Negotiable Instruments Act, 1881 – s.138 r/w S.141 – Complaint filed against appellant – High Court refused to quash the same – On appeal, held: Dishonoured cheque was issued by original accused no.1-husband of the appellant – It was drawn on his bank account and was signed by him – Appellant-original accused no.2 was neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account – Account in question was not a joint account – s.138 does not speak about the joint liability – Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for offence u/s.138 – Appellant cannot be convicted with the aid of s.141 either – High Court committed grave error in not quashing the complaint against the appellant – Impugned judgment set aside – Complaint case filed by respondent no.1-original complainant is quashed.
Allowing the appeal, the Court
Held: 1.1 The dishonoured cheque was issued by original accused No. 1 – husband of the appellant. It was drawn from the bank account of original accused No. 1. The dishonoured cheque was signed by original accused No. 1. The appellant hereinoriginal accused No. 2 is neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account. That the account in question was not a joint account. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied: i) that the cheque is drawn by a person and on an account maintained by him with a banker; ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability; and iii) the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account. Therefore, a person who is the signatory to the cheque and the cheque is drawn by that person on an account maintained by him and the cheque has been issued for the discharge, in whole or in part, of any debt or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have committed an offence. Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque. [Paras 6,7][637-G-H; 638-A-G]
1.2 Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Two private individuals cannot be said to be “other association of individuals”. Therefore, there is no question of invoking Section
141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act. The impugned judgment and order dated 21.08.2019 passed by the High Court refusing to quash the criminal complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act is hereby quashed and set aside. The complaint case pending in the Court of the learned Metropolitan Magistrate filed by respondent No.1 – original complainant being C.C. No. 2802/SS/2016 is hereby quashed and set aside. [Paras 8, 8.1][639-A-F]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.