Introduction:
The Calcutta High Court recently delivered a significant judgment clarifying the scope of criminal liability under Section 138 of the Negotiable Instruments Act, 1881. In Gautam Dey v. Golam Saharia, CRR 3672 of 2023, Justice Uday Kumar held that criminal prosecution for cheque dishonour is strictly personal to the drawer of the cheque and cannot continue against legal heirs, family members, or business associates after the drawer’s death.
The Court emphatically observed that “criminal liability is not a heritable estate,” thereby reaffirming a foundational principle of criminal jurisprudence that penal consequences cannot be inherited. While civil obligations may survive against the estate of a deceased person, criminal culpability ends with the death of the offender.
The case arose from a complaint filed by one Golam Saharia alleging that the petitioner’s deceased brother, Tapan Kumar Dey, who was a ration dealer, had borrowed a sum of ₹27 lakh and issued a cheque dated February 1, 2022 towards repayment of the alleged debt. However, before the cheque could be presented for encashment, Tapan Kumar Dey passed away on February 3, 2022.
Subsequently, the complainant presented the cheque in April 2022. The cheque was dishonoured with the endorsement “Funds Insufficient.” Following the dishonour, a statutory demand notice under Section 138 of the Negotiable Instruments Act was issued not to the deceased drawer, but to his brother Gautam Dey, describing him as a “legal representative” and “business associate.”
When criminal proceedings under Section 138 were initiated, Gautam Dey challenged the prosecution, contending that he was neither the signatory to the cheque nor the holder of the account from which the cheque had been issued. According to him, the prosecution itself was legally unsustainable because the statutory requirements of Section 138 could only apply against the person who actually drew the cheque.
The trial court, however, rejected his plea, reasoning that summons-triable cases under criminal law do not contain a formal provision for discharge at the preliminary stage and that the issue of liability should instead be decided during trial.
Aggrieved by the refusal to terminate the proceedings, Gautam Dey approached the High Court in revision. The matter thus raised important legal questions concerning the personal nature of criminal liability under cheque dishonour law, the effect of the drawer’s death before presentation of the cheque, and the extent to which legal heirs or business associates may be prosecuted in such circumstances.
The High Court’s ruling is particularly important because prosecutions under Section 138 of the Negotiable Instruments Act have become one of the most frequently litigated categories of criminal cases in India. By clarifying that such criminal liability cannot extend beyond the actual drawer of the cheque, the judgment reinforces the distinction between civil recovery proceedings and criminal prosecution.
Arguments of the Parties:
The petitioner, Gautam Dey, challenged the criminal proceedings primarily on the ground that he had no legal connection with the dishonoured cheque sufficient to attract liability under Section 138 of the Negotiable Instruments Act. According to the petitioner, the cheque had admittedly been issued and signed by his deceased brother, Tapan Kumar Dey, and therefore the prosecution against him was fundamentally misconceived.
The petitioner argued that he was neither the signatory to the cheque nor the holder of the bank account from which the cheque was issued. Since Section 138 specifically criminalizes dishonour of a cheque drawn by a person on an account maintained by him, the petitioner contended that the statutory ingredients of the offence were entirely absent in his case.
It was submitted that criminal liability under Section 138 is strictly personal in nature and cannot be imposed upon individuals merely because they are related to the deceased drawer or happen to inherit his business or estate. The petitioner emphasized that inheritance of assets cannot automatically translate into inheritance of criminal culpability.
The petitioner further contended that the entire statutory mechanism contemplated under Section 138 became legally impossible in the present case because the drawer had died even before presentation of the cheque. According to him, the offence under Section 138 consists of a mandatory “concatenation of acts,” including presentation of the cheque, dishonour, issuance of statutory demand notice to the drawer, and failure of the drawer to make payment within the stipulated period.
Since the drawer had already died before presentation of the cheque and issuance of notice, the petitioner argued that these mandatory statutory conditions could never be fulfilled. A deceased person cannot receive a legal notice, nor can such person commit the subsequent “default” of failing to make payment after receipt of notice.
The petitioner also challenged the reasoning adopted by the trial court while refusing to terminate the proceedings. He argued that the absence of a formal discharge provision in summons cases does not compel a criminal court to continue proceedings where the complaint itself discloses no legally recognizable offence.
In support of his submissions, the petitioner relied heavily upon the judgment of the Supreme Court in Alka Khandu Avhad v. Amar Shyamprasad Mishra. In that case, the Supreme Court had clarified that even where a debt may be jointly owed, criminal prosecution under Section 138 can be maintained only against the signatory drawer of the cheque.
The petitioner also relied upon the decision in Ganga Prasad Ratnakar v. Fanindra Kumar Chandra, where it was held that legal heirs of a deceased drawer cannot be prosecuted for cheque dishonour under Section 138.
On the other hand, the complainant argued that Gautam Dey could not escape liability merely because the original drawer had died. According to the complainant, the petitioner had inherited the ration business and effectively stepped into the shoes of the deceased borrower after his death.
The complainant attempted to portray the petitioner not merely as a legal heir but also as a “business associate” connected with the transaction and the underlying liability. It was contended that the outstanding debt survived and that the petitioner, having inherited the business and estate, should bear responsibility arising from the dishonoured cheque.
