Allowed

Dile Ram v. Kangra Central Cooperative Bank

Himachal Pradesh HC2 May 2025CR.R/166/2011

Case brief

AI extract

What is this about?

Revision against conviction for cheque dishonour where the payee name on the cheque showed an unexplained addition. The High Court held the cheque materially altered and that the accused could not be vicariously liable since his co-operative society was not made an accused. Convictions by both courts below were set aside and the petitioner acquitted.

What did the court decide?

Petitioner acquitted of offence under Section 138 NI Act; deposited fine to be refunded subject to statutory limitation; personal bond of Rs 25,000 with surety directed under Section 437-A CrPC/Sectio

Dile Ram Vs Kangra Central Cooperative Bank — Cheque Dishonour | Himachal Pradesh HC (2025)

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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Cr. Revision No. 166 of 2011 Reserved on: 25.03.2025 Date of Decision: 02.5.2025.

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Dile Ram ...Petitioner

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Versus

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The Kangra Central Co-operative Bank, through Its Branch Manager ...Respondent

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Coram

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Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?^1yes.

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For the Petitioner	:	Mr. Sanjeev Advocate, with	Kuthiala Ms.	, Sr. Amita
		Chandel, Advocate	.
For the Respondent	:	Mr. I.S. Chandel Singh Rathore, Ad	and Mr. vocates.	Sohan

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Rakesh Kainthla, Judge

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The present revision is directed against the judgment dated 30.06.2011, passed by learned Sessions Judge, Kullu, H.P. (learned Appellate Court), vide which the judgment of conviction and order of sentence dated 01.02.2011, passed by learned Judicial Magistrate, First Class

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1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

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Manali, H.P. (learned Trial Court) were upheld (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)

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Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments (NI) Act. It was asserted that the complainant is a body corporate having its head office at Dharamshala and Branch at Manali. It is engaged in the business of banking. The accused raised a loan from the complainant and issued a cheque dated 22.10.2007 for an amount of ₹ 1 lac to discharge his liability. The complainant presented the cheque before the bank of the accused, but it was dishonoured with an endorsement of insufficient funds. The complainant issued a notice to the accused asking him to pay the amount of ₹ 1 lac within 15 days from the date of receipt of the notice. However, the accused failed to pay the amount despite the receipt of the notice. Hence, the complaint was filed before the learned Trial Court to take action against the accused as per the law.

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The learned Trial Court, found sufficient reasons to summon the accused. When the accused appeared, a notice of

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accusation was put to him for the commission of an offence punishable under Section 138 of N. I Act, to which he pleaded not guilty and claimed to be tried.

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The complainant examined Man Singh (CW-1) and Nitin Hazari (CW-2).

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The accused admitted in his statement recorded under Section 313 of Cr. P.C. that the complainant is engaged in banking activities and Man Singh Thakur was authorised by the complainant to file the complaint. He stated that he had issued the cheque as security to M/s Chachoga Handloom Co-operative Society. He admitted that the cheque was dishonoured with an endorsement of ‘insufficient funds’. He stated that he had only received a notice from the Court. He examined Luder Chand (DW-1)

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Learned Trial Court held that the accused did not dispute the issuance of the cheque. There is a presumption that the cheque was issued in discharge of the legal liability. It was proved that the accused is the Director of M/s Chachoga Handloom Co-operative Society since its inception. The Society had taken a loan of ₹ 47 lacs and was to pay ₹ 97 lacs. Therefore, the cheque was issued in discharge of the legal liability. It was dishonoured due to insufficient funds, and the

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accused failed to pay the amount despite receipt of a valid notice of the demand. Hence, the accused was convicted of the commission of an offence punishable under Section 138 of the NI Act and was sentenced to undergo simple imprisonment for six months and pay a compensation of ₹ 1,50,000/- to the complainant.

