MANU/SC/1046/2021

Equivalent/Neutral Citation: 2022(230)AIC 68, AIR2021SC 5726, 2022 (1) ALD(C rl.) 243 (SC ), 2022 (1) ALT (C rl.) 1 (A.P.), I(2022)BC 78(SC ),
2022(3)BLJ146, 2021(4)C ivilC C (S.C .), 2021(4)C rimes282(SC ), 2021(4)C riminalC C 108, 2022(2)C TC 904, 2021GLH(4)545, 2022(1)IC C 22, 2021 INSC
710, 2021(6)JKJ26[SC ], 2021 (6) KHC 368, 2021(4)KLJ834, 2021 (3) MWN (C r.) D.C .C . 125, 2022(1)RC R(C riminal)85, 2021(13)SC ALE392,
(2022)2SC C 355, [2022]170SC L172(SC ), [2021]7SC R319, 2022(1)UC 374

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1105 of 2021
Decided On: 10.11.2021
Bhupesh Rathod Vs. Dayashankar Prasad Chaurasia and Ors.
Hon'ble Judges/Coram:
Sanjay Kishan Kaul and M.M. Sundresh, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Pratap Singh Parmar, Kuldeep Singh Kuchaliya, Mohd.
Arif, Manoj Kumar, Advs. and Ajay Pal, AOR
For Respondents/Defendant: V.K. Sidharthan, AOR, Samrat Krishnarao Shinde, Rahul
Chitnis, Advs., Sachin Patil, AOR, Aaditya A. Pande and Geo Joseph, Advs.
Cases Reversed/Partly Reversed:
Bhupesh Rathod vs. Dayashankar Prasad Chaurasia and Ors. MANU/MH/2863/2015
Case Note:
Criminal - Appeal against Acquittal - Cheque dishonour - Sections 138(b), 142
of the Negotiable Instruments Act, 1881 (NI Act) - Cheques drawn
dishonoured on account of "funds insufficient" - Trial court acquitted the
Respondent on the grounds of no document except promissory note to show
that loan was granted - Further Board Resolution itself was not signed by the
Board of Directors - Appeal preferred by Appellant dismissed by High Court
vide impugned order - Hence, the present appeal - Whether complaint in such
circumstances rightly dismissed by impugned judgments?
Facts:
The present appeal was filed against impugned findings directing acquittal of
Respondent in proceedings initiated against dishonour of cheques in question.
The complaint was dismissed on the ground of it being not properly instituted
and contrary to format. Further, as contended it was not instituted in the
manner it should have been by company and thus was held to be not
maintainable. Hence, the present appeal.
Held, while allowing the Appeal:
The only eligibility criteria prescribed under Section 142(1)(a) is that the
complaint must be by the payee or the holder in due course.[18]
The description of the complainant with its full registered office address is
given at the inception itself except that the Managing Director's name

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appears first as acting on behalf of the Company. The affidavit and the cross-
examination in respect of the same during trial supports the finding that the
complaint had been filed by the Managing Director on behalf of the Company.
Thus, the format itself cannot be said to be defective though it may not be
perfect. The body of the complaint need not be required to contain anything
more in view of what has been set out at the inception coupled with the copy
of the Board Resolution. There is no reason to otherwise annex a copy of the
Board Resolution if the complaint was not being filed by the Appellant on
behalf of the Company.[26]
Signatures on the cheques were not denied. Neither was it explained by way
of an alternative story as to why the duly signed cheques were handed over to
the Company. There was no plea of any fraud or misrepresentation. It does
thus appear that the Respondent only sought to take a technical plea arising
from the format of the complaint to evade his liability. There was no
requirement of a loan agreement to be executed separately as any alternative
nature of transaction was never stated.[27]
Both the impugned orders of the trial court and the High Court cannot be
sustained and set aside. Complaint was properly instituted and the
Respondent failed to disclose why he did not meet the financial liability
arising to a payee, who is a holder of a cheque in due course.[28]
Appeal allowed. [30]

