The High Court (HC) has identified three categories of individuals who may be subject to legal proceedings under Section 138 of the Negotiable Instruments Act in cheque dishonour cases involving companies.
The section addresses instances where cheques are dishonoured due to insufficient funds.
The first category encompasses the company that committed the offence, while the second includes all individuals who were responsible for the company's business at the time of the offence.
The third category consists of any director, manager, secretary, or officer of the company whose negligence or connivance led to the offence.
The observation was made in the full verdict released on the Supreme Court's website recently, following a short verdict delivered by the High Court bench of Justice Jahangir Hossain and Justice Md Badruzzaman on March 18, 2021.
The verdict said, "If the drawer of the cheque is a company, firm or an association of individuals would also be prosecuted for commission of [an] offence under section 138 subject
to the fulfilment of the
conditions."
The HC bench has observed that three categories of individuals can be brought under the scope of section 138, through legal fiction envisioned therein.
While the company may be the primary offender under section 138 in cases where a cheque issued by them is dishonoured, they are not solely responsible for the offence.
The other two categories of individuals are equally liable for the same offence under the fiction of law.
The verdict was made in response to a cheque dishonour case filed by National Finance Limited (NFL), a non-banking financial institution (NBFI), against Ibrahim Raihana Industries Limited, its managing
director, and four other directors with the Court of Chief Metropolitan Magistrate in Dhaka.
The case was filed after Ibrahim Raihana Industries Limited failed to repay the loan money to NFL within the stipulated time.
The managing director of Ibrahim Raihana Industries Limited issued a cheque for Tk 150 million on behalf of the company to NFL, which was subsequently bounced twice, on May 31 in 2017 and later on July 5 in 2017.
The complainant then sent a legal notice on July 11 in 2017 requesting the borrowers to pay the cheque amount within 30 days. But they did not make payment within the stipulated period and accordingly, the complaint was made for prosecution.
Then Additional Metropolitan Sessions Judge's Court no 1 in Dhaka framed a charge against the accused persons. The directors moved to the High Court for quashing the entire proceeding of the case.
Upon the primary hearing on the case, the HC bench issued a rule and stayed the proceedings of the trial court. After the final hearing, the HC bench discharged the rule, vacated the stay order and asked the trial court to proceed with the case.
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