Criminal Liability Under Section 138 NI Act Is Personal and Cannot Be Inherited by Legal Representatives

In brief

The question

1. Whether criminal liability under Section 138 of the N.I. Act is strictly intuitu personae (personal to the drawer) or can be inherited by a legal representative.

The court held

The Court held that criminal liability for a dishonoured cheque is non-heritable and cannot be fastened upon a non-signatory heir.

It also directed

The Court allowed the revisional application, quashed the proceedings in C.R. Case No. 365 of 2022 against Gautam Dey, set aside the order dated August 4, 2023, discharged the petitioner from his bail bonds, and clarified that the Opposite Party remains free to pursue civil remedies against the estate of the deceased.

01Facts

The Opposite Party alleged that Tapan Kumar Dey (deceased), a ration dealer and elder brother of the petitioner, borrowed ₹27,00,000/- for business and issued a cheque dated February 1, 2022.

¶ 2.1, 2.2

Tapan Kumar Dey died on February 3, 2022.

¶ 2.2

Despite the drawer’s death, the Opposite Party presented the cheque on April 6, 2022, which was dishonoured for "Funds Insufficient".

¶ 2.3

A statutory demand notice was served upon the petitioner as a "Legal Representative/Business Associate," and a complaint under Section 138 of the Negotiable Instruments (N.I.) Act was filed.

¶ 2.3, 2.4

The Magistrate rejected the petitioner’s prayer for discharge via order dated August 4, 2023, stating there is no provision for discharge in summons-triable cases and liability was a "matter of trial".

¶ 2.5

02Issues

i.1. Whether criminal liability under Section 138 of the N.I. Act is strictly intuitu personae (personal to the drawer) or can be inherited by a legal representative.

¶ 3.2, 6.1

ii.2. Whether a non-signatory to the cheque who does not maintain the bank account can be prosecuted for its dishonour.

¶ 3.2, 7.1

iii.3. Whether the statutory "concatenation of acts" for an offense under Section 138 can be fulfilled if the drawer dies before the presentation of the cheque and issuance of notice.

¶ 3.2, 8.1

iv.4. Whether the Magistrate's refusal to entertain a plea for discharge in a summons case on procedural grounds constitutes a failure to exercise jurisdiction.

¶ 3.2, 9.1

03Law Applied

Section 138 of the N.I. Act, which stipulates that an offense is committed only by the "person" who draws the cheque on an account "maintained by him".

¶ 6.2

The principle of action personalis moritur cum persona, establishing that criminal liability dies with the offender.

¶ 6.4

Supreme Court precedent in Alka Khandu Avhad v. Amar Shyamprasad Mishra (2021), which held that a non-signatory cannot be prosecuted for a joint liability.

¶ 6.6, 7.4

Ganga Prasad Ratnakar v. Fanindra Kumar Chandra (2023), confirming that legal heirs cannot be prosecuted for a deceased drawer's offense.

¶ 6.9

Section 29 of the N.I. Act regarding legal representative liability is strictly confined to civil recovery.

¶ 6.11

Provisions in the judgment · 8 · Linked ones open on LawLens

Code of Criminal Procedure, 1973 Section 482 Section 401 Section 204 Section 251 Section 362

Negotiable Instruments Act, 1881 Section 138 Section 29 Section 141

04Reasoning

The Court reasoned that criminal liability under Section 138 is a "statutory offense" created by legal fiction and is strictly personal to the individual who signs the instrument and maintains the account.

¶ 6.3

Since the petitioner was neither the signatory nor the account holder, he could not be held vicariously liable, as Section 141 (vicarious liability) applies only to companies/firms and not to individuals or proprietorships.

¶ 7.3, 7.4

The "concatenation of acts" (presentation, dishonour, notice, and failure to pay) was broken because the drawer’s death revoked the bank's mandate to pay, and a deceased person cannot "fail to pay" within the statutory 15-day notice period.

¶ 8.4, 8.7

The Court critiqued the Magistrate’s "procedural inertia," holding that while a Magistrate cannot "recall" process, they have a duty under Section 251 Cr.P.C. to drop proceedings that are legally incompetent ab initio to prevent an abuse of process.

¶ 9.3, 9.8