{"id":257544,"date":"2021-11-22T17:00:41","date_gmt":"2021-11-22T11:30:41","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=257544"},"modified":"2021-11-29T15:13:30","modified_gmt":"2021-11-29T09:43:30","slug":"section-138-ni-act-cant-defeat-the-complaint-merely-because-it-does-not-elaborate-upon-managing-directors-authorisation-sc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/11\/22\/section-138-ni-act-cant-defeat-the-complaint-merely-because-it-does-not-elaborate-upon-managing-directors-authorisation-sc\/","title":{"rendered":"Section 138 NI Act| Can’t defeat the complaint merely because it does not elaborate upon Managing Director’s authorisation: SC"},"content":{"rendered":"

Supreme Court<\/strong>: In a case relating to dishonour of cheques where it was alleged that the complaint was filed by the managing director in his personal capacity and not on behalf of the Company, the bench of Sanjay Kishan Kaul*<\/strong> and MM Sundresh, JJ has held that there could be a format where the Company\u2019s name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company. It was further held that it would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation.<\/p>\n

Facts<\/strong><\/p>\n

The respondent had issued 8 cheques totalling to Rs.1,60,000\/- in favour of Bell Marshall Telesystems Limited, however, all the cheques got dishonoured on account of \u201cfunds insufficient\u201d after which legal notices were issued by the beneficiary under Section 138(b) of the Negotiable Instruments Act, 1881. The demand was, however not met within fifteen days of the receipt of the notice nor was any reply sent which resulted in the complaint being filed by the Company\u2019s Managing Director Bhupesh Rathod before the Special Metropolitan Magistrate, Mumbai. The Company also filed an affidavit through its Managing Director, i.e., Bhupesh Rathod, stating that it had authorised to file a complaint case against the respondent. A copy of the Board Resolution was also presented.<\/p>\n

The respondent took an objection that the complaint was filed in the personal capacity of Bhupesh Rathod and not on behalf of the Company. On the other hand it was contended by the appellant that the complaint was in the name of the Company and in the cause title of the complaint he had described himself as the Managing Director. The Company was a registered company under the Companies Act, 1956. On this, the respondent contended that it is only in the aforesaid title description that the complainant is described as the Managing Director of the Company but in the body of the complaint it is not so mentioned.<\/p>\n

Analysis <\/strong><\/p>\n

The Court took note of the facts that the description of the complainant with its full registered office address is given at the inception itself except that the Managing Director\u2019s name appears first as acting on behalf of the Company. The affidavit and the cross-examination in respect of the same during trial supports the finding that the complaint had been filed by the Managing Director on behalf of the Company.<\/p>\n

It, hence, noticed that the format itself cannot be said to be defective though it may not be perfect.<\/p>\n

\u201cThe body of the complaint need not be required to contain anything more in view of what has been set out at the inception coupled with the copy of the Board Resolution. There is no reason to otherwise annex a copy of the Board Resolution if the complaint was not being filed by the appellant on behalf of the Company.\u201d<\/p><\/blockquote>\n

It further explained that a Manager or a Managing Director ordinarily by the very nomenclature can be taken to be the person in-charge of the affairs Company for its day-to-day management and within the activity would certainly be calling the act of approaching the court either under civil law or criminal law for setting the trial in motion.<\/p>\n

\u201cIt would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person\/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified.\u201d<\/p><\/blockquote>\n

The Court considered the governing principles in respect of a \u00a0corporate entity which seeks to file the complaint, as laid down in Associated Cement Co. Ltd. v. Keshavanand, (1998)\u00a01\u00a0SCC\u00a0687<\/strong>, and said that,<\/p>\n

\u201cIf a complaint was made in the name of the Company, it is necessary that a natural person represents such juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no Magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person.\u201d<\/p><\/blockquote>\n

Further, the Court noticed that the signatures on the cheques were not denied. Neither was it explained by way of an alternative story as to why the duly signed cheques were handed over to the Company. There was no plea of any fraud or misrepresentation.<\/p>\n

\u201cIt does, thus, appear that faced with the aforesaid position, the respondent only sought to take a technical plea arising from the format of the complaint to evade his liability.\u201d<\/p><\/blockquote>\n

Ruling <\/strong><\/p>\n

The Court held that the complaint was properly instituted and also that the respondent failed to disclose why he did not meet the financial liability arising to a payee, who is a holder of a cheque in due course.<\/p>\n

The Court was of the view that the respondent should be sentenced with imprisonment for a term of one year and with fine twice the amount of the cheque, i.e., Rs.3,20,000\/-. However, since 15 years have elapsed since the complaint was filed, the Court directed if the respondent pays a further sum of Rs.1,60,000\/- to the appellant, then the sentence would stand suspended.<\/p>\n

[Bhupesh Rathod v. Dayashankar Prasad Chaurasiya, 2021 SCC OnLine SC 1031<\/b><\/a>, decided on 10.11.2021]<\/p>\n

