Cheque dishonour liability can attach to the drawer personally even if the company is not arraigned as an accused.

Section 138 liability attaches to the drawer of the cheque, and the absence of the company as an accused does not defeat prosecution where the cheque was issued by the Managing Director in his personal capacity. Section 141 applies to offences by companies, but it does not prevent personal liability of the actual drawer on his own account. On that basis, the conviction and compensation order for cheque dishonour were upheld, with the Court relying on the compensatory object of Chapter XVII of the Negotiable Instruments Act and approving compensation linked to the cheque amount with simple interest and default imprisonment.

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Issues: (i) whether the respondent could be made liable in his personal capacity under Section 138 of the Negotiable Instruments Act, 1881 when the company was not made a party to the complaint; (ii) whether the conviction and compensation order for dishonour of the cheque were sustainable.

Issue (i): whether the respondent could be made liable in his personal capacity under Section 138 of the Negotiable Instruments Act, 1881 when the company was not made a party to the complaint

Analysis: Liability under Section 138 attaches to the drawer of the cheque drawn on an account maintained by him for discharge of a debt or liability. The cheque in question was drawn by the respondent on his own account in his personal capacity. Section 141 governs cases where the offence is committed by a company and extends liability to persons in charge of and responsible for its business, but the respondent was the Managing Director and no separate averment was necessary on that aspect. The absence of the company as an accused did not absolve the respondent of personal liability where he himself was the drawer.

Conclusion: The respondent was liable in his personal capacity under Section 138 of the Negotiable Instruments Act, 1881.

Issue (ii): whether the conviction and compensation order for dishonour of the cheque were sustainable

Analysis: Once the respondent was held to be the drawer liable under Section 138, the dishonour of the cheque attracted criminal liability. In awarding sentence and compensation, the Court relied on the compensatory object of Chapter XVII of the Act and approved compensation linked to the cheque amount, with simple interest, along with imprisonment for default.

Conclusion: The conviction, sentence, and compensation order were sustained and enhanced as directed by the Court.

Final Conclusion: The appeal succeeded, the acquittal and the High Court's refusal to grant leave were set aside, and the respondent's liability for cheque dishonour under the Negotiable Instruments Act was affirmed with consequential sentence and compensation.

Ratio Decidendi: A cheque dishonour prosecution lies against the drawer of the cheque, and where the drawer himself is the Managing Director who issued the cheque on his own account, liability under Section 138 can be fastened on him even if the company is not arraigned as an accused.

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