BIJAY AGARWALversusM/S MEDILINES

               [2024] 10 S.C.R. 1890 : 2024 INSC 918

                               Bijay Agarwal
                                     v.
                               M/s Medilines
                  (Criminal Appeal No(s). 4301 of 2024)
                              21 October 2024
              [C.T. Ravikumar* and Sanjay Karol, JJ.]


                           Issue for Consideration
       Whether the signatory of a cheque authorized by the Company
       is a drawer and whether such a signatory could be directed to
       deposit any sum out of the fine or compensation awarded by the
       trial Court u/s.148 of the Negotiable Instruments Act, 1881, as a
       condition for suspending the sentence in an appeal filed against
       his conviction u/s.138 of the NI Act.

                                 Headnotes†
       Negotiable Instruments Act, 1881 – ss.138 and 148 – Appellant
       is the authorized signatory of the company – The signed
       cheques were presented in the bank – The cheques were
       dishonoured and returned with the endorsement “payment
       stopped by the drawer” – Trial Court found appellant guilty
       and accordingly was convicted and sentenced – Appellant filed
       criminal appeals before the Principal City Civil and Session
       Judge – The sentence was suspended with condition to
       deposit 20% of the fine/compensation – It is against the said
       direction to deposit 20% of the compensation amount that
       the appellant approached the High Court, which culminated
       in the impugned common order dated 09.01.2024:
       Held: In the case of the position qua Section 143A, NI Act, merely
       because an officer of a company concerned is the authorised
       signatory of the cheque concerned by itself will not make such
       an officer ‘drawer of the cheque’ under Section 148, NI Act, so as
       to empower the Appellate Court, in an appeal against conviction
       for an offence under Section 138, NI Act, to direct to deposit
       compensation of any sum under Section 148(1), of the NI Act – It
       is settled that an Appellate Court in an appeal against conviction
       under Section 138, NI Act, could not place a condition to deposit

* Author
[2024] 10 S.C.R.                                                           1891

                      Bijay Agarwal v. M/s Medilines


     an amount invoking the power under Section 148(1), NI Act,
     mechanically without considering whether the case falls within
     exceptional circumstances – In view of the said exposition of law,
     the Appellate Court ought to have considered the aforesaid aspects
     as it would certainly be an exceptional circumstance to exempt
     the appellant who is not the ‘drawer’ of the cheque concerned to
     deposit the amount payable under Section 148(1) by an appellant
     who is the ‘drawer’ of the cheque – In the instant case, the High
     Court has failed to consider these crucial aspects in the light of
     the dictum laid down by this Court in its various decisions while
     considering the application for suspension of sentence for the
     conviction under Section 138 of the NI Act in the pending appeal –
     In view of the discussion, the impugned order passed by the High
     Court is set aside and the orders passed by the Principal City Civil
     & Sessions Judge stands quashed and set aside to the extent it
     put the condition to deposit of 20% of the fine amount payable.
     [Paras 16, 17, 18]

                              Case Law Cited
     Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao
     Deshmukh & Ors. [2024] 7 SCR 1211 : (2024) SCC OnLine SC
     1800; K.K. Ahuja v. V.K. Vohra and Another [2009] 9 SCR 1144 :
     (2009) 10 SCC 48; N. Harihara Krishnan v. Godfather Travels and
     Tours P. Ltd. (2018) 13 SCC 663; Jamboo Bhandari v. Madhya
     Pradesh State Industrial Development Corporation Limited and
     Ors. (2023) 10 SCC 446 – referred to.

                                List of Acts
     Negotiable Instruments Act, 1881.

                             List of Keywords
     Signatory of a cheque authorized by the Company; Section 148
     of Negotiable Instruments Act, 1881; Suspension of sentence;
     Condition to deposit an amount out of fine or compensation; Ex-
     ceptional circumstances.

