Orissa High Court
Nigam Institute Of Engineering And vs Sadhu Charan Palei …. Opposite Party … on 13 March, 2026
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 23-Mar-2026 11:57:44
IN THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No. 344 of 2026
along with
CRLMC No. 346 of 2026
(In the matter of an application under Section 482 of Criminal
Procedure Code, 1973 corresponding to Section 528 of Bharatiya
Nagarik Suraksha Sanhita, 2023).
Nigam Institute of Engineering and .... Petitioner(s)
Technology
(In both the cases)
-versus-
Sadhu Charan Palei .... Opposite Party (s)
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr. Amit Prasad Bose, Advocate.
For Opposite Party (s) : Mr. Ramesh Chandra Nayak, Advocate
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-05.03.2026
DATE OF JUDGMENT:-13.03.2026
Dr. Sanjeeb K Panigrahi, J.
1. The same Petitioner in both the CRLMCs has instituted the present
Criminal Miscellaneous Case under Section 482 of the Code of
Criminal Procedure, 1973/ Section 528 of Bharatiya Nagarik Suraksha
Sanhita, 2023, invoking the inherent jurisdiction of this Court. The
present application has been filed challenging the order of cognizance
dated 06.12.2025 passed by the learned Nayadhikari, Gram Nayalaya,
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Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 23-Mar-2026 11:57:44
Puri in ICC Case No. 16/2025 and 17/2025, whereby cognizance has
been taken for the alleged offences under Section 138 of Negotiable
Instrument Act.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
(i) The case of the Petitioner, in brief, is that he had purchased two
parcels of land, owing to a shortage of funds at the relevant
time, requested the Complainant to extend a friendly loan of Rs.
20,00.000/- with an assurance to repay the said amount within a
period of one month.
(ii) Thereafter, when the Petitioner failed to repay the loan within
the stipulated time, he issued a cheque bearing No. 000107
drawn on ICICI Bank, Baramunda Branch, for an amount of Rs.
20,00,000/-. The said cheque was issued for encashment from the
account maintained in the name of Nigam Engineering of
Technology, bearing the seal and signature of the Petitioner in
his capacity as the Managing Director and Chairman of the said
institution.
(iii) Pursuant to the said request, the Opp. Party presented the
aforesaid cheque for encashment by depositing the same in his
account in S.B.I., Chandanpur Branch, Puri. However, the
cheque was returned unpaid by the band with the endorsement
“funds insufficient”. Consequently, the Opp. Party instituted a
complaint case in respect of the said dishonour.
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
(iv) It is further stated that the learned Trial Court has taken
cognizance against the Petitioner in his individual capacity,
notwithstanding the fact that the cheque in question was issued
by him in his capacity as the Managing Director and Chairman
of the Institution.
(v) Thereafter, the Opp. Party filed the present ICC Case on
30.07.2025, subsequent to reciving summons in the complaint
case bearing ICC No. 2215 of 2025, which had earlier been
instituted on 16.04.2025 before the learned J.M.F.C.-II,
Bhubaneswar.
(vi) It is further stated that a complaint case has also been instituted
against the Opp. Party has filed under Sections 420, 318, 115(2),
126, 336, 351, 109, 296, 393, 303(3) of the I.P.C. , in which
statement of the complainant has been recorded in accordance
with the law.
(vii) The impugned complaints, cognizance has been taken in ICC
Case No. 16 of 2025 and 17 of 2025 against the present Petitioner.
The Petitioner contends that the said proceedings are not
maintainable in law, inasmuch as the cheque in question was
issued by him in his capacity as the Chairman and Managing
Director of the Institution and not in his individual capacity.
Being aggrieved by the aforesaid facts and circumstances, the
Petitioner has been constrained to approach this Court by filing the
present CRLMC Application seeking appropriate relief in accordance
with law.
