Can I lodge a complaint against the managing director and chairman of the company in a cheque bounce case? The managing director and chairman have issued a cheque after settlement of dues. I have huge financial dues upon the company. In order to settle the outstanding the company organised a meeting. In that meeting the managing director and chairman of the company agreed to pay dues in three equal installments. In the first installment the company will pay 25% dues and the rest of the dues will pay in two installments as 35% & 40% respectively. I received a check for the first installment. When I deposited that cheque for encashment it had bounced. A demand notice was sent but it is unanswered. Now I am going to lodge a complaint under section 138 NI Act. I want to know whether I can lodge that complaint against the managing director and chairman also.
Asked from: Delhi
The Managing Director is ordinarily vicariously liable for offences committed by the company under Section 138 of the Negotiable Instruments Act, 1881, as he is presumed to be in charge of, and responsible for, the conduct of the business of the company.
As far as the Chairman is concerned, his liability under Section 138 NI Act depends on his involvement in the day-to-day affairs of the company. If both the Managing Director and the Chairman are jointly responsible for the company's daily operations, or if the cheque in question bears the signatures of both, then both can be held liable under Section 138.
However, if the Chairman neither signed the cheque nor had any role in the company’s financial management or issuance of the cheque, he cannot be made an accused under Section 138 NI Act merely by virtue of his designation.
In such a scenario, if there is independent evidence indicating that the Chairman induced the complainant to part with money or goods through fraudulent representations, a case for cheating under Section 318 of the BNS may be made out. For initiating proceedings for the offence of cheating, it is not necessary to file a separate complaint. You may array the Chairman as an accused in the same complaint, but only in respect of the offence of cheating, provided the facts support such an allegation.
Accordingly, you are advised to file a single complaint against both persons—against the Managing Director for the offence of dishonour of cheque under Section 138 NI Act as well as cheating, and against the Chairman for the offence of cheating, if the facts and evidence support such a charge.
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