company on whose account
       the dishonoured cheque was drawn.
3.     Appellant company entered into several Agreements and Sale
       Orders with one Cane Agro Energy (India) Ltd. (Cane hereinafter)
       between September 2016 and June 2017. Under these Agreements
       and Sale Orders, the appellant made advance payments amounting
       to Rs.63,46,00,000/- (Rupees sixty three crores forty six lakhs) for
       supply of sugar by Cane. It is alleged by the appellant that Cane
       failed to supply the ordered quantities of sugar and also failed to
       discharge its other obligations as agreed upon. Cane agreed to
       refund the advance amount due and payable to the Appellant. In
       part discharge of liability, a sum of Rs.1,00,00,000/- (Rupees one
       crore) was refunded by Cane on 30.01.2018.
4.     Subsequently, respondent Nos. 1 to 3 issued two cheques dated
       30.03.2020 in favour of the appellant, one for Rs.45,00,00,000/-
       (Rupees forty five crores) and one for Rs.6,64,41,300/- (Rupees
       six crores sixty four lakhs forty one thousand and three hundred),
       amounting to a total amount of Rs.51,64,41,300/- (Rupees fifty
       one crores sixty four lakhs forty one thousand and three hundred).
       These two cheques were signed by respondent No.1, who is the
       Chairman of Cane.
5.     The said cheques were presented to the Bank but were dishonoured
       due to insufficiency of funds, vide return memos dated 02.06.2020.
       Appellant issued notice date 18.06.2020 to respondent Nos. 1 to
       3 against the dishonour of cheques demanding payment of dues.
       A notice was duly served on 30.06.2020. When the payments due
       were not made, the appellant preferred a complaint before the
       Judicial Magistrate, First Class, Kolhapur, which was registered
       as Summary Criminal Case No.2967 of 2020. On 11.08.2020, the
       Judicial Magistrate, First Class, Kolhapur issued process against
       respondent Nos. 1 to 3. In the meantime, Cane was admitted into
       Corporate Insolvency Resolution Process by order of National
       Company Law Tribunal, Mumbai.



1    In short, “NI Act”
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              Shri Gurudatta Sugars Marketing Pvt. Ltd. v.
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6.    Respondent Nos. 1 to 3 entered appearance before the Judicial
      Magistrate and subsequently preferred an application under
      Section 258, Code of Criminal Procedure, 1860,2 seeking stoppage
      of proceedings in terms of the moratorium running against Cane.
      On 20.05.2021 an order imposing moratorium against Cane was
      passed under Section 14, Insolvency and Bankruptcy Code, 2016.3
      Respondent Nos. 1 to 3, along with Cane, preferred another
      application under Section 258, CrPC seeking stoppage of proceedings
      before the Judicial Magistrate.
7.    The Judicial Magistrate partly allowed the above application and
      held that the complaint shall not proceed against Cane in view of
      Section 14, IBC till the order of moratorium is operative; but the
      complaint was ordered to proceed ordinarily against respondent
      Nos.1 to 3 herein. The Judicial Magistrate observed that as per the
      scheme of Section 14, IBC the proceedings for offences punishable
      under Section 138, NI Act is withheld by order of moratorium only
      for corporate debtors and not against other natural persons arrayed
      as respondents in representative capacity for the accused company.
8.    Appellant filed an application under Section 143-A, NI Act against
      respondent Nos. 1 to 3 seeking interim compensation from the
      respondents during the pendency of the criminal proceedings before
      the Judicial Magistrate. Vide order dated 27.04.2022, the Judicial
      Magistrate directed each of the respondents to pay 4% of the total
      cheque amount as interim compensation to the appellant within 60
      days. The respondents were granted an extension till 26.07.2022 to
      pay the interim compensation upon an application made by them.
9.    Appellant preferred an application under Section 421, CrPC read
      with Section 143-A(5), NI Act seeking execution of order dated
      27.04.2022 and thus recovery of interim compensation as if it were
      a fine. The respondents filed their response to the application, the
      same is pending before the Judicial Magistrate.
10. Respondent Nos. 1 to 3 preferred Criminal Application No. 967 of 2022
    before the High Court challenging the order of interim compensation
    dated 27.04.2022 passed by the Judicial Magistrate. The High Court,