\n

*Judgment by: Justice Sanjay Kishan Kaul<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Supreme Court: In a case relating to dishonour of cheques where it was alleged that the complaint was filed by the managing <\/p>\n","protected":false},"author":121,"featured_media":243203,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[34012,34595,6881,2862,47842,23564,9441],"class_list":["post-257544","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-company","tag-company-law","tag-complaint","tag-dishonour_of_cheque","tag-managing-director","tag-negotiable-instruments","tag-section-138"],"yoast_head":"\nSection 138 NI Act| Can't defeat the complaint merely because it does not elaborate upon Managing Director's authorisation: SC | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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dishonour of cheques","author":"Prachi Bhardwaj","date":"October 18, 2021","format":false,"excerpt":"Supreme Court: Explaining the law relating to vicarious liability of the Directors of a company under Sections 138 and 141 of the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi* and Abhay S. Oka, JJ has held that if, at the time the offence was committed, the person accused\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":274559,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/09\/27\/supreme-court-calcutta-high-court-section-141negotiable-instruments-act-1881-dishonour-of-cheque-interest-of-justice-managing-director-criminal-liability-vicarious-liability-independent-non-executive\/","url_meta":{"origin":257544,"position":1},"title":"Explained| Dishonour of Cheques: Can non-executive Directors of the accused company be held vicariously liable under Section 141 NI Act?","author":"Editor","date":"September 27, 2022","format":false,"excerpt":"\u00a0 \u00a0 Supreme Court: In an appeal against a judgment passed by the Calcutta High Court dismissing the Criminal Revision Application filed by the appellants for quashing the proceedings under Sections 138 and 141 of the Negotiable Instruments (NI) Act,1881, the division bench of Indira Banerjee* and J.K. Maheshwari has\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":231311,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/06\/24\/dishonour-of-cheque-mp-hc-director-managing-director-joint-director-other-officers-and-employees-of-a-company-can-not-be-prosecuted-under-s-138-of-ni-act-unless-the-company-is-impleaded-as-an-acc\/","url_meta":{"origin":257544,"position":2},"title":"[Dishonour of Cheque] MP HC | Director\/MD\/JD\/other officers and employees of a company can not be prosecuted under S. 138 of NI Act unless the company is impleaded as an accused","author":"Bhumika Indulia","date":"June 24, 2020","format":false,"excerpt":"Madhya Pradesh High Court:\u00a0Rajendra Kumar Srivastava, J., while addressing a matter with regard to dishonour of cheque held that, Director\/Managing Director\/Joint Director\/other officers and employees of company can not be prosecuted under Section 138 of NI Act unless the company is impleaded as an accused Petitioner is aggrieved with the\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":266662,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/10\/when-no-offence-is-attributable-to-company-it-is-not-possible-to-attach-liability-on-managing-director-section-138-ni-act-dishonour-of-cheque-liability\/","url_meta":{"origin":257544,"position":3},"title":"When no offence is attributable to Company, it is not possible to attach liability on Managing Director by deeming provisions of S. 141 of the NI Act: Del HC","author":"Bhumika Indulia","date":"May 10, 2022","format":false,"excerpt":"Delhi High Court: Asha Menon, J., held that if no offence is attributed to the company, its Directors and other persons responsible for the conduct of its business cannot be saddled with any liability. The petitioner had filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":239115,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/11\/12\/madras-hc-can-a-non-executive-director-who-is-not-responsible-for-day-to-day-affairs-of-company-be-made-vicariously-liable-for-offence-committed-by-company-courts-interpretation-in-light-of-s\/","url_meta":{"origin":257544,"position":4},"title":"Madras HC | Can a ‘Non-Executive Director’ who is not responsible for day-to-day affairs of company be made vicariously liable for offence committed by company? Court’s interpretation in light of S. 141 NI Act","author":"Bhumika Indulia","date":"November 12, 2020","format":false,"excerpt":"Madras High Court:\u00a0G.K. Ilathiraiyan, J., while addressing the instant matter, observed that, a person who is inducted as the Non-Executive Director of an accused company and not responsible for the day-to-day affairs of the company, he\/she cannot be vicariously liable for the offence committed by the company. Petitioners Counsel submitted\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":364270,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/10\/17\/ori-hc-insolvency-no-defence-for-directors-in-cheque-dishonour\/","url_meta":{"origin":257544,"position":5},"title":"Insolvency proceedings no shield for Directors in cheque dishonour cases under S. 138 NI Act: Orissa HC","author":"Editor","date":"October 17, 2025","format":false,"excerpt":"\u201cOn the request of the petitioner, the complainant waited and represented the cheque through its banker, but once again it got dishonoured with the same remark - refer to drawer.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Cheque dishonour","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Cheque-dishonour.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Cheque-dishonour.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Cheque-dishonour.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Cheque-dishonour.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/257544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=257544"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/257544\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/243203"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=257544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=257544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=257544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}