Case Background
The dispute arises from business dealings between the complainant (Opposite Party No. 2) based in Bhojpur district and the petitioner, who was described as the Managing Director of Sona Infracon Pvt. Ltd., a company based in Samastipur district.
According to the complaint, during their business relationship the complainant paid a total of Rs. 52 lakhs into the company’s bank account through several transactions between 27.01.2021 and 22.02.2021. In addition, at the request of the petitioner, the complainant allegedly paid Rs. 32 lakhs to Jial Das & Company, Pakur, Jharkhand, and Rs. 10 lakhs by cheque dated 17.03.2021 to JBR Infratech, Jharkhand.
These outside payments were allegedly for supply of stone chips to the petitioner, with both those Jharkhand firms supplying materials to the petitioner. In this way, trusting the petitioner and their business relations, the complainant says that a total of Rs. 94 lakhs was paid from the complainant, his father’s company and his uncle to the petitioner and his associates.
In the course of business, the petitioner issued a cheque of Rs. 40 lakhs bearing No. 714728 in favour of the complainant. On this cheque, a written note stated that it was being given as “security”. It also recorded that if the petitioner returned the money by 10.01.2022, the complainant would return the cheque; otherwise the complainant could deposit it.
The complaint further alleges that the petitioner later returned an amount of Rs. 32,52,000 to the complainant. According to the complainant, Rs. 61,50,000 still remained outstanding against the petitioner and his associates.
On 10.01.2022, the complainant presented the Rs. 40 lakh cheque in the bank. The petitioner allegedly told the State Bank manager telephonically that the cheque had been lost and a sanha had been lodged. The cheque was dishonoured. The complainant re-presented the cheque on 24.01.2022, but again it was dishonoured because the petitioner had stopped payment.
The complainant issued a legal notice to the petitioner on 01.02.2022, which was not replied to. After alleged inaction by the police, the complainant filed Complaint Case No. 360 of 2022 before the Judicial Magistrate 1st Class, Bhojpur at Ara, under Section 138 of the Negotiable Instruments Act, 1881.
On 16.08.2022, the Magistrate took cognizance under Section 138 of the N.I. Act and issued summons against the petitioner. Later, on 01.02.2024, the Magistrate directed the petitioner to pay 20% of the cheque amount as interim compensation within six months under Section 143-A of the N.I. Act.
The petitioner then approached the Patna High Court through two petitions. In Cr. Misc. No. 55533 of 2025, he challenged the 16.08.2022 cognizance and summons order. In Cr. Misc. No. 63509 of 2024, he challenged the 01.02.2024 order granting interim compensation.
What the Court Examined and Decided
The High Court, presided over by Hon’ble Justice Smt. Soni Shrivastava, heard both criminal miscellaneous cases together because they arose from the same complaint case.
The Court first dealt with Cr. Misc. No. 55533 of 2025 concerning the challenge to the cognizance order.
On behalf of the petitioner, Senior Counsel argued that the entire complaint was not maintainable from the very beginning. The core point was that all alleged payments were made to the account of Sona Infracon Pvt. Ltd., but that company was never made an accused in the complaint. Only the petitioner, by name, described as Managing Director of the company, was made an accused.
Relying on Supreme Court judgments in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., Himanshu v. B. Shivamurthy and Bijoy Kumar Moni v. Paresh Manna, it was argued that when a cheque is issued on behalf of a company, the company itself is the principal offender under Section 138 N.I. Act. Only after the company is made an accused, and an offence by the company is made out, can its directors or officers be held vicariously liable under Section 141.
The petitioner’s side stressed that commission of an offence by the company is an “express condition precedent” for vicarious liability. Without the company being arraigned, a complaint against the director alone is not maintainable.
The petitioner also raised a second line of defence: that the cheque was clearly a security cheque and not meant for payment of any existing debt. The endorsement on the cheque itself, and a debit voucher signed by both parties, stated, “This cheque is only for security reason. Not for payment. Payment will be done and cheque refunded.” The debit voucher likewise recorded that the cheque was only for security and would be refunded after payment.
To support this, the petitioner produced bank statements to show that his company had already paid a total of Rs. 1,77,20,000 to the complainant and others, more than what was allegedly due. This, he argued, meant there was no outstanding debt by the time the cheque was presented.
The petitioner relied upon the Supreme Court decision in Sripati Singh v. State of Jharkhand to say that a security cheque, particularly when the underlying amount has already been paid, cannot be misused to launch a Section 138 case.
On the other hand, counsel for the complainant opposed the petition. He submitted that the order taking cognizance under Section 138 was entirely legal because a prima facie offence was made out. He pointed out that the petitioner was named as accused along with his designation as Managing Director of Sona Infracon Pvt. Ltd. and that he was the authorised signatory of the cheque and the person handling the company’s affairs.
The complainant’s side argued that, since the company was a family-run concern and the petitioner was controlling it, non-impleading the company should not block criminal prosecution.