JUDGMENT
Sanjay Kishan Kaul, J.
1 . Dayashankar Chaurasia, the Respondent issued eight (8) cheques of Rs. 20,000/-
each totalling to Rs. 1,60,000/- in favour of M/s. Bell Marshall Telesystems Limited (for
short 'the Company'). The cheques were drawn on HDFC Bank, Vasai (E) Branch,
Mumbai. These cheques were drawn on different dates but were presented together for
payment on 10.05.2006. All the cheques got dishonoured on account of "funds
insufficient" as per Bank Memos issued on 12.05.2006. On the cheques being
dishonoured, legal notices were issued by the beneficiary Under Section 138(b) of the
Negotiable Instruments Act, 1881 (hereinafter referred to as the 'NI Act') on
26.05.2006. The demand was, however not met within fifteen (15) days of the receipt
of the notice nor was any reply sent which resulted in the complaint bearing No.
160/SS/07 being filed on 07.07.2006 by Mr. Bhupesh Rathod before the Special
Metropolitan Magistrate, Mumbai. The complaint was accompanied by a Board
Resolution of the Company dated 17.05.2006 authorising Mr. Bhupesh Rathod to initiate
legal action against the Respondent on behalf of the Company. On 24.12.2007, the
Company filed an affidavit through its Managing Director, i.e., Mr. Bhupesh Rathod,
stating that it had authorised him through the abovementioned Board Resolution to file
a complaint case against the Respondent.
2. In view of the fact that much turns on the manner of description of the complainant,
we reproduce the description of the complainant as under:
Mr. Bhupesh M. Rathod
Managing Director of M/s. Bell Marshall Telesystems Ltd.

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 Aged: 41 years, Occupation: Business
Having address at 1107,
v. Maker Chamber, Nariman Point Mumbai- 400021.
3. The Board Resolution passed on 17.05.2006 is in the following terms:
RESOLVED THAT legal action be initiated against Dayashankar Prasad Choursiya
for the dishonour of cheques issued by him and in discharge of this liabilities to
the company and Mr. Bhupesh Rathod/Sashikant Ganekar is hereby authorized
to appoint advocates, issues of notices through advocate, file complaint,
Verifications on Oath, appoint Constituent attorney to file complaint in the court
and attend all such affairs which may be needed in the process of legal actions.
For Bell Marshal Tele Systems LTD.
Sd/-
Dated: 17/05/2006
Director
4 . We reproduce the aforesaid as the competency and the manner of filing of the
complaint are the primary considerations debated before us.
5. The case made out in the complaint is that a sum of Rs. 1,60,000/- was advanced to
the Respondent by the Company and the cheques were issued to repay the loan. The
Respondent took an objection that the complaint was filed in the personal capacity of
Mr. Bhupesh Rathod and not on behalf of the Company. While on the other hand it was
contended by the Appellant that the complaint was in the name of the Company and in
the cause title of the complaint he had described himself as the Managing Director. The
Company was a registered company under the Companies Act, 1956. The registration
certificate, however, was not placed on record. On this aspect, it was the further
submission of the Respondent that it is only in the aforesaid title description that the
complainant is described as the Managing Director of the Company but in the body of
the complaint it is not so mentioned.
6. The trial court acquitted the Respondent on 12.03.2009 based on a dual reasoning -
(a) there was no document except the promissory note signed by the
Respondent to show that the loan was being granted; and
(b) the Board Resolution itself was not signed by the Board of Directors (it may
be stated that this was really a true copy of the Board Resolution).
7 . The Appellant preferred an appeal before the High Court. The High Court by the
impugned order dated 03.08.2015 dismissed the appeal.
8. It may be relevant to note that the High Court traversed many paths while coming to
this conclusion. In a nutshell the reasoning was:
(a) it could not be said that the complaint had been filed by a payee or holder
in due course as mandated Under Section 142(a) of the NI Act;
(b) the payee was the Company and a perusal of the complaint did not show
that the complaint was filed by the Company. It had been filed by the Appellant
who had described himself as the Managing Director of the Company only in the

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 cause title of the complaint;
(c) probably a conscious choice was made to not file the complaint in the name
of the Company as it was unclear whether the Company was authorised to
advance loans.
9. We may note that the High Court did not give its imprimatur to the entire reasoning
of the trial court as it noticed that the demand notice was sent on behalf of the
Company. Thus, the Company was aware that the complaint had to be filed by the
Company itself. It was observed that the aforesaid aspect was probably left vague on
purpose by the Company and therefore, it was opined that the complaint had not been
filed by the payee in terms of Section 142 of the NI Act.
Complainant's/Appellant's submissions:
10. The Appellant contended before us that it was quite apparent from the cause title of
the complaint which is an integral part of the complaint, that the same had been filed
on behalf of the Company. It was further contended that this was the reason that the
Board Resolution authorising the Managing Director to file a complaint for dishonour of
the cheques was annexed. The address given was of the Company, which was the
registered office address. The affidavit filed in the cross-examination in pursuance
thereto left no manner of doubt that the complaint was filed as the Managing Director of
the Company.
11. It is the say of the Appellant that there is a presumption Under Section 139 and 118
of the NI Act which was not rebutted by the Respondent. It was further contended that a
duly signed cheque was sufficient to raise a presumption Under Section 139 of the NI
Act against the Respondent as held in Triyambak S. Hegde v. Sripad1. It was not the say
of the Respondent in defence that the cheque was not signed by him or was signed
under any fraud or misrepresentation.
12. It was submitted that a very hyper technical view of the matter had been taken and
it only related to the format of the filing of the complaint and not the substance. The
trial court itself had accepted that the complaint was filed on behalf of the Company as
otherwise it would have refused to take cognizance Under Section 142(a) of the NI Act.
The Respondent had not even challenged the summoning order on the ground that the
complaint is not filed on behalf of the Company.
Respondent's submissions:
13. Learned Counsel for the Respondent, however, contended that the Appellant had
failed to prove his case beyond reasonable doubt and the complaint itself was not in a
proper form. The complaint and the Board Resolution did not lead to a conclusion that it
was filed on behalf of the Company. The Board Resolution was also not signed by the
Directors of the Company nor does it find that it authorises the complainant to file the
complaint.
14. The Respondent also contended that no loan was advanced by the Company nor has
it been proved as to whose account the alleged loan was advanced to. No loan
agreement in favour of the Company was placed on record.
Our View:
15. We have examined the submissions of the learned Counsel for the parties.

