Cheque Bounce Case: Additional Accused Cannot Be Impleaded After Expiry Of Limitation Period U/s. 142 NI Act- SC

The Supreme Court in a cheque dishonour case has observed that an additional accused cannot be arraigned as an accused once the limitation period under Section 142 of the Negotiable Instruments Act, 1881, has expired for taking cognizance.

The bench of Justice Krishna Murari and Justice Bela M. Trivedi held that "once the limitation prescribed for taking cognizance of the offence under Section 142 of the Negotiable Instruments Act has expired, impleadment of additional accused subsequent to the filing of a cheque bounce complaint, merits no consideration."

The Court dismissed the appeal and held that no error was committed by the Allahabad High Court wherein the summoning orders passed by the Magistrate were quashed, on the ground that the director of a company would not be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the Company being arraigned as an accused.

In this case, the appellant and the respondent had business dealings and the respondent was alleged to have issued an account payee cheque for a sum of Rs. 10 Lakhs payable at Union Bank of India, Muzaffarnagar, in favour of the Appellant towards discharge of its liability for the supply of materials made by the appellant, which when presented for clearance was dishonoured on the ground that the cheque amount exceeds arrangement. Hence the Criminal Complaint was filed by the Appellant.

Advocate Anubhav Kumar appeared on behalf of the Appellant and submitted that the High Court erred in not appreciating that respondent no. 2 was arrayed by name describing him as a director of the Ravi Organics Limited and on account of a typographical error, the company could not be arrayed as accused no. 2 in the complaint by name, though the details thereof are mentioned in the description of accused no. 1. he further submitted that NI Act does not prohibits the amendment of a complaint or the impleadment of an additional accused subsequent to the filing of the complaint.

Advocate Vishwa Pal Singh appeared on behalf of the Respondents and submitted that the summoning order is erroneous as the proceedings itself is not maintainable without the company having not been arrayed as an accused in the complaint. He further submitted that if a complaint under Section 138 of NI Act is filed in respect of dishonour of cheque issued from the account of the company, it is incumbent on the part of the complainant to make necessary averments in the complaint that at the time when the offence was committed, the person accused was in charge of and responsible for the conduct and business of the company. This averment is an essential requirement of Section 141 of NI Act.

The issues dealt with by the Court were-

1) Whether a director of a company would be liable for prosecution under Section 138 of the NI Act without the company being arraigned as an accused.

2) Whether a complaint under Section 138 of the NI Act would be liable to be proceeded against the director of the company without their being any averments in the complaint that the director arrayed as an accused was in charge of and responsible for the conduct and business of the company.

With regard to 1st Issue, the Apex Court relied upon the decision of this court in the case of Aneeta Hada Vs. Godfather Travels & Tours (P) Ltd. (2012) 5 SCC 661, and observed that "for maintaining the prosecution under Section 141 of NI Act, arraigning of the company as an accused is imperative and non-impleadment of the company would be fatal for the complaint."

The Apex Court further observed that "the arguments advanced by learned counsel for the appellant that an additional accused can be impleaded subsequent to the filing of the complaint merits no consideration, once the limitation prescribed for taking cognizance of the offence under Section 142 of NI Act has expired. More particularly, in view of the fact that neither any effort was made by the petitioner at any stage of the proceedings to arraign the company as an accused nor any such circumstances or reason has been pointed out to enable the Court to exercise the power conferred by proviso to Section 142, to condone the delay for not making the complaint within the prescribed period of limitation."

With regard to 2nd issue, the Apex Court observed that if the complainant has failed to make specific averments against the company in the complaint for the commission of an offence under Section 138 of NI Act, the same cannot be rectified by taking recourse to general principles of criminal jurisprudence. Section 141 imposes vicarious liability and unless the company or firm has committed the offence as a principal accused, the person who was in charge or was responsible for the conduct of its business would not be liable to be convicted on the basis of the principles of vicarious liability.

Accordingly, the Apex Court dismissed the appeal.

Cause Title- Pawan Kumar Goel v. State of U.P. & Anr 

Click here to read/download the Judgment