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Authorised signatory not to be prosecuted under S. 138 NI Act if the company not arraigned as accused

In CRR No. 2487 of 2018, N.K. Bhagat vs Biswanath Dey, the original complainants had filed under Section 138 against the petitioners alleging that Alok Bhagat (Petitioner 2), who was the authorised signatory of Adeptics, a partnership firm, issued a cheque for Rs 1.5 lakhs for receiving goods from complainant’s factory. However, when presented to the bank, the said cheque got dishonoured with the endorsement–payment stopped by the drawer. A demand notice was sent but the petitioners failed to make payment. The matter went to trial and the petitioners were convicted and sentenced. In the appeal, their conviction was maintained but the sentence was modified. Aggrieved still, the petitioners filed the present revision petition.

It was pointed out by the petitioners that the cheque was issued by the firm and signed by Mr Bhagat as an authorised signatory but the firm was not impleaded as required under law to fasten liability upon the partners/directors of a firm/company.

The High Court agreeing with the petitioners and referring to Aneeta Hada v. Godfather Travels and tours (P) Ltd., noted that the cheque does not show that it was issued by Mr Bhagat in his personal capacity. It was signed on behalf of the firm as authorised signatory in which notice of demand should have been served on the said firm and the company/firm should have been impleaded as one of the accused as mandatorily required. Further, replying on Ajit Balse v. Ranga Karkare, the court rejected the contention of the complainant that no such plea was taken by the accused/petitioner before the trial court or the lower appellate court.

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