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2017 (4) TMI 1570 - HC - Indian LawsDishonor of Cheque - vicarious liability of husband - cheques which have been dishonoured were issued by his wife in her personal capacity - applicant is not a signatory to the cheque - HELD THAT - Indisputably, the applicant herein has not signed the cheque. The cheque has been signed by the wife of the applicant herein. As the applicant is not a signatory to the cheque, no liability can be fastened upon him for the dishonour of the cheque under Section 138 of the Negotiable Instruments Act. The law in this regard is well-settled. The Supreme Court in the case of MRS. APARNA A. SHAH VERSUS M/S SHETH DEVELOPERS PVT. LTD. AND ANOTHER 2013 (7) TMI 718 - SUPREME COURT has held that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains name of the appellant and her husband, the fact remains that her husband alone put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque. Application allowed.
Issues Involved:
1. Vicarious liability of a husband for a cheque issued by his wife. 2. Applicability of Section 138 of the Negotiable Instruments Act to non-signatories. 3. Interpretation of "drawer" under Section 138. 4. Joint account holders' liability under Section 138. Detailed Analysis: 1. Vicarious Liability of a Husband for a Cheque Issued by His Wife: The applicant, the husband of the signatory, sought quashing of the proceedings under Section 138 of the Negotiable Instruments Act, arguing that he had no involvement in the transaction. The court emphasized that criminal liability under Section 138 cannot be extended vicariously unless explicitly provided by statute. The Supreme Court in M/s. Aparna A. Shah v. M/s. Sheth Developers Pvt. Ltd. and another clarified that criminal liability for cheque dishonour is strictly on the drawer of the cheque, not on those related to the drawer unless specific statutory provisions apply. 2. Applicability of Section 138 of the Negotiable Instruments Act to Non-Signatories: The court reiterated that Section 138 applies strictly to the person who has drawn the cheque. The applicant did not sign the cheque; hence, no liability could be fastened upon him. The Supreme Court's interpretation in Jugesh Sehgal v. Shamsher Singh Gogi was cited, confirming that the offence under Section 138 requires the cheque to be drawn by the person on an account maintained by him. 3. Interpretation of "Drawer" under Section 138: The court discussed the specific language of Section 138, which criminalizes dishonour of a cheque only when the cheque is drawn by a person on their account. The Supreme Court's judgment in S.K. Alagh v. State of Uttar Pradesh and others emphasized that vicarious liability in criminal law must be explicitly stated in the statute, which is not the case for Section 138 concerning non-signatories. 4. Joint Account Holders' Liability under Section 138: The court addressed the issue of joint account holders, referencing various High Court decisions. It concluded that in cases of joint accounts, only the person who signs the cheque can be prosecuted under Section 138. The Madras High Court in Devendra Pundir v. Rajendra Prasad Maurya and the Delhi High Court in Gita Berry v. Genesis Educational Foundation both held that non-signatory joint account holders cannot be held liable under Section 138. The court endorsed these views, stating that the appellant, being a non-signatory, could not be prosecuted. Conclusion: The application for quashing the proceedings was allowed, and the court ruled that the applicant, not being the drawer of the cheque, could not be prosecuted under Section 138 of the Negotiable Instruments Act. The proceedings against the co-accused would continue as per law. The court emphasized that Section 138's penal provisions must be strictly construed and cannot extend liability to non-signatories of the cheque.
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