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Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 23-Mar-2026 11:57:44
II. SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. The learned counsel for the Petitioner respectfully and earnestly made
the following submissions in support of his contentions:
(i) The Petitioner submits that the present petition arises out of the
allegations levelled against him in connection with the ICC Case
No. 16/ 2025 and 17/2025. It is contended that the impugned
proceedings were instituted on the basis of the said alleged
allegations. The Petitioner, inter alia, challenges the order of
cognizance dated 06.12.2025, passed by the Gram Nyayalaya,
Puri, whereby cognizance of the alleged offences was taken.
(ii) The Petitioner further submits that the cheque in question was
issued from the account of ICICI Bank, Barmunda Branch in the
name of Nigam Institute of Engineering and Technology,
bearing the seal and signature of the Managing Director. It is
contended that the Complaint case is not maintainable in the
present form, as the Institute itself has not been made a party to
the proceedings.
(iii) The Petitioner contends that, in terms of Section 141 of N.I. Act,
1881, both the company and the person responsible for the
company are liable to be proceeded against jointly. In the
present case, since the Institution has not been made a party to
the proceedings, the person in charge of the Institution cannot,
in his individual capacity, be held personally liable.
(iv) The Petitioner further contends that the judgments relied upon
by the Opp. Party are not applicable in the present case, as it is
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44undisputed that the institution has not been made a party ot the
Complaint. Consequently, the proceedings initiated against the
Petitioner are liable to be quashed.
(v) The Petitioner further submits that, if the criminal proceedings
are allowed to continue, he will be subjected to undue mental
agony and harassment. Finding no expeditious remedy
available, the Petitioner is constrained to challenge the order of
cognizance dated 06.12.2025, passed by the Gram Nyayalaya,
Puri.
III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES:
4. Per contra, the learned counsel for the Opposite Parties earnestly made
the submission that the present CRLMC is not maintainable before
this Court and deserves to be rejected in limine.
(i) The Opp. Parties submits that, as a preliminary objection, the
present petition is not maintainable. It is contended that the
Petitioner is not the Institution and, therefore, is not an accused
in Complaint Case No. 16/2025 and 17/2025. Being a third party
who is neither an accused nor has suffered any legal injury, the
Petitioner has no locus standi to invoke the inherent jurisdiction
of this Court for quashing of criminal proceedings.
(ii) The Opp. Party further submits that, on account of non-
paymnet, the Complaint Case was filed under Section 138 of the
N.I. Act. It is contended that the Complainant clearly discloses
all statutory ingredients of the alleged offence.
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Date: 23-Mar-2026 11:57:44
(iii) The Opp. Party submits that the alleged offence is primarily
committed by the Company and Directors are sought to be
prosecuted by virtue of Section 141 of N.I. Act, on the basis of
vicarious liability.
(iv) It further submits that the Institution neither incurred the debt
nor derived any benefit from the transaction. Consequently, the
Institution cannot be regarded as the primary offender. It is
contended that the Petitioner alone incurred the liability and
issued the cheque, allegedly misusing the corporate protection.
Hence, Section 141 of the act cannot be invoked against the
Petitioner.
(v) The Opp. Party further contends that the Petitioner signed the
cheque as the sole authority and operator, and issued in its
discharge of his personal liability. Whether the Petitioner
misused the funds or not, is a matter between him and the
institution but such dispute does not absolve him liability under
Section 138 of N.I. Act.
(vi) The Opp. Party further submits that the Complaint, on its face,
discloses all the essential ingredients of Section 138 of N.I. Act. It
is contended that the Petitioner has not disputed either the
existence of debt or the issuance of cheque in discharge of his
personal liability.
(vii) The Opp. Party submits that the underlying transaction pertains
to the personal purchase of land by the Petitioner, and the
liability arising therefrom is personal in nature, making the
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
Petitioner the primary debtor. It is contended that merely
because the cheque was drawn on the account of the institution,
where the Petitioner holds the position of Chairman and
Managing Director, he cannot, ipso facto, be absolved of
criminal liability.
