Bijoy Kumar Moni v. Paresh Manna & Anr.

(Criminal Appeal No. 5556 of 2024)

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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

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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

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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 issue