A Section 138 prosecution against a company fails without notice to the company or its director on its behalf.

The appellant/complainant initiated prosecution under Section 138 of the Negotiable Instruments Act, 1881, against P.N. Radhakrishnan, described as the Director of M/s. Parappurath Chitties (P) Ltd., and against the company itself

The trial court recorded the evidence of the complainant as PW1 and marked Exhibits P1 to P5; no defence evidence was adduced

The Additional Chief Judicial Magistrate acquitted the accused on the ground that the statutory demand notice under Section 138(b) had been issued only to the Director personally and not to the company, relying on Target Overseas Exports Pvt. Ltd. v. Iqbal

The complainant appealed, contending that notice to the Director should be treated as notice to the company because both accused appeared through the same counsel

1. Whether a prosecution under Section 138 of the Negotiable Instruments Act can be sustained against a company and its Director when the statutory demand notice is addressed only to the Director in his individual capacity and not to the company

2. Whether notice issued to a Director is sufficient notice to the company where it expressly identifies him as the company’s Director and is issued for and on behalf of the company

Section 138(b) of the Negotiable Instruments Act requires a written demand notice to be issued to the drawer of the cheque after dishonour, and Section 138(c) requires failure to make payment within fifteen days of receipt of that notice for the offence to be constituted

Where the drawer is a company, the company must be arrayed as an accused and must receive the statutory notice; prosecution cannot ordinarily succeed in the absence of notice to the company

However, a single notice addressed to the Director in his capacity as Director, expressly issued for and on behalf of the company, may satisfy the notice requirement against the company

The Court considered Rajneesh Aggarwal v. Amit J. Bhalla, 2001 KHC 130, and distinguished the principle recognised therein from the present case

It also considered the trial court’s reliance on Target Overseas Exports Pvt. Ltd. v. Iqbal, 2005 (2) KLT 45

The High Court examined Ext. P4, the demand notice, and found that it was addressed to P.N. Radhakrishnan at his residential address without describing him as a Director of M/s. Parappurath Chitties (P) Ltd.

The contents of the notice likewise contained no reference to the company and did not indicate that it was issued to the Director in a representative capacity or for and on behalf of the company

Although notice to a Director can suffice where the notice clearly identifies the representative capacity and the company’s liability, the notice in this case was purely personal.

The fact that the accused subsequently appeared through the same counsel did not cure the absence of statutory notice to the company

Accordingly, the prosecution failed to establish compliance with the mandatory notice requirement against the company.

Since statutory notice to the company was absent, the prosecution under Section 138 of the Negotiable Instruments Act could not be sustained against the accused.

The acquittal recorded by the Additional Chief Judicial Magistrate was confirmed, and the criminal appeal was dismissed