P.J. AGRO TECH LIMITED & ORS. versus WATER BASE LIMITED

Citation: [2010] 9 S.C.R. 119 · Decided: 28-07-2010 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2010] 9 S.C.R. 119 
P.J. AGRO TECH LIMITED & ORS. 
V. 
WATER BASE LIMITED 
(Criminal Appeal No. 1357 of 2010) 
JULY 28, 2010 
[ALTAMAS KABIR AND DR. MUKUNDAKAM SHARMA, 
JJ.] 
NEGOTIABLE INSTRUMENTS ACT, 1881: 
s. 138-Dishonour of cheque-Liability for default-Held: 
A 
B 
c 
In order to attract the provisions of s. 138, the cheque must 
have been drawn by a person on the account maintained by 
him with the banker-In the instant case, the cheque in 
question was neither drawn on the account maintained by the 
D 
company against which the complaint was made, nor was it 
signed by any of its directors and, therefore, the company and 
its directors cannot be made liable for the default committed 
by another person~lnterpretation of statutes. 
INTERPRETATION OF STATUTES; 
Strict construction-Held: Provisions in respect of 
criminal and quasi criminal action are to be strictly construed, 
as such matters are in personam and cannot be used to foist 
an offence on some other person, who under the statute was 
not liable therefor-Negotiable Instruments Act, 1881-s. 
136. 
Appellant no.1 company, its Managing Director and 
E 
F 
the Chairperson, as also the proforma respondents were 
G 
served with summons in a case filed by respondent No.1 
against them purported to be u/s 138 of the Negotiable 
Instruments Act, 1881 for dishonour of a cheque drawn 
by respondent No.11. The appellant company along with 
119 
H 
120 
SUPREME COURT REPORTS 
[2010] 9 S.C.R. 
A others challenged the order issuing the summonses, 
before the High Court contending that the cheque was 
neither drawn on its account nor was it signed by any of 
its directors but was drawn by respondent no.11 on his 
own savings bank accounts; and the complaint was 
B abuse of the process of the court filed with the sole 
motive of extracting money from the appellants. The High 
court dismissed the petition. Aggrieved, the Company 
and its directors filed the appeal. 
c 
Allowing the appeal, the Court 
HELD: 1.1. From a reading of s. 138, of the Negotiable 
Instruments Act, 1881, it is very clear that in order to 
attract the provisions thereof a cheque which is 
dishonoured will have to be drawn by a person on an 
D 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 is only such a cheque which, if 
dishonoured, would attract the provisions of s. 138 of the 
E Act against the drawer of the cheque. [Para 8] [125-H; 
126-A-B] 
1.2. In the instant case, the cheque in question may 
have been issued by the respondent No.11 for 
F discharging the dues of the appellant Company and its 
directors to the respondent-company which may have a 
good case against the appellant-company for recovery of 
its dues before other fora, but it would not be sufficient 
to attract the provisions of s.138 of the 1881 Act. The 
appellant-company and its directors cannot be made 
G liable u/s 138 of the 1881 Act for a default committed by 
the respondent No.11. [Para 9) [126-C-E] 
2.An action in respect of a criminal or a quasi-
criminal provision has to be strictly construed in keeping 
H with the provisions alleged to have been violated. The 
P.J. AGRO TECH LIMITED & ORS. v. WATER BASE 121 
LIMITED 
proceedings in such matters are in personam and cannot 
A 
be used to foist an offence on some other person, who 
under the statute was not liable for the commission of 
such offence. [Para 9] [126-D-E] 
CRIMINAL APP ELLA TE JURISDICTION : Criminal Appeal 
No. 1357 of 2010. 
From the Judgment & Order dated 14.09.2006 of the High 
Court of Judicature at Madras in Crl. O.P. No. 22207 of 2003. 
B 
Siddhartha Dave, Senthil Jagadeesan for the Appellants. 
C 
Sudarsh Menon for the Respondent. 
The Judgment of the Court was delivered by 
ALTAMAS KABIR, J. 1. Leave granted. 
2. The Appellant No.1 herein is an agro-based company 
having varied interests in providing feed supplements, vaccines 
etc. The Appellant N_os.2 and 3 are the Managing Director and 
Chairperson of the Appellant No.1 Company, which is based 
in Hyderabad in the State of Andhra Pradesh. In order to utilize 
the dealer network of the Appellant No.1 Company, the 
Respondent No.1 Company approached the Appellants for 
distribution of prawn feed manufactured by it. Inasmuch as, the 
said venture did not turn out to be very successful, the Appellant 
No.1 Company took a decision to discontinue its d

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