BIJAY AGARWAL versus M/S MEDILINES
[2024] 10 S.C.R. 1890, Supreme Court of India, 2024
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2024] 10 S.C.R. 1890 : 2024 INSC 918
Bijay Agarwal 
v. 
M/s Medilines 
(Criminal Appeal No(s). 4301 of 2024)
21 October 2024
[C.T. Ravikumar* and Sanjay Karol, JJ.]
Issue for Consideration
Whether the signatory of a cheque authorized by the Company 
is a drawer and whether such a signatory could be directed to 
deposit any sum out of the fine or compensation awarded by the 
trial Court u/s.148 of the Negotiable Instruments Act, 1881, as a 
condition for suspending the sentence in an appeal filed against 
his conviction u/s.138 of the NI Act.
Headnotes†
Negotiable Instruments Act, 1881 – ss.138 and 148 – Appellant 
is the authorized signatory of the company – The signed 
cheques were presented in the bank – The cheques were 
dishonoured and returned with the endorsement “payment 
stopped by the drawer” – Trial Court found appellant guilty 
and accordingly was convicted and sentenced – Appellant filed 
criminal appeals before the Principal City Civil and Session 
Judge – The sentence was suspended with condition to 
deposit 20% of the fine/compensation – It is against the said 
direction to deposit 20% of the compensation amount that 
the appellant approached the High Court, which culminated 
in the impugned common order dated 09.01.2024:
Held: In the case of the position qua Section 143A, NI Act, merely 
because an officer of a company concerned is the authorised 
signatory of the cheque concerned by itself will not make such 
an officer ‘drawer of the cheque’ under Section
148, NI Act, so as 
to empower the Appellate Court, in an appeal against conviction 
for an offence under Section 138, NI Act, to direct to deposit 
compensation of any sum under Section 148(1), of the NI Act – It 
is settled that an Appellate Court in an appeal against conviction 
under Section 138, NI Act, could not place a condition to deposit 
* Author
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Bijay Agarwal v. M/s Medilines 
an amount invoking the power under Section 148(1), NI Act, 
mechanically without considering whether the case falls within 
exceptional circumstances – In view of the said exposition of law, 
the Appellate Court ought to have considered the aforesaid aspects 
as it would certainly be an exceptional circumstance to exempt 
the appellant who is not the ‘drawer’ of the cheque concerned to 
deposit the amount payable under Section 148(1) by an appellant 
who is the ‘drawer’ of the cheque – In the instant case, the High 
Court has failed to consider these crucial aspects in the light of 
the dictum laid down by this Court in its various decisions while 
considering the application for suspension of sentence for the 
conviction under Section 138 of the NI Act in the pending appeal – 
In view of the discussion, the impugned order passed by the High 
Court is set aside and the orders passed by the Principal City Civil 
& Sessions Judge stands quashed and set aside to the extent it 
put the condition to deposit of 20% of the fine amount payable. 
[Paras 16, 17, 18]
Case Law Cited
Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao 
Deshmukh & Ors. [2024] 7 SCR 1211 : (2024) SCC OnLine SC 
1800; K.K. Ahuja v. V.K. Vohra and Another [2009] 9 SCR 1144 : 
(2009) 10 SCC 48; N. Harihara Krishnan v. Godfather Travels and 
Tours P. Ltd. (2018) 13 SCC 663; Jamboo Bhandari v. Madhya 
Pradesh State Industrial Development
Corporation Limited and 
Ors. (2023) 10 SCC 446 – referred to.
List of Acts
Negotiable Instruments Act, 1881.
List of Keywords
Signatory of a cheque authorized by the Company; Section 148 
of Negotiable Instruments Act, 1881; Suspension of sentence; 
Condition to deposit an amount out of fine or compensation; Ex-
ceptional circumstances.
Case Arising From
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.  
