CRR-2276-2023 and connected cases -1-

IN THE HIGH COURT OF PUNJAB & HARYANA

AT CHANDIGARH

Date of decision: 24

th

 September, 2025

1. CRR-2276-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

...Respondent

2. CRR-1686-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

...Respondent

3. CRR-2278-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

...Respondent

4. CRR-1688-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

...Respondent

5. CRR-2279-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

...Respondent

6. CRR-1683-2023

Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

...Respondent

CRR-2276-2023 and connected cases -2-

7. CRR-2280-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

...Respondent

8. CRR-1685-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

...Respondent

9. CRR-2281-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

     ...Respondent

10. CRR-1675-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

...Respondent

11. CRR-2283-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

         ...Respondent

12. CRR-1687-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

       ...Respondent

CRR-2276-2023 and connected cases -3-

13. CRR-2285-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

         ...Respondent

14. CRR-1690-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

       ...Respondent

15. CRR-2287-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

         ...Respondent

16. CRR-1677-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

       ...Respondent

17. CRR-2316-2023

V.R. Brothers 

...Petitioner

Versus

Navneet Aggarwal

         ...Respondent

18. CRR-1689-2023

 Navneet Aggarwal

...Petitioner

Versus

V.R. Brothers

       ...Respondent

CRR-2276-2023 and connected cases -4-

CORAM:  HON'BLE MRS. JUSTICE MANISHA BATRA

Present: Mr. Sanjay Kaushal, Senior Advocate with 

Mr. A.P. Setia, Advocate and

Mr. Ankit Rana, Advocate for the petitioner.

Respondent in person with 

Mr. Yogesh Goel, Ms. Ashima Teria and

Ms. Ankita Jamwal, Advocates. 

***

MANISHA BATRA, J (ORAL):-

The above mentioned revision petition Nos. 2276, 2278, 2279,

2280, 2281, 2283, 2285, 2287 and 2316 of 2023,  have been filed by the

complainant-V.R. Brothers whereas the revision petition Nos. 1675, 1677,

1683, 1685, 1686, 1687, 1688, 1689 and 1690 of 2023 have been filed by

the accused Navneet Aggarwal (hereinafter to be mentioned as ‘accused’)

against the judgments of conviction and orders on quantum of sentence

dated 15.10.2019 passed by the learned Judicial Magistrate First Class,

Ludhiana in nine criminal complaints bearing Nos. 8706, 8707, 8714, 8715,

8717, 8718, 8720, 8721 and 8722 of 2017, titled as  ‘V.R. Brothers vs.

Alpine Garments and others’, whereby the accused had been held guilty

and convicted for commission of offence punishable under Section 138 of

the Negotiable Instruments Act, 1881 (For short, ‘NI Act’) and judgments

dated 15.07.2023 passed by the learned Appellate Court in criminal appeals

bearing CIS Nos. CRA- 2847 of 2019, 2848 of 2019, 2850 of 2019, 2851 of

2019, 2852 of 2019, 2855 of 2019, 2859 of 2019 and 2860 of 2019 filed by

accused whereas, CIS Nos. CRA-9 of 2023, 10 of 2023, 12 of 2023, 13 of

2023, 15 of 2023, 18 of 2023, 19 of 2023 and 20 of 2023 filed by

complainant, whereby the judgments of the trial Court were affirmed with

regard to the conviction of the accused but compensation amount was

CRR-2276-2023 and connected cases -5-

enhanced. 

2. Since parties in all these revision petitions are common and

these revision petitions have been filed against the same judgments and

relate to cheques which were issued as part of the same transaction, and as

the facts as well as questions of law involved are also the same, hence, they

have been taken up and heard together. They are being disposed of by this

common judgment.

3. For the sake of continuity and coherence, hereinafter the parties

shall be referred to as per their original nomenclature as given at the time of

trial. 

