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K Ranganayakulu v. State of Telangana

Criminal Appeal · 2026 INSC 555Decided 12 May 2026
Crl.A. No.-002472-002472 - 2026
Justice Prashant Kumar Mishra · Justice N.V. Anjaria

Background

The appellant, treasurer of an NGO named TIMES, had signed a Memorandum of Understanding under which TIMES collected electricity bill payments on behalf of a power distribution company (APCPDCL, now Telangana's TSSPDCL). He was convicted by the High Court under Section 138 of the Negotiable Instruments Act for a dishonoured cheque and sentenced to one year's rigorous imprisonment plus a fine of Rs. 1.5 crore, with a further year's imprisonment in default of payment. Before the Supreme Court, he argued that since he was only an authorised signatory of the NGO and not its "drawer" owner, he could not be held liable under the strict penal provisions of the Act.

Decision Breakdown

The Court held that under the terms of the MOU, the appellant alone was authorised to sign negotiable instruments and make payments on TIMES' behalf, making him effectively the drawer of the cheque for all practical and legal purposes, since the MOU recognised no other responsible entity. It therefore rejected his argument and declined to interfere with the conviction. However, taking into account that he was only the Treasurer (not the owner or Chairman) of the NGO, the Court modified the sentence, directing that the fine be paid within two months, failing which he would have to undergo the one-year default sentence.

Lesson Learnt

A person who signs and operates a cheque on an organisation's behalf under an authorising agreement can be treated as the "drawer" for Section 138 liability, even without being its owner or head, but courts retain discretion to moderate the severity of the sentence based on the person's actual role.

Official source (sci.gov.in)View Judgment (PDF)

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