4301 of 2024
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From the Judgment and Order dated 09.01.2024 of the High Court 
of Karnataka at Bengaluru in CRLP No. 13095 of 2023
With
Criminal Appeal No. 4302 of 2024
Appearances for Parties
Siddharth Aggarwal, Sr. Adv., Anjan Datta, Sumon Pathak,  
Ms. Ishita Srivastava, Ms. Arshiya Ghose, Ashish Raghvuvanshi, 
Vishal Arun Mishra, Advs. for the Appellant.
Gautam S. Bharadwaj, Ashwin Kumar D.S., Ishan Roy Chowdhury, 
Ms. Surbhi Mehta, Advs. for the Respondent.
Judgment / Order of the Supreme Court
Judgment
C.T. Ravikumar, J.
Leave granted. 
On the consent of the parties, the matter was finally heard.
1.	
The captioned appeals by a special leave are directed against the 
impugned common order dated 09.01.2024 passed by the High 
Court of Karnataka at Bengaluru in Criminal Petition Nos. 13095 of 
2023 and 13153 of 2023 respectively. 
2.	
Heard the learned senior counsel appearing for the appellant and 
the learned counsel appearing for the respondent.
3.	
In view of the factual background obtained in these cases, a question 
of seminal importance arises for consideration viz., “whether the 
signatory of a cheque authorized by the Company is a drawer and 
whether such a signatory could be directed to deposit any sum 
out of the fine or compensation awarded by the trial Court under 
Section 148 of the Negotiable Instruments Act, 1881 (for short ‘NI 
Act’)”, as a condition for suspending the sentence in an appeal filed 
against his
conviction under Section 138 of the NI Act?
4.	
The contention of the appellant is that he is only an authorized 
signatory of the company M/s. Gee Pee Infotech Private Limited, 
which was held liable to adequately compensate the complainant
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Bijay Agarwal v. M/s Medilines 
company by the trial Court. The status of the appellant authorised 
signatory of the aforesaid company is undisputed rather, it is 
indisputable as it is the very case of the respondent complainant. 
Before the trial Court the said company was the first accused and the 
appellant herein was the second accused. In unambiguous terms, the 
respondent-complainant described the appellant Sri. Bijay Agarwal as 
the authorized signatory/ Director of M/s. Gee Pee Infotech Pvt. Ltd. 
5.	
Bearing in mind the said indisputable and undisputed fact, we will 
briefly refer to the other relevant facts of the case. 
The complaint being C.C. No. 13938 of 2013 was filed by the 
respondent company against M/s. Gee Pee Infotech Private Ltd. 
and appellant, under Section 138 of the NI Act. The crux of the 
complaint was as under: -
The Accused No.1 is a Company incorporated under 
provisions of Companies Act 1956. The second accused 
is an authorised signatory/Director of the first accused 
company and he is incharge and responsible for the 
day today administrative affairs and functioning of the 
accused No.1 Company. The accused by representing 
that they are the Pan Indian circle licence holder for 
distribution of Electronic Pin Recharge BSNL, induced the 
complainant to pay advance amount of Rs.1,00,00,000/- 
and to become the Master Distributor for BS recharge 
pin for Karnataka State and accordingly entered in 
agreement with the
complainant on 01/10/2011. By 
virtue of said Agreement, the accused appointed the 
complainant Master Distributor for BSNL E-recharge 
pin for Karnataka and collected the advance payment 
while undertaking liquidate/transfer BSNL E-recharge pin 
load to the complainant as to enable them to distribute 
through their constituents of the State of Karnataka. After 
entering into the Agreement accused supplied certain 
BSNL E-recharge pin to the complainant. However, to 
their utter shock, surprise and dismay, it came to the 
knowledge of the complainant through their constituents 
that 99% of the BSNL E-recharge pin supplied by the 
accused are fake and the talk time under the said BSNL 
E-recharge load supplied to them could not be uploaded 
to the Mobile Numbers of the customers.
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6.	