                            Case Arising From
     CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
     4301 of 2024
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     From the Judgment and Order dated 09.01.2024 of the High Court
     of Karnataka at Bengaluru in CRLP No. 13095 of 2023
     With
     Criminal Appeal No. 4302 of 2024

                        Appearances for Parties
     Siddharth Aggarwal, Sr. Adv., Anjan Datta, Sumon Pathak,
     Ms. Ishita Srivastava, Ms. Arshiya Ghose, Ashish Raghvuvanshi,
     Vishal Arun Mishra, Advs. for the Appellant.
     Gautam S. Bharadwaj, Ashwin Kumar D.S., Ishan Roy Chowdhury,
     Ms. Surbhi Mehta, Advs. for the Respondent.

               Judgment / Order of the Supreme Court

                               Judgment

     C.T. Ravikumar, J.

     Leave granted.
     On the consent of the parties, the matter was finally heard.
1.   The captioned appeals by a special leave are directed against the
     impugned common order dated 09.01.2024 passed by the High
     Court of Karnataka at Bengaluru in Criminal Petition Nos. 13095 of
     2023 and 13153 of 2023 respectively.
2.   Heard the learned senior counsel appearing for the appellant and
     the learned counsel appearing for the respondent.
3.   In view of the factual background obtained in these cases, a question
     of seminal importance arises for consideration viz., “whether the
     signatory of a cheque authorized by the Company is a drawer and
     whether such a signatory could be directed to deposit any sum
     out of the fine or compensation awarded by the trial Court under
     Section 148 of the Negotiable Instruments Act, 1881 (for short ‘NI
     Act’)”, as a condition for suspending the sentence in an appeal filed
     against his conviction under Section 138 of the NI Act?
4.   The contention of the appellant is that he is only an authorized
     signatory of the company M/s. Gee Pee Infotech Private Limited,
     which was held liable to adequately compensate the complainant
[2024] 10 S.C.R.                                                       1893

                     Bijay Agarwal v. M/s Medilines


     company by the trial Court. The status of the appellant authorised
     signatory of the aforesaid company is undisputed rather, it is
     indisputable as it is the very case of the respondent complainant.
     Before the trial Court the said company was the first accused and the
     appellant herein was the second accused. In unambiguous terms, the
     respondent-complainant described the appellant Sri. Bijay Agarwal as
     the authorized signatory/ Director of M/s. Gee Pee Infotech Pvt. Ltd.
5.   Bearing in mind the said indisputable and undisputed fact, we will
     briefly refer to the other relevant facts of the case.
     The complaint being C.C. No. 13938 of 2013 was filed by the
     respondent company against M/s. Gee Pee Infotech Private Ltd.
     and appellant, under Section 138 of the NI Act. The crux of the
     complaint was as under: -
          The Accused No.1 is a Company incorporated under
          provisions of Companies Act 1956. The second accused
          is an authorised signatory/Director of the first accused
          company and he is incharge and responsible for the
          day today administrative affairs and functioning of the
          accused No.1 Company. The accused by representing
          that they are the Pan Indian circle licence holder for
          distribution of Electronic Pin Recharge BSNL, induced the
          complainant to pay advance amount of Rs.1,00,00,000/-
          and to become the Master Distributor for BS recharge
          pin for Karnataka State and accordingly entered in
          agreement with the complainant on 01/10/2011. By
          virtue of said Agreement, the accused appointed the
          complainant Master Distributor for BSNL E-recharge
          pin for Karnataka and collected the advance payment
          while undertaking liquidate/transfer BSNL E-recharge pin
          load to the complainant as to enable them to distribute
          through their constituents of the State of Karnataka. After
          entering into the Agreement accused supplied certain
          BSNL E-recharge pin to the complainant. However, to
          their utter shock, surprise and dismay, it came to the
          knowledge of the complainant through their constituents
          that 99% of the BSNL E-recharge pin supplied by the
          accused are fake and the talk time under the said BSNL
          E-recharge load supplied to them could not be uploaded
          to the Mobile Numbers of the customers.
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6.   It was the further case that on being told that appropriate action
     would be initiated they executed a Memorandum of Understanding on
     10.04.2012 and assured return of the amount advanced and issued
     five post-dated cheques. The cheque presented was dishonoured
     and thereupon the complainant caused legal notice. Pursuant to
     the same, the accused issued two fresh post-dated cheques each
     for a sum of Rs.25 lakhs in lieu of the old cheques. Later, cheque
     bearing No.955437 dated 24.04.2013 for a sum of Rs.25 lakhs was
     presented, but dishonoured and returned with the endorsement
     “payment stopped by the drawer”. The complaint was, thereupon,
     filed after complying with the requisite procedures and was taken
     on file as C.C. No.13938/2013
7.   After appreciating the evidence, the trial Court arrived at the following
     finding as against issue No.2:
          32. Point No.2:- Complainant Company paid a sum of
          Rs. 1,00,00,000/- to the accused Company for purchasing
          BSNL E recharge pins but was supplied fake E-recharge
          pins which the complainant Company demanded
          repayment, the accused not be uploaded to the Mobile
          numbers of the customers. W a sum of Rs.50,00,000/-
          and for the balance Company repaid amount it issued
          the cheque in question which came to be dishonoured
          on presentation. Complainant Company has been deprive
          of its money for all these years, i.e. for a period of more
          than years. Hence, accused Company shall adequately
          compensate the complainant for the same.
8.   As relates the latter appeal, the complaint that was taken on file as
     C.C. No.13937/2013 was filed pursuant to the dishonour of cheque
     No.955421 dated 24.12.2012 for a sum of Rs. 25 lakhs under similar
     circumstances. On appreciating the evidence the trial Court, as
     per a separate order passed on 30.09.2023 itself arrived at similar
     conclusion as in C.C. No.13938/2013.
9.   Based on the aforesaid conclusions, in both the cases the trial Court
     found the appellant guilty and accordingly convicted and sentenced,
     as per judgment and order dated 30.09.2023 as under: -
          “Accused is found guilty of the offence punishable
          U/Sec. 138 of Negotiable Instruments Act 1881.
[2024] 10 S.C.R.                                                       1895

