Analysis on Supreme Court Judgement of Himanshu vs. B. Shivamurthy & Anr.

The appellant had signed the cheque as a Director of the company and for and on its behalf and in the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable.

The judgment of the High Court has been questioned on two grounds:

1. The appellant could not be prosecuted without the company being named as an accused.

2. The direction of the High Court that the company could be impleaded/arraigned at this stage is erroneous.

The first submission on behalf of the appellant is no longer res integra.

However for second contention, it was observed that the provisions of Section 141 postulate that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or was responsible to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished.

In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused.

Judgement link : https://www.sci.gov.in/supremecourt/2006/6301/6301_2006_Judgement_17-Jan-2019.pdf