It was the further case that on being told that appropriate action 
would be initiated they executed a Memorandum of Understanding on 
10.04.2012 and assured return of the amount advanced and issued 
five post-dated cheques. The cheque presented was dishonoured 
and thereupon the complainant caused legal notice. Pursuant to 
the same, the accused issued two fresh post-dated cheques each 
for a sum of Rs.25 lakhs in lieu of the old cheques. Later, cheque 
bearing No.955437 dated 24.04.2013 for a sum of Rs.25 lakhs was 
presented, but dishonoured and returned with the endorsement 
“payment stopped by the drawer”. The complaint was, thereupon, 
filed after complying with the requisite procedures and was taken 
on file as C.C. No.13938/2013
7.	
After appreciating the evidence, the trial Court arrived at the following 
finding as against issue No.2:
32. Point No.2:- Complainant Company paid a sum of  
Rs. 1,00,00,000/- to the accused Company for purchasing 
BSNL E recharge pins but was supplied fake E-recharge 
pins which the complainant Company demanded 
repayment, the accused not be uploaded to the Mobile 
numbers of the customers. W a sum of Rs.50,00,000/- 
and for the balance Company repaid amount it issued 
the cheque in question which came to be dishonoured 
on presentation. Complainant Company has been deprive 
of its money for all these years, i.e. for a period of more 
than years. Hence, accused Company shall
adequately 
compensate the complainant for the same.
8.	
As relates the latter appeal, the complaint that was taken on file as 
C.C. No.13937/2013 was filed pursuant to the dishonour of cheque 
No.955421 dated 24.12.2012 for a sum of Rs. 25 lakhs under similar 
circumstances. On appreciating the evidence the trial Court, as 
per a separate order passed on 30.09.2023 itself arrived at similar 
conclusion as in C.C. No.13938/2013.
9.	
Based on the aforesaid conclusions, in both the cases the trial Court 
found the appellant guilty and accordingly convicted and sentenced, 
as per judgment and order dated 30.09.2023 as under: - 
“Accused is found guilty of the offence punishable  
U/Sec. 138 of Negotiable Instruments Act 1881.
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Acting U/sec. 255(2) of Cr.PC accused is hereby convicted 
for the offence punishable U/Sec. 138 of Negotiable 
Instruments Act 1881 and he is sentenced to pay to pay 
fine of Rs. 40,00,000/-.
In default, accused shall undergo simple imprisonment for 
a period of six months.”
10.	 Feeling aggrieved by the conviction and sentence passed in 
C.C. No.13937/2013, the appellant preferred Criminal Appeal 
No.1536/2023 and against the conviction and sentence passed in 
C.C. No.13938/2013 filed Criminal Appeal No.1537/2023, before 
the Principal City Civil and Sessions Judge Court at Bangalore. 
In the appeals, the appellant herein filed separate applications 
and sought for suspension of sentence passed in both the cases, 
under Section 389 of the Cr.PC. Separately, but on the very same 
lines orders were passed in both the appeals on 10.11.2023. The 
sentence was suspended with condition to deposit 20% of the 
fine/compensation amount in each of the appeals. It is against the 
said direction to deposit 20% of the compensation amount that 
the appellant approached the High Court by filing Criminal Petition 
Nos.13095/2013 and 13153/2013 seeking that part of the order dated 
10.11.2023 requiring deposit of fine be quashed, which culminated 
in the impugned common order dated 09.01.2024.
11.	 Now, the self-same appellant raised the contention in both the appeals 
that in the light of the decision of this Court in Shri Gurudatta
Sugars 
Marketing Pvt. Ltd. Vs. Prithviraj Sayajirao Deshmukh & Ors.,1 
he could not have been directed to pay any amount payable under 
Section 148 (1) of the NI Act, for this Court laid down the law that 
merely because an officer of a company being the authorised signatory 
of the cheque by itself would not make him its drawer. It is submitted 
that though the said decision was dealing with Section 143A of the 
NI Act in view of its analogicalness to Section 148, NI Act, the dictum 
laid down in the said decision is to be followed as relates Section 148 
as well and hence, an authorized signatory of an accused company 
not being the drawer of the cheque could not be directed to deposit 
any particular percentage of the fine or compensation awarded by 
the trial Court under Section 148, NI Act. The learned counsel for the 
1	
[2024] 7 SCR 1211 : (2024) SCC OnLine SC 1800
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respondent resisted the contention and canvassed for the dismissal 
of the appeals. According to the learned counsel, the exposition of 
law in the decision in Shri Gurudatta Sugars Marketing Pvt. Ltd. 
case (supra) is inapplicable in the cases on hand.
