Legality of a Director filing a cheque bounce complaint on behalf of company

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This topic contains 1 reply, has 2 voices, and was last updated by Dr. Ashok Dhamija Dr. Ashok Dhamija 2 weeks, 4 days ago.

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  • #2776

    Anonymous
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    A cheque is issued to a company, i.e., company is the payee. The cheque bounced and was returned unpaid. Complaint under Section 138 of the Negotiable Instruments Act was filed by a Director on behalf of the company. But the Director was shown as the complainant and it was not mentioned anywhere that the complaint was filed by the company. Whether such complaint is valid in law?

  • #2808

    To answer your question, let me first reproduce clause (a) of Section 142(1) of the Negotiable Instruments Act:

    142. Cognizance of offences.— (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),—

    (a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;”

    The above provision makes it clear that the court can take cognizance of an offence under Section 138 of the said Act only if such complaint has been filed by the payee (or the holder in due course) of the cheque. A complaint needs to be filed in the name of the payee or the holder of the cheque in due course, though it may be filed through some other person; but the complainant should be the payee or the holder of the cheque in due course.

    In a case similar to what you have mentioned in your question, namely, in the case of Bhupesh Rathod v. Dayashankar Prasad Chaurasia, 2015 SCC OnLine Bom 4473, decided by the Bombay High Court, the Managing Director of a company had filed the complaint in his name when the payee was the company, and the complaint was not filed in the name of the company. In these circumstances, it was held as under:

    “…the complaint had not been filed by the payee or the holder in due course of the cheques in question. Section 142 of the N.I. Act leaves no manner of doubt that a complaint in respect of an offence punishable under Section 138 thereof, would be maintainable only if it is filed by a payee or the holder in due course.

    In view of these reasons, the Bombay High Court upheld the acquittal of the accused in the cheque bounce case since the complaint was not filed by the proper complainant as required under Section 142 of the said Act.

    Coming back to your question, if the complaint has been filed by a director of the company in his own name and the company is not made the complainant even though the company was the payee, such complaint may not be valid in view of the provisions of Section 142(1)(a) of the N.I. Act, as mentioned above.

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