Sec.138 of N.I.Act - Sec.141 of N.I.Act - Cheque Bounce Case - whether the respondent can be made liable in his personal capacity when the Company has not been made a party to the complaint.- Trial court dismissed the complaint and acquitted the accused as the company was not made as accused and case was filed in the personal capacity of accused - cheque was issued not for whole discharge of or part discharge of any liability - High court confirmed the same and dismissed the appeal - Apex court held that as the respondent was the Managing Director of M/s. Salvi Infrastructure Pvt. Ltd. and sole proprietor of M/s. Salvi Builders and Developers, there is no need of specific averment on the point and by virtue of their position they are liable to be proceeded with. we are of the view that the respondent be made liable under Section 138 of the NI Act, even though the Company had not been named in the notice or the complaint. There was no necessity for the appellant to prove that the said respondent was in charge of the affairs of the company, by virtue of the position he held. Set aside the acquittal order and convicted the accused by imposing fine of twice with 9 % interest rather than sentencing him to prison - 2015 S.C. MSKLAWREPORTS





whether  the
respondent can be made liable in his personal capacity when the Company  has
not been made a party to the complaint.

Trail court 
The reasons given  for  the  acquittal
of the respondent were that the Company M/s. Salvi Infrastructure Pvt.  Ltd.
was not made the accused and instead the respondent was made accused in  his
personal capacity. The cheque could not be said to have been issued for  the
discharge of whole  or  part  of  the  liability  because  it  exceeded  the
liability. Further, it had not been proved that the respondent was a  person
liable to make the payment for M/s. Salvi Infrastructure Pvt. Ltd.

 The  High  Court  by  the
impugned order dismissed  the  said  application  on  the  ground  that  the
reasoning set out by  the  Trial  Court  in  its  order  did  not  call  for
reconsideration.

Apex court held that

About the liability under Section 138 of the NI Act, where the cheque  drawn
by the employee of the appellant company on his personal  account,  even  if
it be for discharging dues of the appellant-company and  its Directors,  the
appellant-company and its Directors  cannot be  made  liable  under  Section
138. Thus,  we  observe  that  in  the  above mentioned  case,  the  personal
liability was upheld and the Company and its Directors were absolved of  the
liability. The logic applied was that the Section itself  makes  the  drawer
liable and no other person. 
  However, as the respondent  was
the Managing Director of  M/s.  Salvi  Infrastructure  Pvt.  Ltd.  and  sole
proprietor of M/s. Salvi Builders and  Developers,  there   is  no  need  of
specific averment on the point.  
This  Court  has  held  in  National  Small
Industries Corporation Ltd.
Para 39 (v)  “If the accused is a Managing  Director  or  a  Joint  Managing
Director then  it  is  not  necessary  to  make  specific  averment  in  the
complaint and by virtue of their position they are liable  to  be  proceeded
with.”


The Courts below have  wrongly
concluded that notices under Section 138(b) of the N.I.  Act  were  sent  to
all the  Directors  of  the  Company.
 Learned  counsel  for  the  appellant
contended that such a conclusion was not supported by any evidence  inasmuch
as there was only one acknowledgment card  on  record,  showing  receipt  of
notice under Section 138(b) of the Act, by the respondent.
The Courts  below
did not appreciate that  the  accused  respondent  in  his  statement  under
Section 313 Cr.P.C. had admitted that he was  paid  Rs.74,200/-  as  earnest
money and that he had issued receipt for the  same  and  thus  there  is  no
substance in the argument of the respondent that the cheque for  Rs.74,200/-
cannot be said to have been  issued  for  discharge  of  whole  or  part  of
liability, because it exceeded the liability.

Thus, in the light of the position which the respondent in the present  case
held, we are of the view that the respondent be made  liable  under  Section
138 of the NI Act, even though the Company had not been named in the  notice
or the complaint.  There was no necessity for the appellant  to  prove  that
the said respondent was incharge of the affairs of the  company,  by  virtue
of the position he held. Thus, we hold that the respondent Vijay D Salvi  is
liable for the offence under Section 138 of the NI Act.
The law laid down by this Court in R. Vijayan Vs. Baby and Anr.,[3]  was  to
the following effect:



“As the provisions of Chapter XVII of the Act strongly  lean  towards  grant
of reimbursement of the loss by way  of  compensation,  the  courts  should,
unless  there  are  special  circumstances,  in  all  cases  of  conviction,
uniformly exercise the power to levy fine up  to  twice  the  cheque  amount
(keeping in view the cheque amount and the simple  interest  thereon  at  9%
per annum as the reasonable quantum of loss)  and  direct  payment  of  such
amount as compensation. Direction to pay compensation by way of  restitution
in regard to the loss on  account  of  dishonor  of  the  cheque  should  be
practical and realistic, which would  mean  not  only  the  payment  of  the
cheque amount but interest thereon at  a  reasonable  rate.  Uniformity  and
consistency  in  deciding  similar  cases  by  different  courts,  not  only
increase the credibility of cheque as a negotiable instrument, but also  the
credibility of courts of justice.”





We, therefore, award compensation to the extent of twice the  cheque  amount
and  simple  interest  thereon  at  9%  per  annum   to   the   complainant.
Accordingly, the respondent Vijay D Salvi is  sentenced  to  undergo  simple
imprisonment for a period of five months for the offence under  Section  138
of the NI Act. Considering the fact that the cheque amount  is  Rs.74,200/-,
we  direct  the  respondent  Vijay  D  Salvi  to  pay  a   compensation   of
Rs.1,48,400/- (Rupees one lakh forty-eight thousand four hundred only)  with
simple interest thereon at 9% per annum, to  the  complainant-appellant.  In
default of payment of the said compensation, the  respondent  will  have  to
undergo simple imprisonment for a period of six months.

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