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Being aggrieved by the judgments and order passed by the learned Trial Court, the accused filed an appeal which was decided by the learned Sessions Judge (learned Appellate Court). Learned Sessions Judge concurred with the findings of the learned Trial Court that the cheque is presumed to be issued in the discharge of legal liability. The accused failed to rebut the presumption of consideration attached to the cheque. The cheque was dishonoured with an endorsement of insufficient funds. The accused had failed to pay the amount despite the receipt of a valid notice of demand. Hence, the accused was rightly convicted and sentenced. Consequently, the appeal filed by the accused was dismissed.

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Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision, asserting that the learned Courts below

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returned the findings contrary to the evidence on record. They misread and misappreciated the evidence and the statement of the accused recorded under Section 313 of Cr.P.C. The accused had categorically stated that the cheque was issued to M/S Chachoga Handloom Society and not to the bank. A bare perusal of the cheque shows that there is an interpolation in the cheque, and the name of the payee was altered. Luder Chand (DW-1) proved that the cheque was issued to the Society and not to the bank. There was no valid service as the notice was returned unserved. Learned Trial Court erred in holding that the accused was the Director of the Society. The sentence imposed by the learned Trial Court is excessive. Therefore, it was prayed that the present revision be allowed and the judgments and order passed by learned Courts below be set aside.

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I have heard Mr. Sanjeev Kuthiala, learned Senior Advocate, assisted by Ms. Amita Chandel, learned counsel for the petitioner and Mr. I.S. Chandel and Mr. Sohan Singh Rathore, learned counsel for the respondent/complainant.

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Mr. Sanjeev Kuthiala, learned Senior Advocate for the petitioner/accused, submitted that the learned Courts below erred in convicting and sentencing the accused. A bare

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perusal of the cheque shows that there is an interpolation in the name of the payee. The words ‘KCC bank in the loan account’ were added subsequently to the cheque. This is a material alteration in the cheque, which would make it void. The findings recorded by the learned Trial Court that the loan was due to the Society and the accused, being the Director, is liable to pay the loan, are without any pleading. The Society was never arrayed as an accused, and the present accused could not have been held liable in the absence of the Society. Hence, he prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside. He relied upon the judgments of Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15 SCC 689 , Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148 , K.N. Beena v. Muniyappan, (2001) 8 SCC 458 and Mainuddin Abdul Sattar Shaikh v. Vijay D. Salvi, (2015) 9 SCC 622 in support of his submission .

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Mr. I.S. Chandel, learned counsel for the respondent/ complainant, submitted that the learned Courts below had rightly appreciated the evidence. It was rightly held by the learned Trial Court that Society was liable to pay money to the complainant, and the accused, being the Director, had issued

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the cheque to discharge the liability of the Society. The cheque was dishonoured with an endorsement of insufficient funds, and the accused failed to pay the amount despite receipt of a valid notice of demand. Hence, he prayed that the present petition be dismissed. He relied on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 and Mohd. Isaq Gulsani v. J. Rajamouli, 2000 SCC OnLine AP 631 in support of his submission.

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I have given considerable thought to the submissions made at the bar and have gone through the records carefully.

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It was laid down by the Hon’ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh , (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -

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“10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like the appellate court, and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short “CrPC”) vests

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jurisdiction to satisfy itself or himself 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 such 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 wellfounded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.

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This position was reiterated in State of Gujarat v.

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Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294,

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wherein it was observed:

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“13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C., which vests the court with the power to call for and examine records of an inferior court, is for the purposes of satisfying itself as to the legality and regularity of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460, where the scope of Section 397 has been considered and succinctly explained as under:

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“ 12 . Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error, and it may not be appropriate for the court to scrutinise the orders, which, upon the face of it, bear a token of careful consideration and appear to be in accordance with the law. If one looks into the various judgments of this Court, it emerges that the

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revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits.

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Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much-advanced stage in the proceedings under the CrPC.”

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The present revision has to be decided as per the parameters laid down by the Hon’ble Supreme Court.