4. The aforementioned nine complaints were filed by the

complainant, M/s V.R. Brothers, which is a partnership firm engaged in the

business of ready-made garments through its authorized signatory and power

of attorney holder Vishal Bhalla on the allegations that Alpine Garments

Pvt. Ltd. (hereinafter to be mentioned as ‘the company’), the accused

Navneet Aggarwal (hereinafter to be mentioned as ‘accused’), and two

directors of the company, namely Pradeep Kumar and Swatantra Ved, had

approached the complainant-firm and expressed willingness for getting job

work done on the fabric supplied by them, from the complainant firm. An

oral deal was struck between the parties. The company had started placing

orders for making ready-made garments from the fabric supplied by it to the

complainant. The complainant performed its job to the satisfaction of the

company, and the accused and the company had agreed to make payment in

an apple pie order. The job work from the fabrics supplied by the company

was done by the complainant, and an amount of Rs. 22,50,000/- became

payable by the company. The accused acknowledged legal liability of the

CRR-2276-2023 and connected cases -6-

company, directors and himself towards the complainant, and to discharge

that liability, issued seven cheques for sums of Rs. 2,50,000/- each on

01.06.2017, whereas two cheques for sum of Rs. 2,00,000/- each were issued

on 18.03.2017 and 01.06.2017 respectively, for discharging liability of

payment of the aforementioned amount of Rs. 22,50,000/-. All these cheques

were presented for realisation by the complainant before its banker, but were

dishonoured with the remarks “funds insufficient”. The complainant served

statutory notices of demand within the stipulated period to the company, its

directors and to the accused, but to no avail, thereby compelling it to file

complaints under Section 138 of the NI Act.

5. After presentation of the complaint and producing preliminary

evidence by the complainant, the learned trial Magistrate passed orders in

the complaints observing that a prima facie case for commission of offence

punishable under Section 138 of the NI Act was made out as against accused

only, who was the signatory of the cheques in question and also observed

that no prima facie case as against the company or its directors had been

made out. The process was accordingly ordered to be issued against the

accused in each complaint. On appearance of the accused, notice of

accusation was served upon him in each case. He pleaded not guilty.

6. To substantiate its case, the complainant-firm examined its

power of attorney holder/authorized signatory Vishal Bhalla as CW-1, who

tendered affidavit by way of examination in-chief and also relied upon

certain documentary evidence.

7. After closing of evidence of the complainant, statements of the

accused were recorded under Section 313 of Cr.P.C. in each complaint. The

accused pleaded false implication and claimed himself to be innocent. In

CRR-2276-2023 and connected cases -7-

defence evidence, he examined himself as DW-1 and produced DW-2 ASI

Sethi Kumar. Documentary evidence was also produced.

8. On appraising the evidence produced on record and after giving

due deliberations to the contentions as raised by both sides, the learned

Magistrate vide judgment and order on quantum of sentences dated

14.10.2019 passed in each complaint held the accused guilty for commission

of offence punishable under Section 138 of the NI Act and sentenced him to

undergo rigorous imprisonment for a period of two years. The accused was

also directed to pay compensation to the complainant in each case. Feeling

aggrieved from the orders of his conviction and sentence, the accused

preferred aforementioned nine criminal appeals, whereas the complainant

also filed nine criminal appeals as detailed out above while feeling

dissatisfied from the amount of compensation as awarded to him, thereby

seeking enhancement in the same.

9. Vide common judgments dated 15.07.2023, the crimi nal

appeals so filed by the accused were dismissed, whereas the appeals filed by

the complainant were partly allowed to the extent of enhancing the amount

of compensation to 1.75 times of the cheque amount in each case. Still

dissatisfied, the accused has preferred Revision Petition Nos. 1675, 1677,

1683, 1685, 1686, 1687, 1688, 1689 and 1690 of 2023, whereas, the

complainant has also filed revision petition Nos. 2276, 2278, 2279, 2280,

2281, 2283, 2285, 2287, and 2316 of 2023.

10. Learned counsel for the accused has argued that the impugned

orders passed by the learned trial Magistrate as well as the learned Appellate

Court are not sustainable in the eyes of law as while passing the same both

these Courts did not appreciate the evidence produced on record in a proper

CRR-2276-2023 and connected cases -8-

manner. They ignored the fact that the cheques in question were issued only

by way of security cheques; that the fabric having worth of ₹50,00,000/- was

lying with the complainant whereas, job work to the extent of amount of

₹22,50,000/- only had been done by the complainant. Further, the

complainant not only withheld the return of the raw material supplied to it,

but also misused the cheques in question, which had been handed over only

as security.