IV. COURT’S REASONING AND ANALYSIS:
5. Heard Learned Counsel for parties and perused the documents placed
before this Court.
6. In light of the foregoing facts and circumstances of the case, this Court
is of the considered view that the under the Negotiable Instrument
Act, the liability under Section 138 of the Act is primarily fastened
upon the drawer of the cheque. It is a well-settled principle of law that
a company or institution, being a juristic person, acts through its
authorized representatives, and the authorized signatory merely signs
the cheque on behalf of such entity. The doctrine of separate corporate
personality mandates that the institution itself remains the drawer of
the cheque, and not the individual who signs it in an official capacity.
therefore, the liability, if any, must primarily attach to the institution
as the drawer of the cheque, unless specific statutory conditions exist
to fasten vicarious liability upon other persons connected with the
affairs of the institution.
7. Section 138 of the N.I. Act finds place in Chapter XVII of the Act,
which has been specifically incorporated to provide for penalties in
cases involving the dishonour of cheques on account of insufficiency
of funds or where the amount exceeds the arrangement made with the
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
bank. The legislative intent underlying the said provision is to
enhance the credibility of commercial transactions and to instill
confidence in the efficiency of banking operations by attaching penal
consequences to the failure of honouring duly issued cheques.
8. The Supreme Court has authoritatively elucidated the essential
ingredients required to constitute an offence Section 138 of N.I. Act in
Kusum Ingots & Alooys Ltd. v. Pennar Paterson Securities Ltd. &
Ors,1, wherein it has been held that:
“10. On reading of the provision of Section 138 of the N.I.
Act it is clear that the ingredients which are to be satisfied
for making out a case under the provision are:
(i) A person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain
amount of money to another person from out of that
account for the discharge of any debt or other
liability;
(ii) That cheque has been presented to the bank within a
period of six months from the date on which it is
drawn or within the period of its validity, whichever
is earlier;
(iii) That cheque is returned by the bank unpaid, wither
because the amount of money standing to the credit
of the account is insufficient to honour the cheque or
that it exceeds the amount arranged to be paid from
that account by an agreement made with the bank;
(iv) The payee or the holder in due course of the cheque
makes a demand for the payment of the said amount
of money by giving a notice in writing, to the drawer
of the cheque, within 15 days of the receipt of
information by him from the bank regarding the
return of the cheque as unpaid;
1
(2000) 2 SCC 745Page 8
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
(v) The drawer of such cheque fails to make payment of
the said amount to the payee or the holder in due
course of the cheque within 15 days of the receipt of
the said notice.”
9. In the case at hand, the cheque in question was admittedly signed by
the Petitioner in his capacity as the Chairman and Managing Director
of the Institution, and not in his personal and individual capacity.
Thus, the act of signing the cheque was undertaken in a representative
capacity, signifying the liability of the institution as the drawer, rather
than that of the Petitioner in his individual capacity.
10. Further in the case of Jugesh Sehgal v. Shamsher Singh,2, the Supreme
Court laid significant emphasis on the foundational requirement that,
for an offence under Section 138 of the Negotiable Instrument Act to
be made out, the dishonoured cheque must have been drawn by the
accused on an account maintained in his own name and held that:
“22. As already noted hereinbefore, in Para 3 of the
complaint, there is a clear averment that the cheque in
question was issued from an account which was non-
existent on the day it was issued or that the account from
where the cheque was issued “pertained to someone else”.
As per the complainant’s own pleadings, the bank
account from where the cheque had been issued, was
not held in the name of the appellant and therefore,
one of the requisite ingredients of Section 138 of the
Act as not satisfied. Under the circumstances,
continuance of further proceedings in the complaint under
Section 138 of the Act against the appellant would be an
abuse of the process of the Court… ”
2
(2000) 2 SCC 745
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
11. As per the legislative scheme underlying Section 138 of the N.I. Act,
it is primarily the drawer of the cheque who is sought to be made
liable for the offence contemplated therein. The statutory framework
clearly postulates that criminal liability is attracted upon the person or
entity in whose name the account is maintained and from which the
cheque is issued.