On the “security cheque” issue, the complainant relied on the same Supreme Court decision in Sripati Singh to argue that merely labelling a cheque as “security” does not automatically free the drawer from liability if it is dishonoured. If a loan or liability remains unpaid by the due date, a cheque originally issued as security can mature for payment and, on dishonour, Section 138 consequences can follow.
The complainant further submitted that whether the alleged Rs. 1,77,20,000 had indeed been paid or not was a disputed question of fact that could only be decided at trial. Reliance was placed on Sri Om Sales v. Abhay Kumar @ Abhay Patel and Rajeshbhai Muljibhai Patel v. State of Gujarat to stress the presumption under Section 139 of the N.I. Act in favour of the holder of the cheque, and that rebuttal requires evidence.
It was also pointed out that the trial had already progressed to the stage of recording the accused’s statement under Section 313 Cr.P.C. Interference at such an advanced stage, according to the complainant, was not justified.
In reply, the petitioner contended that when a complaint suffers from an inherent legal defect, the stage of the case is irrelevant. The High Court’s inherent powers under Section 482 Cr.P.C. can be exercised even at an advanced stage to prevent abuse of process and secure the ends of justice. Judgments in Kamlesh Kumar v. State of Bihar, Anand Kumar Mohatta v. State (NCT of Delhi), and other High Court decisions were cited to support this.
After hearing both sides, the Patna High Court focused first on the question of non-impleading of the company. The Court examined the complaint and found that:
- The petitioner was named as accused with his designation as Managing Director of Sona Infracon Pvt. Ltd.
- The company itself, whose bank account had received all the payments, was not made an accused.
- The complainant had expressly admitted that all money transactions were in the company’s account.
Referring to the three-judge bench decision in Aneeta Hada, the Court reiterated that arraigning the company as an accused is imperative. The Supreme Court had clearly held that commission of an offence by a company is a pre-condition for vicarious liability of its directors and officers. The words “as well as the company” in Section 141 make this mandatory.
The Court then referred to Himanshu v. B. Shivamurthy, where the Supreme Court held that in the absence of the company being arraigned as an accused and without service of demand notice on it, the complaint against the director alone was not maintainable and had to be quashed.
The Patna High Court also took note of the recent Supreme Court decision in Bijoy Kumar Moni, which reaffirmed that prosecution cannot proceed against authorised signatories or directors when the company, the drawer of the cheque, is not made an accused.
Further, the Court cited Manjula Kapoor v. State of Himachal Pradesh, where following Aneeta Hada and N. Harihara Krishnan v. J. Thomas, the Supreme Court held that if a complaint suffers from the fatal defect of not impleading the company whose account the cheque was drawn on, no cognizance can be taken. Such a defect cannot be cured later by invoking Section 319 Cr.P.C.; the only remedy is to file a fresh complaint within limitation, after removing the defect.
In light of this settled law, the Patna High Court concluded that the complaint in the present case suffered from the same “fatal defect” because Sona Infracon Pvt. Ltd., whose account was involved and on whose behalf the cheque was signed, was not made an accused. Therefore, no cognizance could legally have been taken on such a complaint.
On the “security cheque” and alleged prior payment issues, the Court noted the rival stands and the law in Sripati Singh and Sri Om Sales. It recognised that whether the cheque continued to be only a security cheque or became a cheque against an enforceable debt would require evidence and was a triable issue. The Court consciously declined to undertake a detailed factual enquiry at the pre-trial stage on these points.
However, it held that because the complaint itself was fundamentally defective, there was no need to go into those questions in detail. The Court emphasised that its interference was justified despite the advanced stage of trial, relying on Anand Kumar Mohatta and other precedents which allow use of Section 482 Cr.P.C. even after evidence has been recorded, to prevent abuse of process.
The Court therefore quashed the cognizance order dated 16.08.2022 passed by the Judicial Magistrate 1st Class, Ara, Bhojpur in Complaint Case No. 360C/2022 (CIS No. 0592/2022), along with all further proceedings arising from it. Cr. Misc. No. 55533 of 2025 was allowed.
Turning to Cr. Misc. No. 63509 of 2024, the Court noted that the impugned order dated 01.02.2024, passed under Section 143-A of the N.I. Act, directed the petitioner to pay 20% of the cheque amount as interim compensation. This order was only a consequence of there being a pending trial under Section 138.
Once the very foundation—i.e., the cognizance under Section 138—was removed, the Court held that the interim compensation order could not independently survive. Thus, the order under Section 143-A was also quashed. Cr. Misc. No. 63509 of 2024 was accordingly allowed.
Importantly, the Court clarified that it was allowing the petitions because of the fatal legal defect in the complaint, not on the merits of the factual allegations. It explicitly left the complainant at liberty to pursue other remedies in accordance with law to seek redress, which could include filing a fresh, legally compliant complaint within limitation, if so advised.
Why This Judgment Matters
This decision is significant for businesspeople, small traders, and company officials involved in cheque-based transactions in Bihar.
First, it reinforces that when a cheque is issued by or on behalf of a company, any cheque bounce case under Section 138 of the N.I. Act must make the company itself an accused. Proceeding only against a director or authorised signatory, without naming the company, can lead to the entire case being thrown out, even at an advanced trial stage.