11. Learned counsel for the accused has further argued that he was

neither the director of the company nor he was responsible for day to day

conduct of business of the company, nor he was drawer of the cheques in

question and as such, he was not covered under the provisions of Section

141 of the NI Act. He was simply an authorized signatory to the cheques in

question being an employee of the company. No legally enforceable liability

could be enforced against him being a signatory simplicitor and he could

also not be fastened with liability to pay compensation to the tune of Rs.

1.75 times of the cheque in question. No order for sentencing him to undergo

for imprisonment could be passed. It is submitted that the learned trial Court

as well as Appellate Court did not take these points into consideration at all

and passed non-speaking and perverse orders which are not sustainable in

the eyes of law. With these broad submissions, it is urged that the impugned

judgments as passed by both the Courts are liable to be set aside, the

revision petitions filed by him deserve to be accepted; he deserves to be

acquitted of the accusations and to be exonerated from the liability of

making payment of any compensation/enhanced compensation.

12. While refuting the contentions as raised by learned counsel for

the accused, learned counsel for the complainant has argued that there is no

CRR-2276-2023 and connected cases -9-

illegality or infirmity in the orders passed by the learned trial Court as well

as learned Appellate Court and the same are well reasoned. The accused did

not deny his signatures on the cheques in question by admitting that he had

signed the same as signatory of the company. There was a presumption

under Section 139 of NI Act that the cheques in question were issued by him

in discharge of legally enforceable liability and he has failed to rebut this

presumption by producing any cogent and convincing evidence to the

contrary. The complainant had filed the complaints not only against the

accused but also against the company as well as its directors. It had even

filed application(s) under Section 319 of Cr.P.C. for summoning the

directors as additional accused but it was the trial Court who had not

allowed the same and as such there was no lapse on the part of the

complainant in not prosecuting the company and its directors. He had

produced sufficient evidence on record to prove his case. The learned trial

Court and Appellate Court had committed no error in recording the findings

of guilt of the accused and these findings do not warrant any interference.

13. Learned counsel for the complainant has further argued that no

illegality was committed by the learned trial Court in awarding

compensation to the complainant, but the amount of compensation so

awarded was meager. Even the learned Appellate Court did not award

suitable and proper compensation to the complainant while enhancing the

same, as the fact that the complainant had faced the agony of litigation for a

period of more than eight years without having any fault on the part of its

partners/itself, and had suffered huge financial losses and surely deserved

suitable compensation was not properly appreciated. With these broad

submissions, it is argued that the revision petitions as filed by the

CRR-2276-2023 and connected cases -10-

complainant deserve to be allowed and the amount of compensation as

awarded by the learned Appellate Court in each case deserves to be

enhanced at least to the extent of twice the amount of the cheques in

question, and further that the petitions filed by the accused are liable to be

dismissed.

14. At the very outset, it may be mentioned that the re are

concurrent findings of conviction arrived at by two Courts and the petitioner

has approached this Court to exercise its revisional jurisdiction. It is well

settled that in criminal revisions against conviction, this Court is not

supposed to exercise the jurisdiction like appellate Court and the scope of

interference in the revision is extremely low. Section 438 of Bharatiya

Nagarik Suraksha Sanhita, 2023 (which is pari materia with Section 397 of

Cr.P.C.) vests jurisdiction for the purpose of satisfying itself as to the

correctness, legality or propriety of any finding, sentence or order, recorded

or passed, and as to the regularity of any proceedings of inferior Court. The

object of the provision is to set right a patent defect or an error of

jurisdiction or law. There has to be a well-founded error which is to be

determined on the merits of individual cases. While considering the question

as to whether there is a patent defect or an error of jurisdiction or law, the

revisional Court is not required to dwell at length upon the facts and

evidence of the case to reverse those findings. Reference in this regard can

be had to the observations made by Hon’ble Supreme Court in State of

Gujarat vs. Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294,

wherein it was held so. The well accepted norm is that a revisional

jurisdiction of higher Court is very limited one and cannot be exercised in a

routine manner and it should not lead to injustice ex-facie. In view of this

CRR-2276-2023 and connected cases -11-

position of law, it is to be seen as to whether a case for exercise of revisional

jurisdiction is made out or not?