2    CrPC
3    IBC
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     vide interim order dated 23.09.2022, stayed the operation of the
     order impugned therein.
11. During the pendency of the above application, the High Court, in
    a batch of Writ Petitions and Criminal Application dealing with the
    same issue and the question of law that whether the signatory of the
    cheque, authorized by the “Company”, is the “drawer” and whether
    such signatory could be directed to pay interim compensation in
    terms of section 143A, NI Act leaving aside the company, vide its
    final judgment and order dated 08.03.2023 held that the signatory of
    the cheque is not a ‘drawer’ in terms of Section 143-A, NI Act and
    cannot be directed to pay interim compensation under Section 143A.
12. In light of the above judgment and order of the co-ordinate bench
    in Criminal Application No. 886 of 2022, the High Court vide order
    dated 29.03.2023, allowed the application preferred by the respondent
    Nos. 1 to 3 herein and set aside the order of interim compensation
    passed by the Judicial Magistrate on 27.04.2022.
13. The appellant has challenged the judgment and order of the High
    Court dated 29.03.2023 as well as the relied upon judgment and
    order dated 08.03.2023. The present Appeal is filed assailing the
    correctness of these orders vis-à-vis the larger question of law, as
    framed by the High Court:
          “Whether the signatory of the cheque, authorized 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?”
14. The High Court, in its judgment dated 08.03.2023 in Criminal
    Application No.886 of 2022, answered the above question in the
    negative and upheld the same in its order dated 29.03.2023 in the
    case of the appellant before us. To answer the question of law and
    determine the correctness of its view it is imperative to look into the
    considerations before the High Court and its analysis.
     OBSERVATIONS MADE BY THE HIGH COURT
15. The High Court, while answering the above question in the negative,
    made several observations based on the interpretation of the relevant
    statutes under the NI Act as well as on the judgments relied upon
    by the counsels in their arguments before the High Court.
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              Shri Gurudatta Sugars Marketing Pvt. Ltd. v.
                 Prithviraj Sayajirao Deshmukh & Ors.