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A perusal of the cheque (Ex. CW1/B) shows that it has been issued in the name of Chahoga H/L Co-operative Society Ltd. The words "KCC bank" in the loan account have been added above the name of the payee. These words are written in different ink and handwriting, as is apparent from a simple review of the cheque. Maan Singh Thakur (CW-1) has not explained who wrote these words.

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17. It was held in Narayan Prasad Rai v.

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Ghanshyamlal, 1960 SCC OnLine MP 141: ILR 1960 MP 999: AIR 1961 MP 62 at page 1002 that any material alteration will make the instrument void. It was observed:

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“Section 87 of the Negotiable Instruments Act is as follows:

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“Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto.

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The plain meaning of this section, as it stands, is that if any material alteration is found in a negotiable instrument, the instrument itself becomes void, and the party basing its claim upon it is precluded from claiming anything. This result follows irrespective of the fact whether the party concerned was responsible for the alteration or whether it was made by someone else without their consent or knowledge. This interpretation of the provision is hard on the innocent holder of the instrument. On the other hand, Shri R.K. Pandey contends that section 87 is attracted only if the alteration has been proved to have been made by the holder himself, and this fact must be pleaded and proved by the defendant. He went to the length of saying that in the instant case, even if the alteration had been made by the minor's next friend or guardian, it would not affect the claims of the minor. This interpretation is too narrow and is not justified by the wording of section 87.

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In our opinion, the correct interpretation of section 87 of the Negotiable Instruments Act is that the alteration which has the effect of making the instrument void should have been brought about by the plaintiff or by anyone with his consent or on account of his negligence. If the alteration is brought about by an accident, or by some stranger who came in possession of the instrument in an unauthorised manner, then the instrument would not be rendered void.”

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It was further held that the burden to prove that the

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alteration was made by the signatory is upon the holder of the instrument. It was observed:

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“Shri R.K. Pandey contended that it was necessary for the defendant to plead that the alteration was brought about by the plaintiff himself or by someone with his consent. In the absence of such pleadings, no relief should be granted to the defendant on the ground that the instrument has been materially altered. We find that the law on the point is just the contrary, as would appear from the following passage occurring in Bhashyam's Negotiable Instruments Act (Tenth Edn., 1956) at page 452:

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“Where the instrument appears to be altered, it is incumbent upon the plaintiff (i.e. the holder) to show that the alteration is not improperly made, and the presumption in the case of negotiable instruments is that the alteration was made subsequent to the issue of the instrument; while in the case of deeds, etc., the presumption is the other way. Where a bill appears to have been altered, or there are marks of erasure on it, the party seeking to enforce the instrument is bound to give evidence that it is not avoided thereby.”

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The burden of pleading or proving how the alteration came in the instrument is thus on the plaintiff. In Petamber Manik-Jee v. Motee-Chund Manik-

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Jee [(1836-37) 1 Moo IA 420. ] the following observations were made regarding the burden of proof in such cases:

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“If a plaintiff relies on a bond in this country, or any other instrument, which appears to have been altered, the Court will not receive it, or act upon it, till it is most satisfactorily proved by all the subscribing witnesses at the least, and other evidence, that alteration was made antecedently to Signature.”

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The obvious implication of these observations is that if no such proof is forthcoming, the alteration shall be presumed to have been made after the instrument was executed. To the same effect is the following passage in Mst. Khoob Conwur v. Baboo Moodnarain Singh [(1861-64) 9 Moo IA 1.] .

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“It may be conceded chat, in an ordinary case, the party who presents an instrument, which is an essential part of his case, in an apparently altered and suspicious state, must fail, from the mere infirmity or doubtful complexion of his proof, unless he can satisfactorily explain the existing state of the document.”

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Although their Lordships held that the presumption may be rebutted by the appearance of the document itself, but the principle laid down obviously is that he who produces an altered document must prove how the alteration was made.

