Company cheque dishonour complaints require arraignment of the company; omission can defeat maintainability and process

A complaint under the Negotiable Instruments Act was treated as not maintainable where the cheque was issued on behalf of a company but the company itself was not arraigned as an accused; liability under sections 138 and 141 requires the drawer company and the person in charge of its business to be proceeded against in the recognised manner. The Court also noted that the absence of an inquiry under section 202(2) of the Code of Criminal Procedure did not, on these facts, sustain the process or cure the defect in the complaint. The criminal proceeding was quashed in respect of the petitioner.

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Issues: (i) Whether a complaint under section 138 of the Negotiable Instruments Act was maintainable without arraigning the company, where the cheque was issued on behalf of the company; (ii) Whether section 202(2) of the Code of Criminal Procedure, 1973 applied to the complaint and rendered the order issuing process unsustainable.

Issue (i): Whether a complaint under section 138 of the Negotiable Instruments Act was maintainable without arraigning the company, where the cheque was issued on behalf of the company.

Analysis: The cheque was issued on behalf of the company and the demand notice was also addressed to the company, yet the company was not made an accused. In proceedings under section 138 read with section 141, when the drawer is a company, the company and the person in charge of its business are required to be proceeded against in the manner recognised by the settled law governing company liability. The complaint, as framed, proceeded only against the managing director without impleading the company, which was the principal drawer of the cheque.

Conclusion: The complaint was not maintainable for want of arraignment of the company, and this issue was decided in favour of the petitioner.

Issue (ii): Whether section 202(2) of the Code of Criminal Procedure, 1973 applied to the complaint and rendered the order issuing process unsustainable.

Analysis: The accused resided beyond the territorial jurisdiction of the Magistrate. However, in complaints under section 138 of the Negotiable Instruments Act, the Court relied on the settled interpretation that section 202(2) does not apply in the manner suggested for examination of witnesses on oath, and that examination of witnesses may be permitted on affidavit in such complaints. The absence of a section 202(2) inquiry, therefore, did not salvage the complaint or validate the process on the facts of the case.

Conclusion: Section 202(2) of the Code of Criminal Procedure, 1973 did not furnish a valid basis to sustain the proceedings, and this issue was answered against the respondent.

Final Conclusion: The criminal proceeding arising from the cheque dishonour complaint was quashed in respect of the petitioner, and the revision succeeded.

Ratio Decidendi: In a prosecution under sections 138 and 141 of the Negotiable Instruments Act based on a cheque issued on behalf of a company, the complaint is not maintainable unless the company is arraigned as an accused; further, section 202(2) of the Code of Criminal Procedure, 1973 does not require witness examination on oath in the same manner for such complaints.

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