The promoter of a company borrowed a loan of ₹ 25 lakh on behalf of his company from the respondent. Later, at the request of respondent, the promoter sent a cheque from the company's account. However, the cheque was dis

The facts of the given situation are similar to that of case H.N.D. Mulla Feroze Vs. K.V.D. Prasad Rao [2004] 55 SCL 509 (AP) The petitioner has a legal liability to refund amount to the appellant, petitioner is not the drawer of the cheque, which was dishonoured, and the cheque was also not drawn on an account maintained by him but was drawn on an account maintained by the company. Hence, it was held that the petitioner couldn't be said to have committed the offence under Section 138 of the Negotiable Instruments Act, 1881 (Act). Where an owner of company, who is neither a director nor a person-in-charge, sent a cheque from the companies account to discharge its legal liability. Subsequently the cheque was dishonoured and the compliant was lodged against him. The Andhra Pradesh High court held that, although the petitioner has a legal liability to refund amount to the appellant, petitioner is not the drawer of the cheque, which was dishonoured, and the cheque was also not drawn on an account maintained by him but was drawn on an account maintained by the company. Hence, it was held that the petitioner couldn't be said to have committed the offence under Section 138 of the Act. In view of the above mentioned case it can be said that the promoter is not liable for an offence under section 138 of Negotiable Instruments Act, 1881 in the given circumstances. Alternate Answer The facts of the given are similar to that of case H.N.D. Mulla Feroze vs. K.V.D. Prasad Rao [2004] 55 SCL 509 (AP). It was held that a plain reading of Section 138 of the Negotiable Instruments Act, 1881 (Act) shows that the drawer of the cheque would be liable for punishment for dishonour of the cheque drawn on an account maintained by him in the Bank, if such cheque is drawn for a legally enforceable debt or liability. Even assuming that Section 138 of the Act covers cases where a cheque is issued in connection with discharge of a legally enforceable debt or liability of a person other than the drawer of the cheque, the debtor of the drawee is not made liable for the offence under Section 138 of the Act. In D. Chandra Reddy vs Gowrisetty Prabhakar Rao And Another, Equivalent citations: 1999(6) ALD281, it was held that in order to constitute an offence under Section 138 of the Act the cheque must have been drawn by a person on an account maintained by him. In that case the accused had drawn the cheque on the account of a Company which was not a party to the proceedings, but not on the account maintained by him in his individual capacity and so it was held that the requirement under Section 138 of the Act was not satisfied. In K.P.G. Nair case (supra), it was held that if the allegations in the complaint do not show that the accused is in-charge of the affairs and is responsible for running of the business of a Company, proceedings against him are liable to be quashed. In view of the above mentioned case it can be said that the promoter is not liable for an offence under section 138 of Negotiable Instruments Act, 1881 in the given circumstances.