15. The accused had been held guilty and convicted for commission

of offence punishable under Section 138 of NI Act. The Hon’ble Apex Court

explained the ingredients which are to be satisfied for making out a case

under Section 138 of the NI Act in Kusum Ingots & Alloys Ltd. vs. Pennar

Peterson Securities Ltd. and Others reported in (2000) 2 SCC 745 in the

following manner:

"10. On a reading of the provisions of Section 138 of the NI Act

it is clear that the ingredients which are to be satisfied for

making out a case under the provision are: 

(i)  a person must have drawn a cheque on an account

maintained by him in a bank for payment of a certain amount

of money to another person from out of that account for the

discharge of any debt or other liability;

(ii) that cheque has been presented to the bank within a period

of six months from the date on which it is drawn or within the

period of its validity, whichever is earlier;

(iii) that cheque is returned by the bank unpaid, either because

the amount of money standing to the credit of the account is

insufficient to honour the cheque or that it exceeds the amount

arranged to be paid from that account by an agreement made

with the bank; 

(iv) the payee or the holder in due course of the cheque makes a

demand for the payment of the said amount of money by giving

a notice in writing, to the drawer of the cheque, within 15 days

of the receipt of information by him from the bank regarding

the return of the cheque as unpaid;

(v) the drawer of such cheque fails to make payment of the said

amount of money to the payee or the holder in due course of the

cheque within 15 days of the receipt of the said notice."

CRR-2276-2023 and connected cases -12-

16. A reference to the proviso to Section 138 of NI Act is also

relevant which reads as follows:-

Provided that nothing contained in this section shall

apply unless –

(a) the cheque has been presented to the bank within a pe-

riod of six months from the date on which it is drawn or

within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as

the case may be, makes a demand for the payment of the

said amount of money by giving a notice in writing, to

the drawer of the cheque, within thirty days of the receipt

of information by him from the bank regarding the return

of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment

of the said amount of money to the payee or, as the case

may be, to the holder in due course of the cheque, within

fifteen days of the receipt of the said notice.

Explanation. - For the purposes of this section, "debt or

other liability" means a legally enforceable debt or other

liability.”

17. From a bare reading of Section 138 of the NI Act, it emerges

that the first and foremost ingredient for applying this provision upon a

person, who is to be made liable is that such person should be the drawer of

the cheque and should have drawn the cheque on an account maintained

by him with a banker for payment of any amount of money to another

person from out of that account that whole or part of any debt or liability.

Since in this case, the aforementioned nine complaints had been filed by the

complainant against the company, its directors, and the accused, who is the

authorized signatory to these cheques, alleging commission of offence

punishable under Section 138 of the NI Act, it is, therefore, appropriate to

CRR-2276-2023 and connected cases -13-

refer to Section 141 of the NI Act which deals with the offence by a

company. The same reads as follows:-

Section 141- OFFENCES BY COMPANY:-

(1) If the person committing an offence under section

138 is a company, every person who, at the time the

offence was committed, was in charge of, and was

responsible to the company for the conduct of the

business of the company, as well as the company, shall be

deemed to be guilty of the offence and shall be liable to

be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall

render any person liable to punishment, if he proves that

the offence was committed without his knowledge, or that

he had exercised all due diligence to prevent the

commission of such offence:

Provided further that where a person is nominated as a

Director of a company by virtue of his holding any office

or employment in the Central Government or State

Government or a financial corporation owned or

controlled by the Central Government or the State

Government, as the case may be, he shall not be liable for

prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section

(1), where any offence under this Act has been committed

by a company and it is proved that the offence has been

committed with the consent or connivance of, or is

attributable to, any neglect on the part of, any director,

manager, secretary or other officer of the company, such

director, manager, secretary or other officer shall also be

deemed to be guilty of that offence and shall be liable to

be proceeded against and punished accordingly.