                          Bijay Agarwal v. M/s Medilines


            Acting U/sec. 255(2) of Cr.PC accused is hereby convicted
            for the offence punishable U/Sec. 138 of Negotiable
            Instruments Act 1881 and he is sentenced to pay to pay
            fine of Rs. 40,00,000/-.
            In default, accused shall undergo simple imprisonment for
            a period of six months.”
10. Feeling aggrieved by the conviction and sentence passed in
    C.C. No.13937/2013, the appellant preferred Criminal Appeal
    No.1536/2023 and against the conviction and sentence passed in
    C.C. No.13938/2013 filed Criminal Appeal No.1537/2023, before
    the Principal City Civil and Sessions Judge Court at Bangalore.
    In the appeals, the appellant herein filed separate applications
    and sought for suspension of sentence passed in both the cases,
    under Section 389 of the Cr.PC. Separately, but on the very same
    lines orders were passed in both the appeals on 10.11.2023. The
    sentence was suspended with condition to deposit 20% of the
    fine/compensation amount in each of the appeals. It is against the
    said direction to deposit 20% of the compensation amount that
    the appellant approached the High Court by filing Criminal Petition
    Nos.13095/2013 and 13153/2013 seeking that part of the order dated
    10.11.2023 requiring deposit of fine be quashed, which culminated
    in the impugned common order dated 09.01.2024.
11. Now, the self-same appellant raised the contention in both the appeals
    that in the light of the decision of this Court in Shri Gurudatta Sugars
    Marketing Pvt. Ltd. Vs. Prithviraj Sayajirao Deshmukh & Ors.,1
    he could not have been directed to pay any amount payable under
    Section 148 (1) of the NI Act, for this Court laid down the law that
    merely because an officer of a company being the authorised signatory
    of the cheque by itself would not make him its drawer. It is submitted
    that though the said decision was dealing with Section 143A of the
    NI Act in view of its analogicalness to Section 148, NI Act, the dictum
    laid down in the said decision is to be followed as relates Section 148
    as well and hence, an authorized signatory of an accused company
    not being the drawer of the cheque could not be directed to deposit
    any particular percentage of the fine or compensation awarded by
    the trial Court under Section 148, NI Act. The learned counsel for the


