Director cannot be prosecuted alone under Section 141 without company being made accused party

The Calcutta HC allowed the petitioner's application in a dishonour of cheque case. The court held that proceedings under Section 138/141 of the Negotiable Instruments Act were not maintainable as the company was not made an accused party. Only the petitioner-director was arraigned as accused, and no notice under Section 138 was served on the company. Following Supreme Court precedent in Aneeta Hada case, the HC ruled that arraigning the company as accused is imperative for maintaining prosecution under Section 141, making the complaint against the director alone non-maintainable.

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Issues:
The issues involved in this case are the conviction of the accused under Section 138 of the Negotiable Instruments Act, the sufficiency of demand notice, and the liability of the company in cases of bounced cheques.

Conviction under Section 138 of the Negotiable Instruments Act:

The petitioner was convicted under Section 138 of the Negotiable Instruments Act for issuing a dishonored cheque. The complainant alleged that the petitioner borrowed a loan and issued two account payee cheques which were subsequently dishonored. The Trial Court and the Additional District & Sessions Judge affirmed the conviction, sentencing the petitioner to 3 months of simple imprisonment and a compensation of Rs. 17,00,000 to the complainant.

Sufficiency of Demand Notice:

The petitioner contended that the complainant failed to issue a demand notice under Section 138 of the Negotiable Instruments Act to the company that issued the cheque. It was argued that the demand notice was sent only to the accused/petitioner and not to the company, Bhavyaa Global Limited, which was the actual issuer of the cheques. The absence of a demand notice to the company was highlighted as a procedural flaw in the case.

Liability of the Company in Bounced Cheque Cases:

The petitioner's defense relied on legal precedents, including the Supreme Court judgments in Aneeta Hada vs. Godfather Travels and Tours Private Limited and Himanshu vs. B. Shivamurthy & Another. These judgments emphasized that for maintaining a prosecution under Section 141 of the Negotiable Instruments Act, arraigning the company as an accused is essential. In this case, the company, Bhavyaa Global Limited, was not made an accused, and no notice was served upon the company, leading to the argument that the complaint against the petitioner, as the company's director, was not maintainable.

Conclusion:

The High Court allowed the petitioner's revision petition, setting aside the previous judgment of conviction. The Court acquitted the petitioner of the offense punishable under Section 138/141 of the Negotiable Instruments Act and discharged him from his bail bonds. The judgment highlighted the importance of proper legal procedures, including issuing demand notices to the appropriate entities in cases involving bounced cheques.

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