Explanation.--For the purposes of this section,--

(a) "company" means any body corporate and includes a

firm or other association of individuals; and

CRR-2276-2023 and connected cases -14-

(b) "director", in relation to a firm, means a partner in the

firm."

18. On a bare reading of the aforementioned provision, it is clear

that so far as the companies are concerned, if any offence is committed by it,

then every person who is director or employee of the company is not liable.

Only such person would be held liable who if at the time when offence was

committed, was in charge and responsible for the conduct of business of the

company as well as of the company. However, by way of an exception to the

normal rule that in cases involving criminal liability against vicarious

liability, no-one is to be held liable for an act of another, a specific provision

is made in the statute by way of this Section that criminal liability can be

extended to others.

19. Section 141 of the NI Act is an instance of specific provision,

which in case an offence under Section 138 of the NI Act is committed by a

Company, extends criminal liability for dishonour of cheque to the officers

of the Company. For that purpose certain conditions, which are mentioned

in Section 141 of the NI Act, have to be satisfied and those conditions have

to be strictly complied with. In that case apart from the Company, all

persons, who at the time of commission of offence, were in-charge and were

responsible to the Company for conduct of business of the Company, are

liable for the offence. This section postulates constructive liability of the

directors of the company or the business of the company.

20. It is well settled that what is required for a person, who is

sought to be held vicarously liable for the offence under Section 141 of the

NI Act, is that when the offence was committed, he was in charge and

responsible for conduct and business of the company and this should be

reflected in the averments made in the complaint. Reliance in this context

CRR-2276-2023 and connected cases -15-

can be made to S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla, 2005(3)

Apex Criminal 229, wherein it was observed by Hon’ble Supreme Court

that in a complaint under Section 141 of NI Act, it was necessary to

specifically aver that at the time when the offence was committed, the

person accused was in charge of and was responsible for the conduct of the

business of the company. This was an essential requirement and without this

averment having been made, the requirement of Section 141 of NI Act could

not be set to be satisfied. Similar observations were made in Neeru Gupta

vs. Ajay Dhawan, CRM-M-16269-2018, decided on 18.03.2020 by this

Court, Saroj Kumar Poddar Vs. State (NCT of Delhi), 2007(1) R.A.J. 205,

National Small Industry Corporation Limited vs. Harmeet Singh Paintal,

2010(2) RCR (Criminal) 122, Hitesh Verma vs. M/s Health Care at Home

India Pvt. Ltd. and others, 2025 (1) Apex Court Judgments (SC) 799 and

A.K. Singhania vs. Gujarat State Fertilizer Company Ltd., 2013 (4) RCR

(Criminal) 777 and N.K. Wahi Vs. Shekhar Singh, 2007(2) RCR

(Criminal) 266.

21. In view of the above discussed position of law and applying the

same to the peculiar facts of the petitions in hand, it may be stated that the

accused did not deny the fact that the cheques in question were signed by

him. With regard to question as to liability of the company or himself qua

payment of amount of these cheques, he, however took different stands

before the learned trial Court. When served with notice of accusation, he

stated that the cheques in question were taken by the complainant as

security. They were blank cheques and had been misused by the complainant

by writing the body of the cheques. While cross-examining CW-1 i.e. the

witness of the complainant, no suggestion was given that these cheques were

CRR-2276-2023 and connected cases -16-

security cheques. In his statement(s), recorded under Section 313 of Cr.P.C.,

he stated that nine cheques had been taken by the complainant as security.

He also stated that the cheques were not issued in discharge of any existing

legal liability of the company or himself. Then while appearing as DW-1, he

did not say that the cheques in question were security cheques and the stand

taken by him was that he had signed these cheques only being an employee

and authorized signatory of the company and also that these cheques were

stolen by the partners of the complainant-firm. The learned trial Court as

well as the Appellate Court had observed that it stood proved that the

cheques in question were signed and issued by the accused and since the

accused himself had not disputed this fact, therefore, there cannot be stated

to be any dispute about the fact that the cheques in question were signed by

him.