12.	 To appreciate rival contentions, it is only appropriate to refer to 
Sections 143- A and 148 of the NI Act: - 
“S.143 – A. Power to direct interim compensation –  
(1) Notwithstanding anything contained in the Code of 
Criminal Procedure, 1973 (2 of 1974), the Court trying an 
offence under Section 138 may order the drawer of the 
cheque to pay interim compensation to the complainant- 
(a)	 in a summary trial or a summons case, where 
he pleads not guilty to the accusation made in 
the complaint; and
(b)	 in any other case, upon framing of charge.
(2) The interim compensation under sub-section (1) shall 
not exceed twenty per cent of the amount of the cheque.
(3) The interim compensation shall be paid within sixty 
days from the date of the order under sub-section (1), or 
within such further period not exceeding thirty days as 
may be directed by the Court on sufficient cause being 
shown by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall 
direct the complainant to repay to the drawer the amount 
of interim compensation, with interest at the bank rate as 
published by the Reserve Bank of India, prevalent at the 
beginning of the
relevant financial year, within sixty days 
from the date of the order, or within such further period not 
exceeding thirty days as may be directed by the Court on 
sufficient cause being shown by the complainant.“
“S.148. Power of Appellate Court to order payment pending 
appeal against conviction. 
(1) Notwithstanding anything contained in the Code of 
Criminal Procedure, 1973 (2 of 1974), in an appeal by 
the drawer against conviction under Section 138, the
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Bijay Agarwal v. M/s Medilines 
Appellate Court may order the appellant to deposit such 
sum which shall be a minimum of twenty per cent of the 
fine or compensation awarded by the trial Court:
Provided that the amount payable under this sub-section 
shall be in addition to any interim compensation paid by 
the appellant under Section 143-A.”
(Underline supplied)
13.	 A scanning of Sections 143A and 148 would reveal that the 
former deals with the power of the Court trying an offence under 
Section 138 of the NI Act to direct the drawer of the cheque to 
pay interim compensation to the complainant whereas the latter 
Section deals with the power of the Appellate Court in an appeal 
by the drawer against the conviction under Section 138 to the 
appellant to deposit such sum which shall be a minimum of 20% 
of the fine or compensation awarded by the trial Court. The proviso 
to Section 148(1) would further reveal that the amount payable 
thereunder shall be in addition to any interim compensation paid 
by the appellant under Section 143A, NI Act. Thus, a scanning of 
both the Sections would reveal that the said sections empower to 
issue such directions only to the ‘drawer’ of the cheque. We have 
already noted that in ‘Shri Gurudatta Sugars Marketing Pvt. Ltd.’ 
Case (supra) after referring to the earlier decisions of this Court 
including in ‘K.K. Ahuja v. V.K. Vohra and Another,2’ and in ‘N. 
Harihara Krishnan v. Godfather Travels and Tours P.
Ltd.,3’ this 
Court held that the primary liability for an offence under Section 138 
lies with the company and the company’s management is vicariously 
liable only under specific conditions provided in Section 141 and for 
the purpose of Section 143A of the NI Act and a signatory merely 
authorised to sign on behalf of the company would not become 
the ‘drawer’ of the cheque and, therefore, could not be directed to 
pay interim compensation under Section 143A. In the contextual 
situation, it is relevant to refer to paragraphs 28 to 30, 34 and 35 
of ‘Shri Gurudatta Sugars Marketing Pvt. Ltd.’s case to the extent 
it is relevant for the purpose of this case, as under: -
2	
[2009] 9 SCR 1144 : (2009) 10 SCC 48
3	
(2018) 13 SCC 663
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“28. The High Court’s interpretation of section 7 of the 
Negotiable Instruments Act, 1881 accurately identified 
the “drawer” as the individual who issues the cheque. 
