Bijoy Kumar Moni v. Paresh Manna (2024): only the drawer of a cheque can be prosecuted under Section 138

A complainant who has been handed a dishonoured cheque often reaches for the most visible figure: the human being whose signature sits at the foot of the instrument. In Bijoy Kumar Moni v. Paresh Manna, the Supreme Court drew a firm line between that signatory and the person the statute actually targets. A Bench of Justice J.B. Pardiwala and Justice R. Mahadevan held that the offence under Section 138 is committed by the drawer — and the drawer, in the statutory sense, is the one who maintains the bank account on which the cheque is drawn. A director who signs a cheque on his company's account to discharge his own private debt is not, for that reason, the drawer; he cannot be convicted under Section 138 in his individual capacity.

The facts in brief

The dispute arose from money advanced by the complainant against which a cheque was issued in discharge of a personal liability. The cheque, however, was not drawn on the personal account of the individual who owed the money. It was drawn on the bank account of a company of which he was a director, and he signed it in that capacity. When the cheque was dishonoured and the statutory notice went unanswered, the complainant launched a prosecution under Section 138 — but directed it at the individual signatory personally, treating him as the drawer of the cheque. The courts below had to confront a structural problem: the person prosecuted was not the account-holder, and the account-holder (the company) was not before the court.

The question

The narrow but consequential question was whether a person who signs a cheque drawn on an account maintained by another — here, his company — can be treated as the "drawer" and prosecuted under Section 138 in his personal capacity to discharge his own debt. That turned on the meaning of the words "on an account maintained by him with a banker" in Section 138, read with the definition of "drawer" in Section 7, and on whether the vicarious-liability machinery of Section 141 had any role to play where the actual account-holder was a company that had never been arraigned.

What the Court held

The Court anchored its answer in the plain text of Section 138, which penalises the dishonour of a cheque drawn "on an account maintained by him with a banker." That phrase, the Bench held, describes an intrinsic relationship between an account-holder and the bank — a relationship that cannot be transferred by a delegation of authority to sign. A person may be authorised to operate or draw on another's account, but the account remains the other's; he does not thereby become the one who "maintains" it.

Applying that principle, the Court reasoned that although the individual had physically signed and issued the cheque, he had done so on an account maintained by the company. The company was the drawer; the individual was, at most, its authorised signatory. Because Section 138 is a penal provision, it had to be construed strictly, and its reach could not be stretched to capture a signatory who was not the account-holder simply because the underlying debt was his own. The personal liability sought to be fastened on the signatory therefore could not stand. Where a company is the drawer, the route to a director's liability runs through Section 141 — and that route opens only when the company itself, the principal offender, is made an accused.

Analysis

The judgment sits squarely within the line of authority that treats the corporate drawer as the foundation of any Section 138 prosecution. Its closest doctrinal cousin is Aneeta Hada v. Godfather Travels & Tours, where the Supreme Court held that prosecution of a director or signatory under Section 141 is not maintainable unless the company is itself arraigned as an accused — because Section 141 imposes vicarious liability that presupposes the commission of the offence by the company. Bijoy Kumar Moni extends that logic to its source. Aneeta Hada answers the question "can you proceed against the director without the company?"; this case answers the prior question "who is the drawer in the first place?" — and the answer is the account-holder, not the hand that signs.

The careful textual work lies in the Court's reading of "maintains an account." By treating the account-holder–banker relationship as something that cannot be re-assigned by authorising a signature, the Bench preserved the statutory architecture: Section 138 fixes primary liability on the drawer, and Section 141 then extends that liability to the natural persons behind a corporate drawer, but only derivatively. A signatory who is not the account-holder cannot be slotted into the role of primary offender; if he is to be reached at all, it must be as a person in charge of the company's affairs under Section 141, with the company in the dock. The strict-construction principle does real work here — it forecloses the intuitive but textually unsupported move of equating the signing hand with the drawing entity.

Why it matters

For practitioners drafting complaints, the case is a checklist warning. Before a Section 138 complaint is filed, the cheque must be matched to its account: who maintains it? If the answer is a company, partnership, or other juristic person, that entity must be named as an accused, and any director or signatory must be brought in through Section 141 with the requisite averments about their role in the company's affairs. A complaint that targets only the individual signatory of a corporate cheque — however clearly that individual owed the money — is liable to be quashed at the threshold, and the limitation clock on a fresh, properly framed complaint may by then have run out.

The decision also disciplines a common factual pattern: an individual debtor who pays a personal debt with a cheque drawn on his company's account. Such a debtor cannot be convicted under Section 138 in his personal capacity on that instrument, because he is not its drawer. Creditors dealing with closely-held companies and their directors should insist on cheques drawn on the account that actually owes the money, or ensure the corporate entity is squarely positioned to be arraigned. For directors and authorised signatories, the judgment is a measure of protection — the criminal exposure of Section 138 does not attach to the mere act of signing, but to the legal status of being, or standing behind, the drawer.

Related on Valkya

• Dashrath Rupsingh Rathod v. State of Maharashtra: territorial jurisdiction in cheque-bounce cases
• In re Expeditious Trial of Section 138 NI Act cases (2021)
• Meters and Instruments v. Kanchan Mehta: the compensatory character of Section 138
• MediaOne Global v. Ad Bureau: Section 138 as a compensatory remedy

Sources

• Verdictum, "Only Drawer Of Cheque Can Be Held Liable For An Offence Under Section 138 NI Act: Supreme Court"
• SCC Online Blog, "Compilation of Important Judgments regarding Section 138 of the Negotiable Instruments Act, 1881"