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1 6 . To decide the controversy the relevant Sections of the NI Act are extracted as
under:
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --
Where any cheque drawn by a person on an account maintained by him with a
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, is
returned by the bank unpaid, either because of the amount of money standing
to the credit of that 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 that bank, such person shall be deemed to have committed an
offence and shall, without prejudice to any other provision of this Act, be
punished with imprisonment for [a term which may be extended to two years],
or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this Section shall apply unless--
(a) the 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;
(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.
....................
1 3 9 . Presumption in favour of holder.-- It shall be presumed, unless the
contrary is proved, that the holder of a cheque received the cheque of the
nature referred to in Section 138 for the discharge, in whole or in part, of any
debt or other liability.
....................
118. Presumptions as to negotiable instruments.-- Until the contrary is proved,
the following presumptions shall be made:
(g) that holder is a holder in due course: that the holder of a negotiable
instrument is a holder in due course: provided that, where the instrument has
been obtained from its lawful owner, or from any person in lawful custody
thereof, by means of an offence or fraud, or has been obtained from the maker
or acceptor thereof by means of an offence or fraud, or for unlawful
consideration, the burden of proving that the holder is a holder in due course
lies upon him.
....................
142. Cognizance of offences.-- Notwithstanding anything contained in the Code

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 of Criminal Procedure, 1973 (2 of 1974), --
(a) no court shall take cognizance of any offence punishable Under
Section 138 except upon a complaint, in writing, made by the payee or,
as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the
cause of action arises under Clause (c) of the proviso to Section 138:
[Provided that the cognizance of a complaint may be taken by
the Court after the prescribed period, if the complainant
satisfies the Court that he had sufficient cause for not making a
complaint within such period;]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial
Magistrate of the first class shall try any offence punishable Under
Section 138.
1 7 . We must say at the inception that the Respondent not having disputed his
signatures on the cheques, it was for the Respondent to show in what circumstances the
cheques had been issued, i.e., why was it not a cheque issued in due course. The words
of Section 139 of the NI Act are quite clear that unless the contrary is proved, it shall be
presumed that the holder of the cheque received the cheque of the nature referred to in
Section 138 for the discharge, in whole or in part, of any debt or other liability. The
Respondent has not set up a case that the nature of transaction was of the nature which
fell beyond the scope of Section 138. Other than taking a technical objection, really
nothing has been said on the substantive aspect.
18. The only eligibility criteria prescribed Under Section 142(1)(a) is that the complaint
must be by the payee or the holder in due course.
19. In the conspectus of the aforesaid principles we have to deal with the plea of the
Respondent that the complaint was not filed by the competent complainant as it is the
case that the loan was advanced by the Company. As to what would be the governing
principles in respect of a corporate entity which seeks to file the complaint, an
elucidation can be found in the judgment of this Court in Associated Cement Co. Ltd. v.
Keshavanand MANU/SC/0894/1998 : (1998) 1 SCC 687. If a complaint was made in
the name of the Company, it is necessary that a natural person represents such juristic
person in the court and the court looks upon the natural person for all practical
purposes. It is in this context that observations were made that the body corporate is a
de jure complainant while the human being is a de facto complainant to represent the
former in the court proceedings. Thus, no Magistrate could insist that the particular
person whose statement was taken on oath alone can continue to represent the
Company till the end of the proceedings. Not only that, even if there was initially no
authority the Company can at any stage rectify that defect by sending a competent
person.
20. The aforesaid judgment was also taken note of in a subsequent judgment of this
Court in M.M.T.C. Ltd. and Anr. v. Medchl Chemicals and Pharma (P) Ltd. and Anr.
MANU/SC/0728/2001 : (2002) 1 SCC 234.
2 1 . We find that the judicial precedents cited aforesaid have been breached by the
Courts below. The High Court also embarked on a discussion as to the vagueness of the
identity of the complainant and its relation with the legality of a loan which may be

