The Supreme Court (SC) in Bijoy Kumar Moni v Paresh Manna & Anr [2024 INSC 1024], reiterated that the authorised signatory of a company cannot be held liable under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque drawn on the company’s account, unless the company is arraigned as the principal accused.
Under Section 138 of the NI Act, only the drawer of the cheque can be made liable. It relied on various precedents which clarified that a cheque must be drawn on an account maintained by the accused to attract liability under Section 138.
The expression “on an account maintained by him with a banker” in Section 138 of the NI Act establishes a specific relationship between the account holder and the banker, and delegating authority to manage or transact from an account does not alter the fact that the account is maintained by the account holder,
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 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 138 of the NI Act.
The 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.
