Summary
Extending Shri Gurudatta Sugars Marketing (on Section 143A) to Section 148 of the Negotiable Instruments Act, 1881, the Supreme Court held that an officer who merely signs a company's cheque as authorised signatory is not its 'drawer'. The appellate court therefore cannot, on that basis alone, require him to deposit 20% of the fine or compensation as a condition for suspending his sentence. The deposit condition was set aside.
Issues
- Whether an authorised signatory of a cheque issued by a company is the 'drawer' of the cheque for the purposes of Section 148 of the Negotiable Instruments Act, 1881.
- Whether the appellate court could direct such a signatory, convicted under Section 138, to deposit 20% of the fine or compensation under Section 148(1) as a condition for suspension of sentence.
Provisions considered
- Section 148(1), Negotiable Instruments Act, 1881The Court read Section 148(1) as empowering the appellate court to order a deposit only in an appeal by the drawer, and held that an authorised signatory of a company's cheque is not, merely for that reason, the drawer who can be directed to deposit. (¶¶ 12, 13, 14, 15, 16)
- Section 143A, Negotiable Instruments Act, 1881Because Section 143A also applies only to the drawer, and the proviso to Section 148(1) treats the appellate deposit as additional to interim compensation under Section 143A, the Court held that the reasoning of Shri Gurudatta Sugars on Section 143A applies equally to Section 148. (¶¶ 12, 13, 15)
- Section 141, Negotiable Instruments Act, 1881The Court expressly left open whether a company officer could be made liable to deposit under Section 148(1) through the vicarious liability in Section 141, as that question was not argued and depends on proven facts. (¶¶ 14, 15)
Held
- Sections 143A and 148 both empower directions only against the 'drawer' of the cheque concerned. Read with the proviso to Section 148(1), which makes the appellate deposit additional to interim compensation under Section 143A, the two provisions are analogous, so the interpretation of 'drawer' in Shri Gurudatta Sugars Marketing v Prithviraj Sayajirao Deshmukh applies to Section 148. (¶¶ 13, 14, 15)
- Merely being the authorised signatory of a company's cheque does not make an officer the 'drawer' under Section 148, so the appellate court cannot, on that basis, direct him to deposit any sum under Section 148(1) in his appeal against conviction under Section 138. (¶ 16)
- Whether such an officer can be required to deposit under Section 148(1) through the vicarious liability in Section 141 was not decided, as it was not argued and depends on proven facts. (¶¶ 14, 15)
- Following Jamboo Bhandari, the appellate court must not impose a Section 148(1) deposit mechanically without considering whether exceptional circumstances exist. The fact that the appellant is not the drawer is such a circumstance, and both the appellate court and the High Court failed to consider it. (¶ 17)
Result
Appeals allowed; High Court's common order dated 09.01.2024 set aside; Sessions Court orders of 10.11.2023 quashed to the extent they required deposit of 20% of the fine. Suspension of sentence restored on the bond condition until disposal of the pending appeals, which the First Appellate Court is to decide expeditiously.