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granted by the Company, something that was not required to be gone into.
22. If we look at the format of the complaint which we have extracted aforesaid, it is
quite apparent that the Managing Director has filed the complaint on behalf of the
Company. There could be a format where the Company's name is described first, suing
through the Managing Director but there cannot be a fundamental defect merely because
the name of the Managing Director is stated first followed by the post held in the
Company.
23. It is also relevant to note that a copy of the Board Resolution was filed along with
the complaint. An affidavit had been brought on record in the trial court by the
Company, affirming to the factum of authorisation in favour of the Managing Director. A
Manager or a Managing Director ordinarily by the very nomenclature can be taken to be
the person in-charge of the affairs Company for its day-to-day management and within
the activity would certainly be calling the act of approaching the court either under civil
law or criminal law for setting the trial in motion.2 It would be too technical a view to
take to defeat the complaint merely because the body of the complaint does not
elaborate upon the authorisation. The artificial person being the Company had to act
through a person/official, which logically would include the Chairman or Managing
Director. Only the existence of authorisation could be verified.
24. While we turn to the authorisation in the present case, it was a copy and, thus,
does not have to be signed by the Board Members, as that would form a part of the
minutes of the Board meeting and not a true copy of the authorisation. We also feel that
it has been wrongly concluded that the Managing Director was not authorised. If we
peruse the authorisation in the form of a certified copy of the Resolution, it states that
legal action has to be taken against the Respondent for dishonour of cheques issued by
him to discharge his liabilities to the Company. To this effect, Mr. Bhupesh
Rathod/Sashikant Ganekar were authorised to appoint advocates, issues notices through
advocate, file complaint, verifications on oath, appoint Constituent attorney to file
complaint in the court and attend all such affairs which may be needed in the process of
legal actions. What more could be said?
25. The finding by the Courts below as to the lack of authorisation to depose also, thus,
stands nullified.
26. The description of the complainant with its full registered office address is given at
the inception itself except that the Managing Director's name appears first as acting on
behalf of the Company. The affidavit and the cross-examination in respect of the same
during trial supports the finding that the complaint had been filed by the Managing
Director on behalf of the Company. Thus, the format itself cannot be said to be
defective though it may not be perfect. The body of the complaint need not be required
to contain anything more in view of what has been set out at the inception coupled with
the copy of the Board Resolution. There is no reason to otherwise annex a copy of the
Board Resolution if the complaint was not being filed by the Appellant on behalf of the
Company.
2 7 . In our view, one of the most material aspects is, as stated aforesaid, that the
signatures on the cheques were not denied. Neither was it explained by way of an
alternative story as to why the duly signed cheques were handed over to the Company.
There was no plea of any fraud or misrepresentation. It does, thus, appear that faced
with the aforesaid position, the Respondent only sought to take a technical plea arising
from the format of the complaint to evade his liability. There was no requirement of a

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loan agreement to be executed separately as any alternative nature of transaction was
never stated.
Conclusion:
28. We are, thus, of the view that both the impugned orders of the trial court and the
High Court cannot be sustained and are required to be set aside. The finding is, thus,
reached that the complaint was properly instituted and the Respondent failed to disclose
why he did not meet the financial liability arising to a payee, who is a holder of a
cheque in due course.
29. We now turn to what would be the result of the aforesaid finding. The complaint
was instituted in July, 2006. Fifteen (15) years have elapsed since then. The
punishment prescribed for such an offence Under Section 138 of the NI Act is
imprisonment for a term which may extend to two years, or with fine which may extend
to twice the amount of the cheque, or with both. We are of the view that in the given
scenario the Respondent should be sentenced with imprisonment for a term of one year
and with fine twice the amount of the cheque, i.e., Rs. 3,20,000/-. However, in view of
passage of time, we provide that if the Respondent pays a further sum of Rs. 1,60,000/-
to the Appellant, then the sentence would stand suspended. The needful be done by the
Respondent within two (2) months from today. The Appellant would also be entitled to
costs.
30. The appeal accordingly stands allowed in the aforesaid terms.

1 Crl. Appeal Nos. 849-850/2011 decided on 23.09.2021.

2 Credential Finance Ltd. v. State of Maharashtra MANU/MH/1619/1998 : 1998(3)
Mh.L.J. 805.
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