     15.1. Obligation of the Drawer of the Cheque
     The High Court observed that under Section 7 of the NI Act, the
     maker of a bill of exchange or cheque is termed the “drawer,” and
     the person directed to pay is called the “drawee.” The drawer is the
     individual who issues the cheque. Sections 138, 143A, and 148 of
     the NI Act fall under Chapter XVII, which pertains to penalties for
     the dishonour of certain cheques due to insufficient funds. A plain
     reading of Section 138 highlights that the drawer must have an
     account with sufficient funds to cover the cheque. The primary liability
     under Section 138 is on the drawer, who must ensure that there are
     adequate funds in the account at the time the cheque is presented.
     Additionally, the offence under Section 138 is not complete until a
     demand notice is served on the drawer, emphasizing the drawer’s
     responsibility. The drawer is considered the principal offender if the
     cheque is returned unpaid, subject to the fulfilment of the necessary
     conditions before and after the cheque is dishonoured.
     15.2. General Rule of Criminal Liability
     The High Court noted the general rule against vicarious liability in
     criminal cases, where individuals are typically not held criminally liable
     for acts committed by others. However, this principle is subject to
     exceptions created by specific statutory provisions extending liability
     to additional parties. Section 141, NI Act is one such provision that
     extends criminal liability for dishonour of a cheque committed by a
     company to its officers. The Court emphasized that liability under
     Section 141 arises from the conduct, act, or omission of the person
     involved, not merely their position in the company. The provision
     establishes vicarious liability for officers of the company, such as
     signatories of the cheque, managing directors, or those in charge
     of its affairs, by legal fiction. Thus, while the drawer of the cheque
     remains primarily liable, Section 141 broadens liability to include
     others associated with the company’s management, ensuring
     accountability beyond the drawer alone.
     15.3. Authorised signatory cannot be equated to the company
     Further, the High Court delved into the distinction between legal
     entities and individuals acting as authorized signatories within the
     framework of the NI Act. The Court observed that while individuals
     may sign cheques as authorized representatives of companies, they
     do not assume legal identity of the company itself. It clarified that a
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    legal entity, such as a corporation or company, is an artificial creation
    of the law endowed with rights, duties, and the capacity to sue and
    be sued independently of the individuals who manage or represent
    it. The Court emphasized that an authorized signatory, despite acting
    on behalf of a company, remains distinct as an individual under
    the law. This distinction is crucial as it clarifies that the actions and
    obligations undertaken by an authorized signatory are attributable
    to the company they represent, but do not merge their legal status
    with that of the company itself. Thus, while an authorized signatory
    may bind the company through their actions, they do not transform
    into a legal entity in the eyes of law.
    15.4. Interpretation of the Section 143-A and the legislative intent
    Moreover, the High Court highlighted the principle of statutory
    interpretation, particularly in relation to Sections 143A and 148 of the
    NI Act, which are under consideration. It discussed the dichotomy
    between interpreting statutes based on their plain language versus
    applying purposive construction. According to the Court, when the
    statutory language is clear and unambiguous, it speaks for itself, and
    there is no need for further interpretation. The natural and ordinary
    meaning of words should prevail unless the legal context necessitates
    a different interpretation to align with the legislative intent or to avoid
    absurd outcomes.
    15.4.1. The Court further elucidated that legislative intent should guide
    the interpretation of statutes, with all parts of a statute considered
    together to discern the overall purpose. It stressed that words and
    phrases within a statute must be construed in context, taking into
    account the legislative objectives and the broader framework of the
    law. This holistic approach ensures that statutory interpretation remains
    faithful to the lawmakers’ intentions and avoids inconsistencies or
    injustices that may arise from a literal reading of isolated provisions.
    15.4.2. The High Court emphasized that Section 143A should be
    interpreted plainly, without resorting to other rules of interpretation.
    It asserted that the term ‘drawer’ in Section 143A has a clear and
    unambiguous meaning, referring specifically to the person who issues
    the cheque. Referring to the Statement of Objects and Purposes
    of the Negotiable Instruments (Amendment) Act, 2018, the High
    Court noted that the purpose of Section 143A is to provide interim
    relief to payees of dishonoured cheques by imposing liability on the
    drawer. This, according to the High Court, aligns with the legislative
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                 Shri Gurudatta Sugars Marketing Pvt. Ltd. v.
                    Prithviraj Sayajirao Deshmukh & Ors.

     intent to curb frivolous litigations and expedite resolution of cheque
     dishonour cases.
     15.4.3. The High Court rejected the inclusion of authorized signatories
     within the definition of ‘drawer’. It pointed out that the legislature’s
     choice of words in Section 143A specifically targets the drawer of
     the cheque, whether an individual or a company, and does not
     extend liability to authorized signatories. Drawing from established
     legal precedents, the High Court underscored that the term ‘drawer’
     carries a specific legal meaning within the NI Act. It highlighted the
     cases where Courts consistently interpreted ‘drawer’ to refer strictly
     to the issuer of the cheque, reinforcing its decision to uphold this
     interpretation. The High Court relied on the following judgments to
     emphasise on the literal interpretation warranted in the present case:
     i.      Nazir Ahmad v. King Emperor4
     ii.     Central Bank of India v. Ravindra5
     iii.    Noor Mohammed v. Khurram Pasha6
     15.4.4. Contextually, the High Court stressed upon the finding that
     ‘drawer’ within the framework of the NI Act consistently refers to
     the party issuing the cheque. It dismissed the arguments seeking
     to expand this definition to include authorized signatories, citing the
     need for consistency in statutory interpretation.
     15.4.5. The High Court also invoked principles of company law to
     support its interpretation. It affirms the separate legal identity of a
     company and its authorized signatories under the Companies Act,
     which prevents extending liability to signatories under Section 143A.
16. In conclusion, the High Court’s analysis underscores the critical
    distinction between individuals acting as authorized signatories and
    the legal entities they represent under the NI Act.
17. Before we delve into the arguments presented by the counsels for the
    parties before us, it is imperative that we also look at the observations
    made by the High Court with respect to the two judgments heavily
    relied upon by the parties before it as well as before us.