1   [2024] 7 SCR 1211 : (2024) SCC OnLine SC 1800
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     respondent resisted the contention and canvassed for the dismissal
     of the appeals. According to the learned counsel, the exposition of
     law in the decision in Shri Gurudatta Sugars Marketing Pvt. Ltd.
     case (supra) is inapplicable in the cases on hand.
12. To appreciate rival contentions, it is only appropriate to refer to
    Sections 143- A and 148 of the NI Act: -
          “S.143 – A. Power to direct interim compensation –
          (1) Notwithstanding anything contained in the Code of
          Criminal Procedure, 1973 (2 of 1974), the Court trying an
          offence under Section 138 may order the drawer of the
          cheque to pay interim compensation to the complainant-
               (a)   in a summary trial or a summons case, where
                     he pleads not guilty to the accusation made in
                     the complaint; and
               (b)   in any other case, upon framing of charge.
          (2) The interim compensation under sub-section (1) shall
          not exceed twenty per cent of the amount of the cheque.
          (3) The interim compensation shall be paid within sixty
          days from the date of the order under sub-section (1), or
          within such further period not exceeding thirty days as
          may be directed by the Court on sufficient cause being
          shown by the drawer of the cheque.
          (4) If the drawer of the cheque is acquitted, the Court shall
          direct the complainant to repay to the drawer the amount
          of interim compensation, with interest at the bank rate as
          published by the Reserve Bank of India, prevalent at the
          beginning of the relevant financial year, within sixty days
          from the date of the order, or within such further period not
          exceeding thirty days as may be directed by the Court on
          sufficient cause being shown by the complainant.“
          “S.148. Power of Appellate Court to order payment pending
          appeal against conviction.
          (1) Notwithstanding anything contained in the Code of
          Criminal Procedure, 1973 (2 of 1974), in an appeal by
          the drawer against conviction under Section 138, the
[2024] 10 S.C.R.                                                          1897

                           Bijay Agarwal v. M/s Medilines


            Appellate Court may order the appellant to deposit such
            sum which shall be a minimum of twenty per cent of the
            fine or compensation awarded by the trial Court:
            Provided that the amount payable under this sub-section
            shall be in addition to any interim compensation paid by
            the appellant under Section 143-A.”
                                                    (Underline supplied)
13. A scanning of Sections 143A and 148 would reveal that the
    former deals with the power of the Court trying an offence under
    Section 138 of the NI Act to direct the drawer of the cheque to
    pay interim compensation to the complainant whereas the latter
    Section deals with the power of the Appellate Court in an appeal
    by the drawer against the conviction under Section 138 to the
    appellant to deposit such sum which shall be a minimum of 20%
    of the fine or compensation awarded by the trial Court. The proviso
    to Section 148(1) would further reveal that the amount payable
    thereunder shall be in addition to any interim compensation paid
    by the appellant under Section 143A, NI Act. Thus, a scanning of
    both the Sections would reveal that the said sections empower to
    issue such directions only to the ‘drawer’ of the cheque. We have
    already noted that in ‘Shri Gurudatta Sugars Marketing Pvt. Ltd.’
    Case (supra) after referring to the earlier decisions of this Court
    including in ‘K.K. Ahuja v. V.K. Vohra and Another,2’ and in ‘N.
    Harihara Krishnan v. Godfather Travels and Tours P. Ltd.,3’ this
    Court held that the primary liability for an offence under Section 138
    lies with the company and the company’s management is vicariously
    liable only under specific conditions provided in Section 141 and for
    the purpose of Section 143A of the NI Act and a signatory merely
    authorised to sign on behalf of the company would not become
    the ‘drawer’ of the cheque and, therefore, could not be directed to
    pay interim compensation under Section 143A. In the contextual
    situation, it is relevant to refer to paragraphs 28 to 30, 34 and 35
    of ‘Shri Gurudatta Sugars Marketing Pvt. Ltd.’s case to the extent
    it is relevant for the purpose of this case, as under: -