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The same view has been consistently taken by this Court. In Kanhayalal v. Sitaram [20 NLR 76], it was held that a material alteration made by, or with the consent of, one party, but without the consent of the other party, makes the instrument void and disentitles the party responsible for the alteration from enforcing it. The Court observed in that case that where the plaintiff relies upon an altered or suspicious instrument, “the law

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casts a heavy onus on him to explain the alteration and to show when it was made”. The following observations from Halsbury's Laws of England, Volume 10, sections 764 and 765 , at page 431, were relied upon:

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“An alteration made while the instrument is in the custody of one parry, not made with his knowledge or consent, has the same effect in avoiding the instrument as if made by him, on the principle that he who has the custody of an instrument made for his benefit is hound to preserve it in its original state.”

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In Pachkodi's case (supra), the same view has been taken regarding the burden of proof by observing that:

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“These documents were altered in his possession and were produced from his custody. He had to explain when and how the alteration was made.”

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We have no doubt that the burden of proving how the alterations were made in the document lies on the plaintiff, and in the absence of any proof, it should be presumed that they were made by him or by his next friend, who was in custody of the document. The view which we have taken does not go against the Madras decisions relied upon by the appellant. Although the single Judge had stated his conclusion somewhat widely, the Division Bench definitely concluded that the instrument would be saved from becoming void only if the material alteration was made by a stranger without the consent of the holder. In that case, the natural father, who was suspected to have made the changes, was a stranger inasmuch as the pro-note was in favour of the adoptive father, and the adoptive mother was acting as the legal guardian. In the instant case, the pronote has all along been in the custody of the minor plaintiff's father, who also acted as the next friend of the minor when the suit was filed. Under these circumstances, according to the statement of law quoted from Halsbury's Laws of England in paragraph 13 above,

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the presumption that the alteration was made by the plaintiff's father or by someone with his consent had to be rebutted by the plaintiff.”

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It was held in C. Sonamuthu v. R. Barsha Beevi,

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2013 SCC OnLine Mad 386: (2013) 1 MWN (Cri) DCC 113 that any material alteration in the instrument will make it void. It was observed:

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At this juncture, this Court aptly quotes the decision, T. Kalavathi v. Veera Export, 2002 BC 1247 Mad ., wherein it is held that “where material alteration made by the Accused in Negotiable Instruments Act, after the expiry of the period of validity, it would render the said instruments void, hence the Complaint on the basis of invalid, Negotiable Instruments Act could not be maintained.”

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The effort of Section 87 of the Negotiable Instruments Act is that such a document is void and as such non-est . The technical defence or absence of a plea should not drive the Court on such occasion, especially with reference to the contention and evidence.

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Ordinarily, any material alteration of a Negotiable Instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. Any such alteration, if made by an endorsee, discharges his endorser from all liability to him/her in respect of the consideration thereof in the considered opinion of this Court.

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It was held that an alteration in the Negotiable

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Instruments Act, if it changes its legal character, is a material alteration. It was observed:

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“24. An alteration of a Negotiable Instrument is material if it changes its legal character or its scope as means of evidence, in the considered opinion of this Court. Integrity and sanctity of contracts are to be preserved, and the object is to prevent fraud and deter persons from tampering with the written instruments. Where an instrument appears altered, it is the primordial duty on the part of the Plaintiff to show that the alteration was not improperly made as per the decision in Jayantilal Goel v. Zubeda Khanum, AIR 1986 AP 120 .

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26. In law, the following are declared to be Material Alterations:

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(i) the date, (ii) the sum payable, (iii) the time of payment, (iv) the place of payment, (v) the addition of a place of payment mentioned by the acceptor without the acceptor’s consent.” Therefore, the burden was upon the complainant to prove that the alteration was made by the accused. Once it is apparent that the words have been added to the name of the payee.

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It was laid down in Geemol Joseph v.