4   AIR 1936 Privy Council 253
5   [2001] Supp. 4 SCR 323 : (2002) 1 SCC 367
6   [2022] 6 SCR 860 : (2022) 9 SCC 23
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18. The High Court while addressing the reliance placed upon Aneeta
    Hada v. Godfather Travels and Tours Pvt. Ltd.7 and N. Harihara
    Krishnan v. J. Thomas,8 observed that while Aneeta Hada (supra)
    underscored the necessity of involving the company as an accused
    to maintain a prosecution under Section 141 NI Act, N. Harihara
    Krishnan (supra) clarified that an authorized signatory is not
    considered the “drawer” under Section 138 of the NI Act. These
    judgments guided the High Court in interpreting provisions of the NI
    Act regarding vicarious liability and the definition of the term “drawer”
    within the statutory framework.
     SUBMISSIONS OF THE APPELLANT
19. The learned counsel for the appellant submitted that if a director,
    managing director, chairman, promotor of a company can be arrayed
    as accused under Section 141, NI Act despite not being a signatory
    to the cheque, then it is only fair that one or more of such individuals
    be held liable to pay interim compensation.
20. Relying upon the object of Section 143-A, NI Act, it was submitted
    that for addressing the issue of undue delay and for providing relief
    to the payees of dishonoured cheque, it is only just and fair that this
    be done through payment of interim compensation by the director
    or any such person in charge of the company. This would be in
    alignment with the purposes and objectives of the provision.
21. Further, it was argued that in the present case the company is
    admitted to CIRP, thus being its alter ego, it is only the directors
    who can be directed to pay interim compensation in furtherance of
    the object of the provision in light of the CIRP proceedings against
    the company, the payees of the dishonoured cheque cannot be
    left with no interim relief, thereby defeating the purpose of Section
    143-A and causing injustice to the payees already suffering due to
    the pending litigation.
22. Learned counsel for the appellant further submitted that any restrictive
    interpretation of the provision would defeat the purpose of providing
    interim compensation to the payee of a dishonoured cheque. To
    further strengthen their argument, they relied upon this Court’s


7   [2012] 5 SCR 503 : (2012) 5 SCC 661
8   [2017] 9 SCR 324 : (2018) 13 SCC 663
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                 Shri Gurudatta Sugars Marketing Pvt. Ltd. v.
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     judgment in Aneeta Hada (Supra)9 and submitted that in para 20 of
     the judgment, this Court has observed that an authorised signatory
     of a company becomes a drawer as he has been authorised to do
     so in respect of the account maintained by the company.
23. Lastly, it was submitted that since the company is in moratorium and
    that it is admitted by the respondents that their case is not that they
    are unable to pay compensation, the grant of a meagre four percent
    of the cheque amount by each of them is just and fair. That even such
    an amount in the form of interim payment would serve the purposes
    of the provision and would also help the business of the appellant.
     SUBMISSIONS OF THE RESPONDENTS
24. The learned senior counsel for the respondents, Mr. Siddharth Dave,
    vehemently argued that it is a well settled position of law that an
    authorised signatory of a company is not a drawer of the cheque. To
    substantiate this argument, he relied upon this Court’s judgment in N.
    Harihara Krishnan (Supra) wherein it was held that, “Every person
    signing the cheque on behalf of a company on whose account the
    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.”
25. Further rejecting the submissions made by the appellant with regard
    to the observations made in the case of Aneeta Hada (Supra), it was
    submitted by Mr. Dave that in this judgment this Court was dealing
    with the question of extending criminal liability on the officers of
    the company and it held that the criminal liability for the dishonour
    of cheque primarily falls on the drawer company and is thereby
    extended to those in charge of it only when the conditions provided
    under Section 141 are satisfied. Therefore, the Court did not hold
    that the authorised signatory becomes a drawer but only made a
    reference and an observation to this effect to elucidate that the
    criminal liability extends from the company to its directors and other
    officers by virtue of the cheque drawn on the company’s account by
    such authorised signatory.
26. It was further submitted that with respect to the interpretation of the
    provision, the appellant’s argument that the meaning of ‘drawer’ under


