2023 (3) TMI 431 - HC - Indian Laws

Dishonour of Cheque - signatory of the cheque, authorized by the "Company", is the “drawer" of the cheque or not - ratio decidendi/obiter dicta - whether such signatory could be directed to pay interim compensation in terms of section 143A of the Negotiable Instruments Act, 1881 living aside the company? - deposit of a minimum sum of 20% of the fine or compensation is necessary under Section 148 of NI Act in an appeal filed by persons other than "drawer" against the conviction and sentence under section 138 of the NI Act or not?

HELD THAT:- A legal entity has rights and responsibilities and the capacity to sue and be sued under the law. Legal persons, being the artificial creations of the law, maybe as many kinds as the law pleases. They include corporations or companies. A legal person is any subject matter other than a human being to which the law attributes personality. A juristic person is a body of persons, a corporation or company, a partnership or other legal entity recognised by law as the subject of rights and duties, also called an artificial person. An entity, such as a company, is created by law and given certain legal rights and duties of a human being. It is therefore evident that authorised signatory being individual cannot be equated with or termed as a legal entity created under a statute.

For appreciating submissions on interpretation of statute, well-settled rule of interpretation of a statute needs to be borne in mind that when a language of a provision is plain and unambiguous and capable of only one meaning, there is no question of the construction of a statute, as the provision speaks for itself. The natural and ordinary meaning of words should only be departed from if it is shown that the legal context in which the words are used requires a different meaning. In that case, it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the act.

It appears that the legislature's purpose was to provide interim relief to the drawee by directing the drawer to pay temporary compensation. This compensation was made payable by the cheque's drawer or issuer. By specifically fastening the liability on the drawer/issuer, the legislature excluded anyone else from being made liable to pay interim compensation. The plain language section 143A clearly spells out the intention of the parliament by resorting to the golden rule of interpretation that a statute must be read plainly to arrive at its meaning. Principal offender under Section 138 in case cheque issued by the company is the drawer (company). Drawer alone would have been the offender thereunder if the Act did not contain section 141. By virtue of Section 141 of the Act that penal liability under Section 138 is cast on other persons connected with the company. Therefore there is no need to interpret the word 'drawer' to include authorised signatory.

It is true that on considerations of judicial uniformity and judicial discipline, the High Courts must accept as binding not only the ratio decidendi in the decisions of the Supreme Court but also the obiter dicta. In determining the binding nature of the expression of opinion, the courts should consider—Whether the expression of opinion was casual or considered. Whether it was connected with any point arising in the case. It is true that under Article 141 of the Constitution, the law declared by the Supreme Court is binding on all the courts and therefore, even the principles enunciated by the Supreme Court, including its obiter dicta, when they are stated in clear terms, have a binding force. But when a question is neither raised nor discussed in a judgment rendered by the Supreme Court, it is difficult to deduce any principles of a binding nature from it by implication.

In ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT], the point for determination before the Supreme Court was whether a complaint under Section 138 read with Section 141 of the NI Act was maintainable against a Director or Authorised signatory of a company without joining the company as an accused. Answering the same in negative, it is held that in terms of the provisions of Section 141 NI Act, a commission of the offence by the company is an express condition precedent to attract vicarious liability of another. It is observed that the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. Therefore the prosecution of other persons under Section 138 NI Act is permissible only when the company is named as an accused in the complaint.

Having held that the expression "drawer" in section 143A does not include the authorized signatory of a company, amended section 148 needs to be interpreted accordingly. The plain language of section 148 makes it clear that the Appellate Court is granted the power to direct deposit of a minimum sum of 20% of the fine or compensation awarded by the Trial Court "in an appeal by the drawer". Section 148 emphasizes such power being conferred only in an appeal by the ‘drawer’ - Proviso to section 148 clarifies that such payment shall be in addition to the amount payable under section 143A. The expression "drawer" under section 143A does not include the authorized signatory of a company; therefore, the language of the proviso to section 148 lends support to the interpretation that such power is available only in an appeal filed by the "drawer". It needs to be clarified that section 148 starts with the non-obstante clause having an overriding effect on the provisions under the Code of Criminal Procedure, 1973.

Thus, the signatory of the cheque, authorized by the "Company", is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A - In an appeal under section 148 of NI Act filed by persons other than "drawer" against the conviction under section 138 of the NI Act, a deposit of a minimum sum of 20% of the fine or compensation is not necessary.

Petition disposed off.