Bijoy Kumar Moni v. Paresh Manna and Anr., the Supreme Court of India addressed the issue of liability under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), concerning dishonoured cheques.
Case Facts
Parties Involved
- Complainant/Appellant: Bijoy Kumar Moni, a construction entrepreneur.
- Accused/Respondent: Paresh Manna, Director of Shilabati Hospital Pvt. Ltd.
Background
- In 2006, Moni alleged that he lent ₹8,45,000 to Manna, comprising ₹7,00,000 via bearer cheque and ₹1,45,000 in cash.
- Manna issued a cheque for ₹8,45,000 to repay this amount, which was dishonoured due to insufficient funds.
- Moni initiated legal proceedings under Section 138 of the NI Act against Manna.
- The Trial Court and Sessions Court convicted Manna, sentencing him to one year of imprisonment.
- On appeal, the Calcutta High Court acquitted Manna, noting that the cheque was issued on behalf of the company, which was not made a party to the case.
Final Judgment
The Supreme Court upheld the High Court’s acquittal, emphasizing that:
Liability Under Section 138
- The term “drawer” refers to the person who has an account with the bank and on whose behalf the cheque is issued.
- In cases where a company issues a cheque, the company is the principal offender.
- An authorized signatory of the company cannot be held liable under Section 138 unless the company is arraigned as an accused.
- Vicarious liability under Section 141 of the NI Act arises only when the company is prosecuted alongside its officers.
Conclusion
- Since Shilabati Hospital Pvt. Ltd. (the company) was not made an accused in the proceedings, Manna, as its director and authorized signatory, could not be held individually liable under Section 138.
This judgment underscores the necessity of prosecuting the company as the principal offender in cheque dishonour cases involving corporate entities, ensuring that authorized signatories are not unjustly held liable without the company’s inclusion in the proceedings.