22. What invariably follows from a perusal of provisions of Section

138 of NI Act is that it is only the drawer of the cheque who can be held

liable under Section 138 of NI Act. Section 6 of the NI Act inter alia defines

a ‘cheque’ as a bill of exchange drawn on a specified banker and not

expressed to be payable otherwise than on demand. Section 7 defines the

"drawer" as the maker of a bill of exchange or cheque and "drawee" as the

person thereby directed to pay. Sections 30 and 31 of the NI Act respectively

define the liability of the drawer and the drawee of a cheque as follows:

"30. Liability of drawer.-The drawer of a bill of exchange or

cheque is bound, in case of dishonour by the drawee or acceptor

thereof, to compensate the holder, provided due notice of

dishonour has been given to, or received by, the drawer as

hereinafter provided.

31. Liability of drawee of cheque.-The drawee of a cheque

CRR-2276-2023 and connected cases -17-

having sufficient funds of the drawer in his hands properly

applicable to the payment of such cheque must pay the cheque

when duly required so to do, and, in default of such payment,

must compensate the drawer for any loss or damage caused by

such default.

23. Since as per Section 138 of NI Act, it is the drawer of the

cheque in question who drew the cheque on an account maintained by him in

a bank, who is to be held liable for payment of the same, therefore, the next

question that arises for consideration before this Court is as to whether, the

accused could be considered to be the drawer of the cheques in question and

further as to whether these cheques are proved to have been drawn on the

account maintained by him as required for applying the provisions of

Section 138 of NI Act against him?

24. For the above purpose, it is relevant to mention that the cheques

in question were admittedly issued from the account maintained by the

company M/s Alpine Garments whose name was printed on the cheques

themselves and the petitioner signed them as authorized signatory thereof.

The accused had not even been summoned/prosecuted as a director of the

company nor he was arraigned as such in the complaint in that capacity.

Though the company as well as its director had been impleaded as accused

in the complaint but as already mentioned, they were not summoned as

accused by the learned trial Court and it was only the accused Navneet

Aggarwal, who has been summoned as such.

25. The issue as to whether, authorized signatory of a company,

who had signed a cheque drawn on the bank account of the company which

was dishonoured, could be held liable under Section 138 of NI Act and also

for making payment of compensation under Section 143-A of NI Act was

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considered by Hon’ble Supreme Court in a recent decision in the case of

Shri Gurudatta Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao

Deshmukh 2024 SCC OnLine SC 1800 and while applying the doctrine of

separate corporate personality, it was held by Hon’ble Supreme Court that it

was only the drawer of the cheque, who could be held to be liable for

payment of compensation and the authorized signatory of a company cannot

be said to be the drawer of the cheque.

26. In

Bijoy Kumar Moni v. Paresh Manna, 2024 SCC Online

SC 3833, the Hon’ble Supreme Court was dealing with a similar question

and observed that if a cheque is issued by a company but has been signed by

its authorized signatory, the latter would not be considered as the maker of

those cheques and it is the company alone, which would continue to maker

of the cheque and also the drawer within meaning Section 7 of NI Act and

the cheque would be considered to be drawn on the account maintained by

the company and not by the authorized signatory. It was further observed

that the authorized signatory of a company was merely the physical limb that

signed and made the cheque on behalf of the company’s incorporeal

personality. The company, for all purposes, continued to remain the drawer

of the cheques. If any other interpretation was accepted then even an

employee of the company, who on account of his being an authorized

signatory signed a cheque issued by the company towards discharge of the

debt or other liability thereof, would be liable to prosecution and conviction

under Section 138 of NI Act even after he resigned from the company or

was no more in its employment. Hon’ble Supreme Court held that this could

not have been the intention of the legislature and even vicarious liability

created under Section 138 would not be attracted in respect of a director or

CRR-2276-2023 and connected cases -19-

an employee of the company, who resigns and severes his connection with

the same. It was also held that a company vis-a-vis its authorized signatory

stood on a completely different footing as compared to account holders of a

joint account. The culpability attached to the dishonour of a cheque could, in

no case, “except in case of Section 141 of the NI Act” be extended to those

on whose behalf the cheque was issued.