Second, it shows that courts will not hesitate to quash criminal proceedings under Section 482 Cr.P.C. where there is a clear legal defect, even if evidence has been recorded and the matter is at the stage of the accused’s statement.
Third, for complainants, the judgment is a caution to draft cheque bounce complaints carefully. Missing a necessary party such as the company can waste years of litigation. However, the Court has also kept their rights open by allowing them to pursue other remedies.
Legal Issues and Answers
- Issue: Can a cheque bounce complaint under Section 138 of the N.I. Act proceed only against a company’s managing director when all transactions and the cheque relate to the company, but the company itself is not made an accused?
Answer: No. Following Supreme Court precedents, the Patna High Court held that arraigning the company is mandatory. The complaint suffered from a fatal defect and the cognizance order and all proceedings were quashed. - Issue: Does the advanced stage of the criminal trial bar the High Court from exercising its inherent powers under Section 482 Cr.P.C. to quash proceedings?
Answer: No. The Court held that there is no such bar. Where continuation of proceedings based on a legally defective complaint would amount to abuse of process, the High Court can quash even at an advanced stage. - Issue: What happens to an order granting interim compensation under Section 143-A N.I. Act if the underlying cognizance under Section 138 is quashed?
Answer: The interim compensation order, being only a consequence of the Section 138 proceedings, cannot survive independently. It must also be quashed.
Cases Cited by the Court
- Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661
- Himanshu v. B. Shivamurthy & Anr., (2019) 3 SCC 797
- Bijoy Kumar Moni v. Paresh Manna & Anr., (2026) 5 SCC 380
- Manjula Kapoor v. State of Himachal Pradesh & Anr., 2026 SCC Online SC 1521
- N. Harihara Krishnan v. J. Thomas, (2018) 13 SCC 663
- Sripati Singh (since deceased) through his son Gaurav Singh v. State of Jharkhand & Anr., (2022) 18 SCC 614
- Sri Om Sales v. Abhay Kumar @ Abhay Patel & Anr., 2025 SCC Online 2897
- Rajeshbhai Muljibhai Patel & Ors. v. State of Gujarat & Anr., (2020) 3 SCC 794
- Kamlesh Kumar v. State of Bihar & Anr., (2014) 2 SCC 424
- Anand Kumar Mohatta & Anr. v. State (NCT of Delhi) & Anr., (2019) 11 SCC 706
- State of Karnataka v. L. Muniswamy, (1977) 2 SCC 699
- Md. Nausad Khan @ Md. Naushad Khan & Ors. v. State of Bihar & Anr., Cr. Misc. No. 45981 of 2015 (Patna High Court)
- Madan Mohan Agarwala v. State of Orissa, 1985 Cri. L.J. (NOC) 92 (Ori)
- Ramawatar v. State of Madhya Pradesh, (2022) 13 SCC 635
- Ramagopal & Anr. v. State of Madhya Pradesh, (2022) 14 SCC 531
- Shirish Subhash Kekan & Ors. v. State of Maharashtra & Anr., Cr. Writ Petition No. 479 of 2019 (Bombay High Court)
- Shesh Rao S/o Makhram Jadhav v. State of Maharashtra (Bombay High Court)
Case Details
Case Numbers: Criminal Miscellaneous No. 63509 of 2024; Criminal Miscellaneous No. 55533 of 2025 (arising out of Complaint Case No. 360 of 2022, CIS No. 0592/2022, Bhojpur)
Case Title: Naveen Kumar @ Naween Kumar v. The State of Bihar & Vijay Shankar Ojha (in both criminal miscellaneous cases)
Coram: Hon’ble Justice Smt. Soni Shrivastava
Citation: 2026 (6) PLJR 28
Advocates:
- For the petitioner (in both matters): Mr. Chitranjan Sinha, Senior Advocate; Mr. Baidhyanath Thakur, Advocate; Mr. Kaushik Deo, Advocate
- For the State (Cr. Misc. No. 63509 of 2024): Mr. Arun Kumar Singh, Advocate
- For the State (Cr. Misc. No. 55533 of 2025): Mr. Ram Sumiran Rai, Advocate
- For Opposite Party No. 2 (in both matters): Mr. Rajesh Ranjan, Advocate; Mr. Mohammad Farooq, Advocate; Mr. Himanshu Ranjan, Advocate; Ms. Sakshi Bhatnagar, Advocate; Mr. Ankur Agraj, Advocate
Nature of the Case: Petitions under Section 482 Cr.P.C. challenging (i) the Magistrate’s order taking cognizance and issuing summons under Section 138 of the Negotiable Instruments Act, 1881, and (ii) an order directing interim compensation under Section 143-A of the Negotiable Instruments Act, 1881.
Date of High Court Judgment: 31.08.2026
Link to Judgment: https://patnahighcourt.gov.in/viewjudgment/NiM2MzUwOSMyMDI0IzEjTg==—am1–ccVOm2UCGI=
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