This interpretation is fundamental to understanding 
the obligations and liabilities under Section 138 of the 
Negotiable Instruments Act, 1881, which makes it clear that 
the drawer must ensure sufficient funds in their account at 
the time the cheque is presented. The appellants’ argument 
that directors or other individuals should also be liable 
under Section 143A misinterprets the statutory language 
and intent. The primary liability, as correctly observed 
by the High Court, rests on the drawer, emphasizing the 
drawer’s responsibility for maintaining sufficient funds.
29. The general rule against vicarious liability in criminal 
law underscores that individuals are not typically held 
criminally liable for acts committed by others unless specific 
statutory provisions extend such liability. Section 141 of the 
Negotiable Instruments Act, 1881 is one such provision, 
extending liability to the company’s officers for the 
dishonour of a cheque. The appellants’ attempt to extend 
this principle to section 143A, to hold directors or other 
individuals personally liable for interim compensation, is 
unfounded. The High Court rightly emphasized that liability 
under section 141 arises from the conduct or omission 
of the individual involved, not merely
their position within 
the company.
30. The distinction between legal entities and individuals 
acting as authorized signatories is crucial. Authorized 
signatories act on behalf of the company but do not assume 
the company’s legal identity. This principle, fundamental to 
corporate law, ensures that while authorized signatories 
can bind the company through their actions, they do not 
merge their legal status with that of the company. This 
distinction supports the High Court’s interpretation that the 
drawer under section 143A refers specifically to the issuer 
of the cheque, not the authorized signatories.
34. The respondents correctly argued that an authorised 
signatory is not a drawer of the cheque, as established
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Bijay Agarwal v. M/s Medilines 
in N. Harihara Krishnan. This judgment clarified that 
a signatory is merely authorised to sign on behalf of 
the company and does not become the drawer. The 
respondents’ interpretation aligns with the principle that 
penal statutes should be interpreted strictly, particularly 
in determining vicarious liability. The judgment in  
K.K. Ahuja further supports this approach, emphasising that 
penal provisions must be read strictly to determine liability.
35. In conclusion, the High Court’s decision to interpret 
“drawer” strictly as the issuer of the cheque, excluding 
authorised signatories, is well-founded.”
14.	 As noted earlier, Section 148 would make it clear that it empowers 
the Appellate Court in an appeal by the drawer against conviction 
under Section 138, NI Act, to direct to deposit a sum which shall be 
a minimum of 20% of the fine or compensation awarded by the trial 
Court and the same shall be in addition to any interim compensation 
paid by the appellant under Section 143A. When this be the position 
revealed from Sections 143A and 148 there cannot be any doubt with 
respect to the position that the term ‘drawer’ referred to in Section 
148 and 143A means ‘drawer of the cheque concerned’. Ergo, the 
question is whether the law laid down in the decision in Shri Gurudatta 
Sugars Marketing Pvt. Ltd.’s case (surpa) is applicable proprio 
vigore in cases involving the question of liability to pay additional
compensation, as contemplated under Section 148(1), NI Act. The 
proviso to Section 148(1) itself makes it specifically clear that the 
amount payable under Section 148(1), NI Act, if the Appellate Court 
so directs, shall be in addition to any interim compensation paid by 
the appellant concerned under Section 143A, NI Act. It is nobody’s 
case that the appellant was made to pay interim compensation under 
Section 143A, in relation to the original proceedings. Be that as it 
may, the other question is whether an authorised signatory of the 
cheque can be said to be the drawer of the cheque concerned? We 
may hasten to add here that we were not addressed on the question 
whether the appellant herein could be saddled with the liability to pay 
such additional compensation in terms of Section 148(1) by virtue of 
the provision under Section 141, NI Act which extends liability to the 
officers of the company for the dishonour of a cheque and as such, 
we do not propose to consider that aspect as it need be considered 
only when pointedly posed for consideration based on proven facts.
