Case Law Details
Man Mohan Patnaik Vs Cisco Systems Capital India Pvt.Ltd & Ors. (Delhi High Court)
Upon a bare perusal of section 138 of the NI Act, it is evident that the genesis of an offence under that provision is the ‘return’ of a cheque by a bank ‘unpaid’, inter-alia for insufficiency of funds in the account on which the cheque is drawn. Furthermore, the provision also stipulates certain pre-conditions which must be fulfilled before the offence is taken to be committed, one of which is the issuance of a written notice of demand for payment to the drawer of the cheque within 30 days of the cheque being returned unpaid by the bank; and giving to the drawer at least 15 days from the date of receipt of notice, to make such payment.
Furthermore, section 141 of the NI Act is clear, that if the person committing the 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 … shall be liable to be proceeded against and punished accordingly…”
Clearly therefore, on a prima facie view, merely being a signatory to a cheque does not, in and of itself, make a person guilty of the offence under section 138 of the NI Act. The offence is triggered at the stage when a cheque is returned unpaid by the bank inter-alia for insufficiency of funds. For guilt to be imputed to an officer of a company, at the very least, the officer should have been responsible for the business and affairs of the company and for honouring the cheque on the date that the cheque was returned unpaid.
In the present case, it is clear that though the petitioner co-signed the cheques in question, he had retired from the company more than 09 months before the cheques came to be presented; and could not therefore have ensured sufficient funds in the bank account of the company to honour the cheques, even if he had so desired.
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