NO FUNDAMENTAL DEFECT IN A CHEQUE BOUNCE COMPLAINT JUST BECAUSE THE NAME OF THE MD IS STATED FIRST, FOLLOWED BY HIS POSITION IN THE COMPANY - SC

The Supreme Court held that there is no fundamental defect in a cheque bounce complaint solely because the name of the Managing Director is stated first, followed by the position held by him in the company.

Eight cheques issued by the respondent were dishonored on the ground of insufficient funds. A legal notice was sent to the respondent but, nothing was availed. Thereafter, the appellant registered a complaint before the Special Metropolitan Magistrate, Mumbai. The complaint was made by Bhupesh Rathod, the MD of the company, and he accompanied a Board Resolution on behalf of the company, authorizing him to initiate legal action. 

However, the respondent raised an objection that the complaint was filed by the MD in his personal capacity and not on behalf of the company.

The trial court and the High Court acquitted the respondent on the ground that the complaint was not filed through the payee, which was the company. This judgment of the HC came to be challenged before the Top court.

Before the SC, the appellant argued that the cause title made it clear that the complaint was filed on behalf of the company. Moreover, a BR authorizing the MD was also annexed. A hyper-technical view was taken before passing the order; the issue is only related to the format of the complaint and not its substance. It was also clarified that an MD is given the charge of a company’s day-to-day affairs, and the same would entail approaching a court. 

After hearing the Parties, a bench of Justices SK Kaul and MM Sundresh found that the complaint was properly instituted. Respondent was sentenced to one-year imprisonment, but if paid a sum of Rs1,60,000 to the appellant, the sentence would be suspended. The respondent was also directed to pay a fine twice the amount mentioned on the cheque. 

Author: Papiha Ghoshal