2   [2009] 9 SCR 1144 : (2009) 10 SCC 48
3   (2018) 13 SCC 663
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        “28. The High Court’s interpretation of section 7 of the
        Negotiable Instruments Act, 1881 accurately identified
        the “drawer” as the individual who issues the cheque.
        This interpretation is fundamental to understanding
        the obligations and liabilities under Section 138 of the
        Negotiable Instruments Act, 1881, which makes it clear that
        the drawer must ensure sufficient funds in their account at
        the time the cheque is presented. The appellants’ argument
        that directors or other individuals should also be liable
        under Section 143A misinterprets the statutory language
        and intent. The primary liability, as correctly observed
        by the High Court, rests on the drawer, emphasizing the
        drawer’s responsibility for maintaining sufficient funds.
        29. The general rule against vicarious liability in criminal
        law underscores that individuals are not typically held
        criminally liable for acts committed by others unless specific
        statutory provisions extend such liability. Section 141 of the
        Negotiable Instruments Act, 1881 is one such provision,
        extending liability to the company’s officers for the
        dishonour of a cheque. The appellants’ attempt to extend
        this principle to section 143A, to hold directors or other
        individuals personally liable for interim compensation, is
        unfounded. The High Court rightly emphasized that liability
        under section 141 arises from the conduct or omission
        of the individual involved, not merely their position within
        the company.
        30. The distinction between legal entities and individuals
        acting as authorized signatories is crucial. Authorized
        signatories act on behalf of the company but do not assume
        the company’s legal identity. This principle, fundamental to
        corporate law, ensures that while authorized signatories
        can bind the company through their actions, they do not
        merge their legal status with that of the company. This
        distinction supports the High Court’s interpretation that the
        drawer under section 143A refers specifically to the issuer
        of the cheque, not the authorized signatories.
        34. The respondents correctly argued that an authorised
        signatory is not a drawer of the cheque, as established
[2024] 10 S.C.R.                                                          1899

                     Bijay Agarwal v. M/s Medilines


          in N. Harihara Krishnan. This judgment clarified that
          a signatory is merely authorised to sign on behalf of
          the company and does not become the drawer. The
          respondents’ interpretation aligns with the principle that
          penal statutes should be interpreted strictly, particularly
          in determining vicarious liability. The judgment in
          K.K. Ahuja further supports this approach, emphasising that
          penal provisions must be read strictly to determine liability.
          35. In conclusion, the High Court’s decision to interpret
          “drawer” strictly as the issuer of the cheque, excluding
          authorised signatories, is well-founded.”
14. As noted earlier, Section 148 would make it clear that it empowers
    the Appellate Court in an appeal by the drawer against conviction
    under Section 138, NI Act, to direct to deposit a sum which shall be
    a minimum of 20% of the fine or compensation awarded by the trial
    Court and the same shall be in addition to any interim compensation
    paid by the appellant under Section 143A. When this be the position
    revealed from Sections 143A and 148 there cannot be any doubt with
    respect to the position that the term ‘drawer’ referred to in Section
    148 and 143A means ‘drawer of the cheque concerned’. Ergo, the
    question is whether the law laid down in the decision in Shri Gurudatta
    Sugars Marketing Pvt. Ltd.’s case (surpa) is applicable proprio
    vigore in cases involving the question of liability to pay additional
    compensation, as contemplated under Section 148(1), NI Act. The
    proviso to Section 148(1) itself makes it specifically clear that the
    amount payable under Section 148(1), NI Act, if the Appellate Court
    so directs, shall be in addition to any interim compensation paid by
    the appellant concerned under Section 143A, NI Act. It is nobody’s
    case that the appellant was made to pay interim compensation under
    Section 143A, in relation to the original proceedings. Be that as it
    may, the other question is whether an authorised signatory of the
    cheque can be said to be the drawer of the cheque concerned? We
    may hasten to add here that we were not addressed on the question
    whether the appellant herein could be saddled with the liability to pay
    such additional compensation in terms of Section 148(1) by virtue of
    the provision under Section 141, NI Act which extends liability to the
    officers of the company for the dishonour of a cheque and as such,
    we do not propose to consider that aspect as it need be considered
    only when pointedly posed for consideration based on proven facts.
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15. There can be no doubt with respect to the position that Section 143A
    and 148 empowers the Court trying an offence under Section 138
    and the Appellate Court considering an appeal by a drawer against
    his conviction under Section 138 respectively to fasten liability
    to pay interim compensation and additional compensation under
    Section 148(1), as the case may be, and therefore, the question
    whether any particular officer of the company concerned can be
    made to pay interim compensation or deposit additional compensation
    under the aforesaid relevant provision(s) would depend upon the
    question whether he is only a signatory of the cheque or whether
    he is the drawer of the cheque. It is that question with reference to
    Section 143A, NI Act, that was answered as above in the decision
    in Shri Gurudatta Sugars Marketing Pvt. Ltd.’s case (surpa). In
    view of the analogicalness of Section 143A to Section 148, that
    both the provisions are under the same Act though applicable at
    different stage of proceedings under Section 138 of NI Act and that
    the proviso to Section 148(1) makes it abundantly clear that deposit
    under Section 148(1) of the NI Act shall be an additional compensation
    paid by the appellant under Section 143A thereof, it can only be
    said that the decision in Shri Gurudatta Sugars Marketing Pvt.
    Ltd.’s case (supra) is applicable to the extent it holds an officer of
    a company who is an authorised signatory of the cheque issued by
    a company is not the drawer of the same subject to what is held in
    the said decision with reference to Section 141, NI Act, as relates
    Section 148 thereof.
16. To wit, as in the case of the position qua Section 143A, NI Act,
    merely because an officer of a company concerned is the authorised
    signatory of the cheque concerned by itself will not make such an
    officer ‘drawer of the cheque’ under Section 148, NI Act, so as to
    empower the Appellate Court, in an appeal against conviction for an
    offence under Section 138, NI Act, to direct to deposit compensation
    of any sum under Section 148(1), of the NI Act.
17. In the decision in ‘Jamboo Bhandari v. Madhya Pradesh State
    Industrial Development Corporation Limited and Ors.4’ this Court
    held that an Appellate Court in an appeal against conviction under
    Section 138, NI Act, could not place a condition to deposit an amount