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15.	 There can be no doubt with respect to the position that Section 143A 
and 148 empowers the Court trying an offence under Section 138 
and the Appellate Court considering an appeal by a drawer against 
his conviction under Section 138 respectively to fasten liability 
to pay interim compensation and additional compensation under 
Section 148(1), as the case may be, and therefore, the question 
whether any particular officer of the company concerned can be 
made to pay interim compensation or deposit additional compensation 
under the aforesaid relevant provision(s) would depend upon the 
question whether he is only a signatory of the cheque or whether 
he is the drawer of the cheque. It is that question with reference to 
Section 143A, NI Act, that was answered as above in the decision 
in Shri Gurudatta Sugars Marketing Pvt. Ltd.’s case (surpa). In 
view of the analogicalness of Section 143A to Section 148, that 
both the provisions are under the same Act though applicable at 
different stage of proceedings under Section 138 of NI Act and that 
the proviso to Section 148(1) makes it abundantly clear that deposit 
under Section 148(1) of the NI Act shall be an additional compensation 
paid by the appellant under Section 143A thereof, it can only be 
said that the decision in Shri Gurudatta Sugars Marketing Pvt. 
Ltd.’s case (supra) is applicable to the extent it holds an officer of 
a company who is an authorised
signatory of the cheque issued by 
a company is not the drawer of the same subject to what is held in 
the said decision with reference to Section 141, NI Act, as relates 
Section 148 thereof.
16.	 To wit, as in the case of the position qua Section 143A, NI Act, 
merely because an officer of a company concerned is the authorised 
signatory of the cheque concerned by itself will not make such an 
officer ‘drawer of the cheque’ under Section 148, NI Act, so as to 
empower the Appellate Court, in an appeal against conviction for an 
offence under Section 138, NI Act, to direct to deposit compensation 
of any sum under Section 148(1), of the NI Act.
17.	 In the decision in ‘Jamboo Bhandari v. Madhya Pradesh State 
Industrial Development Corporation Limited and Ors.4’ this Court 
held that an Appellate Court in an appeal against conviction under 
Section 138, NI Act, could not place a condition to deposit an amount 
4	
(2023) 10 SCC 446
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invoking the power under Section 148(1), NI Act, mechanically without 
considering whether the case falls within exceptional circumstances. 
In view of the said exposition of law, the Appellate Court ought to 
have considered the aforesaid aspects as it would certainly be an 
exceptional circumstance to exempt the appellant who is not the 
‘drawer’ of the cheque concerned to deposit the amount payable 
under Section 148(1) by an appellant who is the ‘drawer’ of the 
cheque. In the case on hand, the High Court has failed to consider 
these crucial aspects in the light of the dictum laid down by this Court 
in the decisions referred supra while considering the application for 
suspension of sentence for the conviction under Section 138 of the 
NI Act in the pending appeal. 
18.	 The upshot of the discussion is that these appeals should succeed 
and consequently, it is allowed. The impugned common order dated 
09.01.2024 passed by the High Court of Karnataka at Bengaluru 
in Criminal Petition Nos.13095/2023 and 13153/2023 is set aside. 
Accordingly, the orders dated 10.11.2023 passed by the Principal 
City Civil & Sessions Judge at Bangalore respectively in Criminal 
Appeal No. 1537/2023 and 1536/2023 stands quashed and set aside 
to the extent it put the condition to deposit of 20% of the fine amount 
payable under orders in CC Nos.13937/2023 and 13938/2013, passed 
by the Court of XXXVI Additional Chief Metropolitan
Magistrate, 
Bangalore City and restore the orders dated 10.11.2023 suspending 
the sentence of the appellant in both the cases, with the condition(s) 
imposed qua execution of bond and on such execution it will remain 
in force till the disposal of the above mentioned appeals pending 
before the First Appellate Court concerned. 
19.	 The First Appellate Court shall endeavour to dispose of the appeals 
expeditiously.
20.	 The appeals stand allowed as above.
21.	 Pending application(s), if any, shall stand disposed of. 
Result of the case: Appeals allowed.
†Headnotes prepared by: Ankit Gyan