12. In the instant case, the Chairman and Managing Director of the
Institution have signed and issued the cheque in his capacity as an
authorized signatory, acting on behalf of the institution and in
furtherance of its affairs. The issuance of the cheque, therefore, cannot
be construed as an act undertaken in his personal or individual
capacity. Consequently, upon dishonour of the said cheque, the
liability, if any, would attach to the institution as the drawer of the
cheque, and not to the Chairman and Managing Director in his
individual capacity, save and except in circumstances where the
statutory requirements for fastening vicarious liability are duly
satisfied.
13. Even assuming, arguendo, that the cheque in question had been
issued towards the discharge of a personal liability of the accused in
favour of the Complainant, had the Nigam Institute of Engineering
has been arraigned as an accused in the complaint case before the
learned Trial Court, it would have remained open to the Complainant
to establish with the aid of the statutory presumption under Section
139 of the N.I Act, that the cheque issued on behalf of the institution
was in discharge of a legally enforceable debt or liability.
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
14. However, in the absence of the drawer of the cheque, namely the said
institution, being impleaded as an accused, the prosecution could
have been validly sustained against the accused in his personal
capacity alone. The statutory scheme mandates that the primary
liability rests upon the drawer, and any vicarious liability of persons
in charge of and responsible for the conduct of the business of the
company can be invoked only by virtue of Section 141 of the N.I. Act.
Such vicarious liability, however, is contingent upon the company
itself being arraigned as an accused. In the absence thereof, fastening
criminal liability upon the accused in his individual capacity would be
legally untenable and contrary to the settled position of law.
15. The liability under Section 138 of the N.I. Act cannot be mechanically
extended to individuals who merely cat as authorized signatories,
unless the statutory prerequisites embodied under Section 141 are
duly satisfied. This Court is of the considered view that vicarious
liability, as engrafted under Section 141, predicates that the company
or institution must be prosecuted as the principal offender, being the
drawer of the cheque.
16. In the absence of the company having been arraigned as an accused,
the prosecution against its directors or authorized signatories alone is
rendered legally unsustainable. Consequently, no criminal lability can
be fastened upon such individuals in their personal capacity, unless
the foundational requirement of impleading the company as an
accused is fulfilled, in consonance with the settled principles
governing vicarious liability under the Act.
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Location: ORISSA HIGH COURT,
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Date: 23-Mar-2026 11:57:44
17. Moreover, it is the drawer Institution which is required to be treated
as the principal offender under Section 138 of the N.I. Act, before
culpability can be extended, by way of a legal fiction, to the Directors
or other persons who are in charge of and responsible for the conduct
of the business of the Company. The statutory scheme clearly
postulates that such vicarious liability is contingent upon the primary
liability of the drawer itself. In the absence of fastening liability upon
the drawer institution, there arises no occasion to invoke the
provisions of vicarious liability against the other individuals
connected with the affairs of the company. Consequently, unless the
drawer institution is prosecuted and held liable in the first instance,
the question of extending criminal liability to its directors or persons
in charge does not arise, rendering such prosecution legally
unsustainable under the Act.
18. The Court is of the considered view that the identity of the drawer of
the cheque is evident and discernible from the cheque itself, and
therefore, it was always open to the Complainant to take appropriate
steps for impleadment of the company, being the drawer of the
cheque, as an accused in the complaint proceedings. It is further well-
settled that an offence under Section 138 of the N.I. Act is essentially
person-specific, fastening liability primarily upon the drawer of the
cheque. In the absence of adherence to the statutory scheme, and
dehors the applicability of general principles under the CrPC, the
learned Magistrate could not have validly taken cognizance of the
complainant without the drawer who can be prosecuted for the
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offence under Section 138, the omission to implead the company
strikes at the very root of the maintainability of the complaint,
rendering the proceedings unsustainable in the eye of law.