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Kousthabhan, 2019 SCC OnLine Ker 2465, that the

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alteration in the name of the payee is a material alteration. It was observed:

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14. On a perusal of Ext.P1 cheque, it is seen that the name “Kousthubhan” (the name of the accused) was initially written as the name of the payee. It is seen that the name of the payee, written as “Kousthubhan”, is struck off, and the name of the complainant is written in the cheque as the payee. Therefore, it is evident that there was alteration made in the cheque with regard to the name of the payee. The question is whether it is a material alteration or not.

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15. A material alteration, varies the rights, liabilities, or legal position of the parties as ascertained by the deed

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in its original state, or otherwise varies the legal effect of the instrument as originally expressed, or reduces to certainty some provision which was originally unascertained and as such void, or which may otherwise prejudice the party bound by the deed as originally executed (See Loonkaran Sethia v. Ivan E. John : (1977) 1 SCC 379: AIR 1977 SC 336 ).

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16. Alteration of the payee's name in a cheque is material which affects the character of the instrument, and so also the relationship of the parties and their legal position as originally expressed. Therefore, it has to be concluded that material alteration of Ext.P1 cheque was effected with regard to the name of the payee.

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17. Section 87 of the Act reads as follows:

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“87. Effect of material alteration - Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties.

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Alteration by indorsee - Any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.

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The provisions of this section are subject to those of Sections 20, 49 and 86 and 125.

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18. The party who consents to the alteration, as well as the party who made the alteration, are not entitled to complain against such alteration. If the drawer of the cheque himself altered the cheque, he cannot take advantage of it later by saying that the cheque became void as there is a material alteration thereto. Even if the payee or the holder of the cheque made the alteration with the consent of the drawer thereof, such alteration also cannot be used as a ground to resist the right of the payee or the holder thereof. It is always a question of fact whether the alteration was made by the drawer himself or whether it was made with the consent of the drawer. It requires evidence to prove the aforesaid question whenever it is disputed (See Veera

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Exports v. Kalavathy : (2002) 1 SCC 97: AIR 2002 SC 38 ).

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Therefore, the cheque became enforceable because

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of the material alteration in it.

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Man Singh Thakur (CW1) stated in his crossexamination that the accused had taken the loan in the name of the Society, which is to be repaid. He stated that the accused has to pay ₹ 95 lacs to the complainant. He stated that the accused is a member of the Managing Committee of the Society and the authorised signatory.

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The cross-examination of the witness shows that the accused had issued the cheque towards the liability of the Society because he is a member of the Managing Committee. Learned Trial Court also held that the accused is a Director and therefore, liable by his position to repay the amount.

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It was suggested to Luder Chand (DW-1) that the Society had taken a loan from the KCC bank worth ₹ 47 lacs. He also admitted that the accused is the President of the Society, and he is managing the affairs of the society. It was also suggested to him that the accused had issued a cheque for the payment of the dues of the Society.

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The cross-examination of the witness shows that the complainant has come forward with the case that the accused had issued the cheque to discharge the legal liability of the Society and not his individual liability.

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The complaint does not mention that the loan was taken by the Society, and the accused is the authorised signatory of the Society; rather, it mentions in para-3 that the accused had raised a loan from the bank and issued a cheque amounting to ₹ 1 lac. Thus, as per the complaint, the loan was taken by the accused individually, and he was not held liable as an authorised signatory of the Society. Therefore, the findings recorded by the learned Trial Court that the accused is liable being the authorised signatory/Director is not sustainable.

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Admittedly, the society was not arrayed as a party. The Society is a juristic person under the H.P. Co-operative Societies Act. It was laid down by the Hon'ble Supreme Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 that it is not permissible to prosecute the Directors in the absence of the Company. It was observed that

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“58. Applying the doctrine of strict construction, we are of the considered opinion that the commission of the offence by the company is an express condition

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precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it 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 the petition and proof thereof. One cannot be oblivious to the fact that the company is a juristic person and it has its respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.

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In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative.”