4   (2023) 10 SCC 446
[2024] 10 S.C.R.                                                      1901

                        Bijay Agarwal v. M/s Medilines


     invoking the power under Section 148(1), NI Act, mechanically without
     considering whether the case falls within exceptional circumstances.
     In view of the said exposition of law, the Appellate Court ought to
     have considered the aforesaid aspects as it would certainly be an
     exceptional circumstance to exempt the appellant who is not the
     ‘drawer’ of the cheque concerned to deposit the amount payable
     under Section 148(1) by an appellant who is the ‘drawer’ of the
     cheque. In the case on hand, the High Court has failed to consider
     these crucial aspects in the light of the dictum laid down by this Court
     in the decisions referred supra while considering the application for
     suspension of sentence for the conviction under Section 138 of the
     NI Act in the pending appeal.
18. The upshot of the discussion is that these appeals should succeed
    and consequently, it is allowed. The impugned common order dated
    09.01.2024 passed by the High Court of Karnataka at Bengaluru
    in Criminal Petition Nos.13095/2023 and 13153/2023 is set aside.
    Accordingly, the orders dated 10.11.2023 passed by the Principal
    City Civil & Sessions Judge at Bangalore respectively in Criminal
    Appeal No. 1537/2023 and 1536/2023 stands quashed and set aside
    to the extent it put the condition to deposit of 20% of the fine amount
    payable under orders in CC Nos.13937/2023 and 13938/2013, passed
    by the Court of XXXVI Additional Chief Metropolitan Magistrate,
    Bangalore City and restore the orders dated 10.11.2023 suspending
    the sentence of the appellant in both the cases, with the condition(s)
    imposed qua execution of bond and on such execution it will remain
    in force till the disposal of the above mentioned appeals pending
    before the First Appellate Court concerned.
19. The First Appellate Court shall endeavour to dispose of the appeals
    expeditiously.
20. The appeals stand allowed as above.
21. Pending application(s), if any, shall stand disposed of.

     Result of the case: Appeals allowed.



     †
         Headnotes prepared by: Ankit Gyan