27. In N. Harihara Krishnan v. J. Thomas (2018) 13 SCC 663,

while dealing with the issue of commission of an offence under Section 138

of NI Act by a company, it was observed by Hon’ble Supreme Court that

Section 138 only contemplated the drawer of the cheque to be responsible

for the commission of the offence. It is only by virtue of Section 141 that

certain persons other than the drawer of the cheque can be made liable for

the offence in cases where the offence under Section 138 is committed by a

company and not by an individual person. It was also held that the offence

under Section 138 was capable of being committed only by drawer of the

cheque. Section 141 stipulated the liability for the offence punishable under

Section 138, when the person committing such an offence happens to be a

company-in other words, when the drawer of the cheque happens to be a

company.

28. In view of the above discussed proposition of law, it is clear

that in case a cheque is drawn from the account of a company by its

authorized signatory, the latter would not be considered to be the drawer of

the cheque and it is the company which would be considered to be so and

therefore, the petitioner who had been summoned and prosecuted could not

be considered to be drawer of the cheque. Since in these cases, neither the

company nor the director thereof had been summoned and prosecuted as

CRR-2276-2023 and connected cases -20-

accused and since the complainant failed to bring any material on record to

show that the accused was responsible for day to day conduct of business of

the company and was vicariously liable, therefore, due to only being

authorized signatory, criminal liability on account of dishonour of cheque

did not fall on him as such liability primarily falls on the drawer company

and it is only thereafter, it extends to its officers/directors only when the

conditions incorporated in Section 141 of NI Act are satisfied. Rather during

cross-examination, CW-1 i.e. the only witness of the complainant

categorically admitted that the petitioner was not conducting day to day

business/affairs of the company. Reference in this context can be had to the

observations made by Hon’ble Supreme Court in Aneeta Hada v. Godfather

Travels & Tours (P) Ltd., (2012) 5 SCC 661, that commission of an offence

by the company is an express condition precedent and only when the

prosecution is maintainable against the company that the persons mentioned

in other categories under Section 141 can be vicariously made liable for the

company for the offence committed under Section 138. The doctrine of strict

construction is to be applied as per which commission of offence by the

company is a condition precedent to attract the vicarious liability of others.

When the company can be prosecuted, then only the persons mentioned in

other categories could be made vicariously liable.

29. As a result of the discussion made above, it follows that it is the

drawer company which must be first held to be the principal offender under

Section 138 of NI Act before culpability can be extended to the other

directors or persons in charge of and responsible to the company for the

conduct of its business. If the liability of the drawer company is not proved

or if it is not prosecuted then there is no requirement to hold the other

CRR-2276-2023 and connected cases -21-

persons vicariously liable for the offence committed under Section 138 of

the NI Act. Since the cheques in question were not drawn from the account

maintained by the accused but were issued on the account maintained by the

company and as the accused was not the drawer of the company, therefore,

the requirements for establishing the ingredients for Section 138 of NI Act

cannot be stated to have been complied with while recording findings as to

the guilt of accused and hence, these findings not being in accordance with

the well established position of law are not sustainable and are liable to be

reversed. The learned trial Court as well as Appellate Court did not consider

these important aspects of the case as well as the law applicable and

therefore, the findings as given by learned trial Court as to the guilt of the

accused and directing him to pay compensation and as upheld by the learned

trial Court in all the nine complaints are set aside. As a result thereto, the

judgments as passed by the trial Court recording conviction of the accused

and judgments of Appellate Court affirming the same are hereby reversed

and set aside; the revision petitions as filed by the accused are accepted,

whereas, the revision petitions filed by the complainant are dismissed. The

accused is ordered to be acquitted of the accusations in all the

cases/complaints.

30. Photocopy of this order be placed on the files of the connected

cases.

31. Since   the   main   petitions  have   been   disposed   of,  pending

application, if any, is rendered infructuous.

            [MANISHA BATRA]

   JUDGE

24

th

 September, 2025

Parveen Sharma

  1. Whether speaking/ reasoned : Yes / No

2. Whether reportable : Yes / No