Section 138 liability depends on being the drawer of the cheque; connected debt alone is not enough.

Section 138 of the Negotiable Instruments Act requires that the accused be the drawer of the dishonoured cheque and maintain the account on which it was drawn. Where a cheque is issued from a company account and the person proceeded against is neither the drawer nor shown to be a director or person in charge of the company's affairs, alleged liability connected with the underlying debt does not satisfy the statutory ingredients. In that situation, service or deemed service of statutory notice becomes immaterial to criminal liability, and prosecution under section 138 cannot be sustained.

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Issues: Whether proceedings under section 138 of the Negotiable Instruments Act, 1881 could be sustained against a person who was not the drawer of the cheque and did not maintain the bank account on which the cheque was drawn, merely because he was alleged to be connected with the underlying debt or company transaction, and whether the question of service of statutory notice had any significance in such circumstances.

Analysis: Liability under section 138 arises from dishonour of a cheque drawn by the accused on an account maintained by him, for discharge of a legally enforceable debt or liability. On the complaint allegations, the cheque was drawn on the company account and not on an account maintained by the petitioner, nor was he shown to be a director or person in charge of the company's affairs. Even if the petitioner had some liability towards the complainant, that by itself did not satisfy the statutory requirement that he must be the drawer of the dishonoured cheque. Once the basic ingredient of drawer status was absent, the issue of statutory notice or deemed service ceased to be material for deciding criminal liability under section 138.

Conclusion: The petitioner was not liable to be prosecuted under section 138 of the Negotiable Instruments Act, 1881, and the proceedings against him were liable to be quashed.

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