Three categories persons can be prosecuted in cheque dishonour case if drawer is a company

Gulam Rabbani :
The High Court relying upon an apex court verdict has observed that three categories of persons can be brought under legal proceedings in the cheque dishonour cases filed under Section 138 of the Negotiable Instruments Act (NIA) if the drawer of the cheque is a company.

The first category is the Company which committed the offence;the second category is every person who was in-charge of and was responsible for the business of the company at the time of commission of offence; and the third category is, any other person who is a Director, Manager, Secretary or officer of the company, with whose connivance or neglect, the company has committed the offence.

The High Court bench of Justice Jahangir Hossain and Justice Md Badruzzaman passed the observation in the full text of a verdict. The HC bench delivered the short verdict on March 18 in 2021, while the full verdict released on the SC website recently.

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 offence under section 138 of NIA subject to the fulfillment of the conditions.”

Referring the apex court verdict the HC of NIA bench also said, three categories of persons to be brought within the ambit of section 138, through legal fiction envisaged therein.

It further said when a cheque is issued by the company and the same is dishonoured, there is no doubt that the company is the principal offender under section 138, but that alone does not mean that it is solely liable for the offence.

The other two categories of persons are also similarly liable for the same offence by fiction of law… When such offence was committed by the company alone, the other two categories of persons can also be prosecuted and punished if arraigned in the category as accused.

According to the verdict, National Finance Limited (NFL), a Non-Banking Financial Institution (NBFI), filed a cheque dishonour case against a company, Ibrahim Raihana Industries Limited, its Managing Director and four other Directors with the Court of Chief Metropolitan Magistrate in Dhaka.

Earlier, Ibrahim Raihana Industries Limited took a loan from the NFL. However, they failed to repay the loan money within the stipulated time.

Then Managing Director of the Ibrahim Raihana Industries Limited only on behalf of the company issued a cheque of Tk 150 million on May 29 in 2017 in favour of the complainant. However, the cheque was bounced for two times, on May 31 in 2017 and later on July 5 in 2017.

The complainant then sent 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 charge against the accused persons. The Directors moved the High Court for quashing the entire proceeding of the case.

Upon primary hearing on the case the HC bench issued a rule and stayed the proceedings of the trial court. After final hearing, the HC bench discharged the rule, vacated the stay order and asked the trial court to proceed with the case.