19. It is borne out from the record that, in the case at hand, the accused
had allegedly borrowed a sum of money from the Complainant in
connection with the purchase of a plot for his son. upon demand, a
cheque came to be issued in the name of the institution for the
purpose of encashment; however, the same was subsequently
dishonoured upon presentation.
20. Be that as it may, it is now well-settled by a catena of authoritative
pronouncements of the Supreme Court that where a cheque is issued
on behalf of a company or institution by its authorized signatory, the
prosecution cannot be validly maintained against such authorized
signatory or other office bearers of the company, as contemplated
under the Act, unless the company itself- being the drawer of the
cheque, is arraigned as an accused in the complaint case instituted
before the learned Magistrate. The failure to implead the principal
offender, namely the drawer company, vitiates the very substratum of
the prosecution and renders the proceedings legally untenable.
21. In the absence of the drawer of the cheque having been arraigned as
an accused, it manifests that no prosecution could have validly
proceeded against the accused in his personal capacity. The legal
position in this regard stands no longer res integra, having been
authoratively settled by the Supreme Court in Aneeta Hada v.
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Godfather Travels and Tours Private Limited,3, wherein it has been
held that:
“58. Applying the doctrine of the strict construction, we are
of the considered opinion that commission of offence by the
company is an express condition precedent to attract the
vicarious liability of others. Thus, the words “as well as the
company” appearing in the section make it absolutely
unmistakably clear that when the company can be
prosecuted, then only the persons mentioned in the other
categories could be vicariously liable for the offence subject
to the averments in the petition and proof thereof. One
cannot be oblivious of the fact that the company is a juristic
person and it has its own respectability. If a finding is
recorded against it, it would create a concavity in its
reputation. There can be situations when the corporate
reputation is affected when a Director is indicated.”
22. The aforesaid general rule is also informed by the well-recognized
legal maxim Lex non cogit ad impossibilia, signifying that the law
does not compel a person to do that which is impossible. However, in
the fats of the present case, the said principle does not come to the aid
of the Complainant so as to sustain the prosecution. Rather, it fortifies
the conclusion that the complaint is liable to be quashed, inasmuch as
the Chairman and Managing Director of the company has been
arrayed as the sole accused for the dishonour of a cheque drawn on an
account maintained in the name of the company.
23. This Court if of the considered view that the settled and fundamental
principles of criminal jurisprudence, as well as the statutory mandate
under the Negotiable Instrument Act, must govern the field. In the
3
(2012) 5 SCC 661
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absence of the company, being the drawer of the cheque, having been
arraigned as an accused, the prosecution against the individual alone
cannot be sustained as an accused, the prosecution against the
individual alone cannot be sustained, rendering the continuation of
such proceedings an abuse of the process of law.
24. This Court is of the considered view that, in the absence of any cogent
and convincing material to justify the non-impleadment of the
institution, being the drawer of the cheque, in the present
proceedings, fastening liability solely upon the individual in his
personal capacity is impermissible in the eye of law. Such an approach
stands expressly proscribed by the scheme of the Negotiable
Instruments Act, as well as by a plethora of authoritative
pronouncements of the Supreme Court. Consequently, the
prosecution, having been instituted in derogation of the settled legal
principles governing liability under Section 138 and 141 of the Act,
cannot be sustained. Accordingly, the complaint case is liable to be
quashed, as it continuance would amount to a manifest abuse of the
process of law.
V. CONCLUSION:
25. In view of the foregoing analysis, and upon meticulous and
consideration of the material facts and circumstances of the case, this
Court is of the considered opinion that the continuance of the
impugned proceedings cannot be sustained in the eye of law.
Accordingly, the ICC Case No. 16 of 2025 and 17 of 2025, along with
all consequential criminal proceedings emanating therefrom, are liable
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to be quashed and set aside. Consequently, this Court is inclined to
accede to the relief sought for by the Petitioner, and the same is
thereby granted.
26. Accordingly, both the CRLMCs stand allowed.
27. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated 13th March, 2026/
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