HIMANSHU versus B. SHIVAMURTHY & ANR.

Citation: [2019] 1 S.C.R. 991 · Decided: 17-01-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

Cited by 4 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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HIMANSHU
v.
B. SHIVAMURTHY & ANR.
(Criminal Appeal No. 1465 of 2009)
JANUARY 17, 2019
[DR. DHANANJAYA Y CHANDRACHUD
AND HEMANT GUPTA, JJ.]
Negotiable Instruments Act, 1881 – s.141 and Proviso to s.138
– Maintainability of Complaint – When cheque was drawn by a
person as a director of a Company – Appellant borrowed a sum of
money from respondent and issued a cheque – When cheque was
presented in the bank for encashment, it was returned with the
endorsement that funds were insufficient – Respondent issued notice
to the appellant – Upon the failure of the appellant to pay the amount
due under the cheque, a complaint was instituted – Appellant filed
petition u/s. 482 of the Cr.P.C. to quash the complaint – Appellant
contended that cheque was issued by one of the directors of the
company and that was not a cheque issued by any person in his
individual capacity – Submission of appellant was rejected by the
High Court and it held that company could be arraigned as an
accused, and the petition was dismissed – On appeal, held: In the
instant case, the record before the Court indicated that the cheque
was drawn by the appellant for ‘L’ Company, as its Director – Notice
of demand was served only on the appellant – Complaint was lodged
only against the appellant without arraigning the company as an
accused – In the absence of the company being arraigned as an
accused, a complaint against the appellant was therefore not
maintainable – Appellant had signed the cheque as a Director of
the company and for and on its behalf –  Moreover, in the absence
of a notice of demand being served on the company and without
compliance with the proviso to s.138, the High Court was in error
in holding that the company could now be arraigned as an accused
– High Court erred in rejecting the petition u/s. 482 of the Cr.P.C –
Code of Criminal Procedure, 1973 – s.482.
Complainant-respondent instituted a complaint u/s.138 of
the Negotiable Instruments Act, 1881 against the appellant.
According to the complainant, the appellant had borrowed a sum
[2019] 1 S.C.R. 991
991
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SUPREME COURT REPORTS
[2019] 1 S.C.R.
of Rs. 4,15,000/- “for his business development” and on the same
day, the appellant issued a cheque for an equivalent amount.  When
the cheque was presented for encashment to the Bank, it was
returned with an endorsement that funds were insufficient. The
complainant issued a notice to the appellant, upon the failure of
the appellant to pay the amount due under the cheque, a complaint
was instituted. Appellant instituted a petition u/s.482 of Cr.P.C.
before the High Court, which was dismissed. Hence, the present
criminal appeal.
Disposing of the appeal, the Court
HELD: 1. The judgment of the High Court has been
questioned on two grounds.  The appellant submits that firstly,
the appellant could not be prosecuted without the company being
named as an accused. The cheque was issued by the company
and was signed by the appellant as its Director. Secondly, it was
urged that the observation of the High Court that the company
can now be proceeded against in the complaint is misconceived.
Appellant also submitted that the offence under Section 138 is
complete only upon the issuance of a notice of demand and the
failure of payment within the prescribed period. In absence of
compliance with the requirements of Section 138, it is asserted,
the direction of the High Court that the company could be
impleaded/arraigned at this stage is erroneous. [Para 7][996-C-
D]
2. The first submission on behalf of the appellant is no longer
res integra.  A decision of a three Judge Bench of this Court in
Aneeta Hada v. Godfather Travels and Tours Private Limited
governs the area of dispute.   The issue which fell for consideration
was whether an authorized signatory of a company would be liable
for prosecution under Section 138 of the Negotiable Instruments
Act, 1881 without the company being arraigned as an accused.
The three Judge Bench held that applying the doctrine of strict
construction, the considered opinion was 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
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the petitio

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