Supreme Court: No Separate Notices to Directors under Section 138

The Supreme Court held that Section 138 of the Negotiable Instruments Act, 1881 does not require separate notices to directors. Imposing such a requirement would make the remedy cumbersome and frustrate the legislative intent. The Court overturned the High Court's decision, ruling that directors would naturally be aware of notices served on the Company. The appeal was allowed, the High Court's order was set aside, and the matter was remitted for fresh consideration.

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Issues Involved:
1. Requirement of separate notices to directors under Section 138 of the Negotiable Instruments Act, 1881.

Detailed Analysis:

Issue 1: Requirement of Separate Notices to Directors under Section 138 of the Negotiable Instruments Act, 1881

Background and Procedural History:
The appeal by Special Leave was directed against the order dated 6.5.2008 by the High Court of Judicature at Bombay, which rejected the appellant's Criminal Application No. 2174 of 2007 for leave to appeal. The case originated from a notice issued on 14.09.1996 under Section 138 of the Negotiable Instruments Act, 1881, regarding a dishonoured cheque drawn by M/S Indo French Bio Tech Enterprises Ltd. The appellant filed Complaint Case No. 243/S/1996 against the Company and its directors, alleging their liability for the dishonoured cheque. The Metropolitan Magistrate convicted the Company but acquitted the directors, citing the necessity of issuing individual statutory notices to each director under Section 138.

Appellant's Argument:
The appellant contended that it was not necessary to serve individual notices to the directors and that serving notice on the Company was sufficient. Reliance was placed on various High Court decisions, including Girish Chandra Pandey v. Kanhaiyalal Chandak and Jain Associates v. Deepak Chawdhary & Co., which supported the view that individual notices to each partner or director were not required.

High Court's Judgment:
The High Court, relying on the Division Bench judgment of the Madras High Court in B. Raman v. Shasun Chemicals & Drugs Ltd., held that separate notices to the directors were mandatory. It concluded that without such individual notices, vicarious liability under Section 138 could not be fixed on the directors.

Supreme Court's Analysis:
The Supreme Court examined whether the decision in N.K. Wahi v Shekhar Singh mandated separate notices to directors. It found that the issue was not considered in that case. The Court then analyzed Sections 138 and 141 of the Act, emphasizing the plain language of Section 138, which requires notice to "the drawer of the cheque" and not to individual directors. The Court noted that the purpose of the notice is to give the drawer an opportunity to rectify the omission and avoid penal consequences. Section 141 attributes vicarious liability to directors responsible for the Company's conduct but does not stipulate separate notices to them.

Interpretative Principles:
The Court referred to principles of statutory interpretation, emphasizing that the intention of the Legislature must be found in the words used. The Court cannot add or subtract words to a statute or read something into it which is not there. The plain and unambiguous language of the statute must be given effect.

Conclusion:
The Supreme Court concluded that Section 138 does not require individual notices to directors. The directors, being in charge of the Company's affairs, would naturally be aware of the notice served on the Company. Imposing a requirement for individual notices would make the remedy under Section 138 cumbersome and could frustrate the summary remedy intended by the Legislature. Therefore, the High Court's interpretation was incorrect, and the Division Bench decision in B. Raman was overruled.

Outcome:
The appeal was allowed, the High Court's order was set aside, and the matter was remitted to the High Court for fresh consideration. The Supreme Court directed that the application for leave to appeal be decided as early as possible.

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