The complainant further argued that the question whether the petitioner had sufficient involvement with the transaction was a factual matter requiring trial and evidence. Therefore, according to the complainant, the trial court correctly refused to terminate the proceedings at the preliminary stage.
It was also contended that since summons cases do not contain a formal statutory mechanism for discharge similar to warrant cases, the trial court had rightly deferred determination of liability until completion of evidence during trial.
However, the petitioner countered that the issue was not merely factual but one of pure legal competence. According to him, even assuming all allegations in the complaint to be true, no offence under Section 138 could legally arise against a person who neither drew nor signed the cheque.
Thus, the central issue before the High Court became whether criminal liability under cheque dishonour law could survive against legal heirs or business associates after the death of the actual drawer.
Court’s Judgment:
The Calcutta High Court allowed the revision petition and quashed the entire criminal proceedings against Gautam Dey, holding that the prosecution itself was legally incompetent from its very inception.
Justice Uday Kumar began by examining the statutory framework of Section 138 of the Negotiable Instruments Act. The Court emphasized that the offence under Section 138 is specifically directed against the “drawer” of the cheque, namely the person who draws the cheque on an account maintained by him.
The Court observed that criminal liability under the provision is personal and cannot be extended to individuals who are neither signatories to the cheque nor account holders. In a strongly worded observation, the Court declared:
“Criminal liability is not a heritable estate.”
This observation formed the core principle underlying the judgment. The Court clarified that while civil liabilities may survive against the estate of a deceased person, criminal culpability dies with the offender and cannot be inherited by family members or legal representatives.
The Court relied substantially upon the Supreme Court’s judgment in Alka Khandu Avhad v. Amar Shyamprasad Mishra. Referring to the Supreme Court ruling, the High Court reiterated:
“A person might have been jointly liable to pay the debt, but if such a person was not a signatory to the cheque, [he] cannot be prosecuted.”
Applying this principle, the Court held that even if Gautam Dey had some civil connection with the debt or had inherited the business of the deceased, such circumstances could not attract criminal prosecution under Section 138 in the absence of him being the drawer or signatory to the cheque.
The High Court also relied upon Ganga Prasad Ratnakar v. Fanindra Kumar Chandra, which had specifically held that legal heirs of a deceased drawer cannot be prosecuted under Section 138 of the Negotiable Instruments Act.
One of the most significant aspects of the judgment was the Court’s analysis of the statutory mechanism constituting the offence under Section 138. The Court explained that the offence is not completed merely upon dishonour of the cheque. Rather, it involves a series of mandatory procedural steps, often described as a “concatenation of acts.”
These include presentation of the cheque, dishonour by the bank, issuance of statutory demand notice to the drawer, and failure of the drawer to make payment within the stipulated time after receipt of notice.
The Court observed that in the present case, these mandatory statutory requirements became legally impossible because the drawer had already died before the cheque was presented and before notice was issued.
The Court categorically stated:
“A dead person cannot receive a notice, nor can they commit the ‘default’ of non-payment.”
Therefore, the statutory offence itself could never be completed in the manner contemplated by Section 138. Consequently, continuation of criminal proceedings against the petitioner was legally unsustainable.
The Court also rejected the complainant’s argument that inheritance of the ration business effectively made the petitioner liable in place of the deceased borrower. Justice Uday Kumar clarified that succession to business assets or estate does not result in automatic succession to criminal liability.
The judgment carefully distinguished between civil and criminal remedies. The Court acknowledged that the complainant may still possess valid civil claims against the estate of the deceased borrower for recovery of the alleged loan amount. However, such civil remedies cannot be converted into criminal prosecution against individuals who were not the actual drawers of the cheque.
Another important aspect of the judgment concerned the criticism directed against the trial court’s reasoning. The magistrate had refused to terminate the proceedings on the ground that summons-triable cases do not contain a specific statutory provision for discharge.
The High Court found this reasoning erroneous and overly mechanical. The Court emphasized that criminal courts are not powerless merely because procedural law does not expressly provide for discharge at a particular stage.
Justice Uday Kumar observed that procedural law is fundamentally a “handmaid of justice” and cannot be used to perpetuate legally untenable prosecutions. The Court held that where the complaint itself fails to disclose any legally recognizable offence, criminal proceedings should not be mechanically continued merely because of procedural technicalities.
This observation reinforces an important principle of criminal jurisprudence that courts possess inherent responsibility to prevent abuse of process and unnecessary continuation of prosecutions lacking legal foundation.
Ultimately, the High Court concluded that the proceedings against Gautam Dey were wholly without legal basis because he was neither the drawer nor signatory of the cheque and because the statutory offence under Section 138 could never be completed after the death of the original drawer.
Accordingly, the Court quashed the entire criminal proceedings while clarifying that the complainant would remain free to pursue appropriate civil remedies against the estate of the deceased borrower in accordance with law.
The judgment is an important reaffirmation of the principle that criminal law imposes personal culpability and cannot be stretched beyond the limits prescribed by statute. By drawing a clear distinction between civil recovery rights and criminal prosecution, the Calcutta High Court has ensured that penal liability under cheque dishonour law remains confined to the actual drawer of the cheque.