9   [2012] 5 SCR 503 : (2012) 5 SCC 661
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      Section 143-A must be read liberally and purposively is contrary to
      the position of law on interpretation of statutes. Further submission is
      that such an interpretation of penal statues is contrary to the settled
      principles of criminal law, as penal provisions are to be read strictly
      in order to determine the liability of a party, more so where vicarious
      liability is to be determined. To substantiate this, he relied upon the
      judgment of this Court in the case of K.K. Ahuja v. V.K. Vohra.10
27. In conclusion, it was submitted that the primary liability for an offence
    under Section 138 is that of the company itself and the company’s
    management is only subsequently and vicariously liable. Thus, it
    is only the company that is to be considered as the drawer of the
    cheque. Consequently, a strict interpretation of Section 143-A would
    mean that it is only the drawer-company’s liability to pay the interim
    compensation as the provision does not provide for an interim
    compensation to be paid by the employees or the management or
    the signatory of the company.
      ANALYSIS
28. The High Court’s interpretation of Section 7 of the NI Act 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 NI Act, 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 NI Act 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 emphasized that


10   [2009] 9 SCR 1144 : (2009) 10 SCC 48
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      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. Authorized 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
    authorized 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 authorized 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 emphasized 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 authorized signatories under Section
    143A contradicts this principle and would lead to an unjust extension
    of liability not supported by the statutory text.
32. The High Court’s reliance on established legal precedents further
    reinforces its interpretation. Judicial precedents relied upon in the
    impugned judgment underscore the need for a literal interpretation of
    the statutory provisions. These precedents support the High Court’s
    decision to limit the definition of ‘drawer’ to the issuer of the cheque,
    excluding authorized signatories.
33. The appellants’ reliance on the judgment in Aneeta Hada (Supra),11
    is misplaced and out of context. While this case underscored the
    necessity of involving the company as an accused to maintain a
    prosecution under Section 141, it does not support the extension of
    liability to authorized signatories under Section 143A. The judgment
    nowhere lays down that directors or authorised signatories would
    come under the ambit of ‘drawer’ for the purposes of Section 143A.
    The appellants’ interpretation conflates the roles of authorized
    signatories and drawers, which are distinct under the NI Act.
    Appellants have relied upon a single paragraph, which does not


11   [2012] 5 SCR 503 : (2012) 5 SCC 661
1224                                                        [2024] 7 S.C.R.

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      form part of the ratio therein, to substantiate their argument. But in
      this relied upon paragraph, the Court only made an observation that
      the authorised signatory becomes a drawer for the company, for the
      limited purpose of extending the criminal liability as per Section 141.
34. The respondents correctly argued that an authorized signatory is not
    a drawer of the cheque, as established in N. Harihara Krishnan
    (Supra).12 This judgment clarified that a signatory is merely authorized
    to sign on behalf of the company and does not become the drawer.
    The respondents’ interpretation aligns with the principle that penal
    statutes should be interpreted strictly, particularly in determining
    vicarious liability. The judgment in K.K. Ahuja (Supra),13 further
    supports this approach, emphasizing that penal provisions must be
    read strictly to determine liability.
35. In conclusion, the High Court’s decision to interpret ‘drawer’ strictly
    as the issuer of the cheque, excluding authorized signatories, is
    well-founded. This interpretation aligns with the legislative intent,
    established legal precedents, and principles of statutory interpretation.
    The primary liability for an offence under Section 138 lies with the
    company, and the company’s management is vicariously liable only
    under specific conditions provided in Section 141. The appellants’
    submissions are thus rejected, and the High Court’s judgment is
    upheld. This decision maintains the clarity and consistency of the
    law regarding cheque dishonour cases, ensuring that liability is
    appropriately assigned to the responsible parties under the NI Act.
    Therefore, the question of law put before this Court is answered in
    the negative.
36. The appeals are accordingly dismissed. Pending application(s), if
    any, shall stand disposed of.

      Result of the case: Appeals dismissed.



      †
          Headnotes prepared by: Ankit Gyan




12   [2017] 9 SCR 324 : (2018) 13 SCC 663
13   [2009] 9 SCR 1144 : (2009) 10 SCC 48