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This judgment was followed by the Hon'ble Supreme

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Court in Charanjit Pal Jindal v. L.N. Metalics, (2015) 15 SCC 768: 2015 SCC OnLine SC 1033, and it was held:

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“11. From the aforesaid finding, we find that after analysing all the provisions and having noticed the different decisions rendered by this Court, the threejudge Bench arrived at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning a company as an accused is imperative. Hence, in this case, we find no reason to refer the matter to the larger Bench.

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12. In the present case, only the appellant was impleaded as an accused. In that view of the matter, we are of the view that the complaint with respect to the offence under Section 138 read with Section 141 of the Act was not maintainable following the decision in Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661: (2012) 3 SCC (Civ) 350: (2012) 3 SCC (Cri) 241] . We set aside the judgment dated 17-4-2010 passed by the trial court, the order dated 27-5-2011 passed by the appellate court and the impugned judgment dated 9-11-2012 passed by

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the High Court of Orissa, Cuttack in Charanjit Pal Jindal v. L.N. Metalics [ Charanjit Pal Jindal v. L.N. Metalics , Criminal Revision No. 467 of 2011, decided on 9-11-2012 (Ori) ]. The appellant stands acquitted.”

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This position was reiterated in Himanshu v. B. Shivamurthy , (2019) 3 SCC 797: 2019 SCC OnLine SC

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83, and it was held:

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“13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The 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 Section 138, the High Court was in error in holding that the company could now be arraigned as an accused.”

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This position was reiterated in Pawan Kumar Goel

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v. State of U.P., 2022 SCC OnLine SC 1598, and it was held:

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“31. This Court has been firm with the stand that if the complainant fails to make specific averments against the company in the complaint for the commission of an offence under Section 138 of the NI Act, the same cannot be rectified by taking recourse to general principles of criminal jurisprudence. Needless to say, the provisions of Section 141 impose vicarious liability by deeming a fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-sections (1) and (2) would not be liable to be convicted based on the principles of vicarious liability.”

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Therefore, in view of the binding precedents of the Hon’ble Supreme Court, the prosecution of the Society is necessary before the accused can be held vicariously liable. Since Society has not been arrayed as the accused, therefore, the accused cannot be held vicariously liable.

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Learned Courts below did not have the advantage of the judgment of the Hon’ble Supreme Court in Anita Hada (supra) and could not consider whether the petitioner/accused could be held liable in the absence of Society. Hence, they committed a jurisdictional error while convicting and sentencing the accused. Such an error can be corrected in the exercise of revisional jurisdiction.

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The judgment of the Andhra Pradesh High Court in Moh. Isaq Gulsani (supra) will not help the respondent/complainant because this judgment is contrary to the judgment of the Hon’ble Supreme Court in Anita Hada (supra). Hence, no advantage can be derived from the said judgment.

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Thus, the learned Courts below erred in holding the accused liable for the commission of an offence punishable under Section 138 of the NI Act and sentencing him to undergo simple imprisonment for six months and to pay of ₹ 1.50 lacs,

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compensation. Hence, the judgments and order passed by the learned Court below are not sustainable.

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Consequently, the present petition is allowed and the petitioner/accused is acquitted of the commission of an offence punishable under Section 138 of the N I Act. The fine amount, if deposited by the accused, be refunded to him after the expiry of the statutory period of limitation in case no appeal is preferred, and in case of appeal, the same be dealt with as per orders of the Hon’ble Apex Court.

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In view of the provisions of Section 437-A of the Code of Criminal Procedure [Section 481 of Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS)], the petitioner/accused is directed to furnish his personal bond in the sum of ₹25,000/with one surety in the like amount to the satisfaction of the learned Registrar (Judicial) of this Court/learned Trial Court, within four weeks, which shall be effective for six months with stipulation that in the event of Special Leave Petition being filed against this judgment, or on grant of the leave, the petitioner/accused, on receipt of notice(s) thereof, shall appear before the Hon’ble Supreme Court.

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