2018 (10) TMI 663 - HC - Indian Laws

Dishonor of Cheque - recovery of loan - Section 138 of Negotiable Instrument Act - case of petitioner is that they never issued any cheque and never be the signatory to the alleged cheque issued by the petitioner - Held that - Admittedly the cheque has been issued from the current account of CANNAN CITY signed by one P.David Rajan as its Proprietor/authorised signatory. The petitioner/accused is not the signatory to the said cheque issued to the tune of 3 lakhs dated 11.11.2013 drawn on Axis Bank Ashok Nagar Branch Chennai. It is only the drawer of the cheque who can be prosecuted. In the case on hand admittedly the petitioner is not a drawer of the cheque and she has not signed the same. A copy of cheque is annexed with the typed set of papers and it is brought to the notice of this Court that one Mr.P.David Rajan signed as Proprietor by authorised signatory of CANNAN CITY from its current account - As per the case of the respondent/complainant the petitioner borrowed a sum of 3 lakhs to develop her business on 11.08.2013 on her personal capacity. On the date of the borrowal of the said amount itself the petitioner issued the cheque in favour of the respondent/complainant. The criminal proceedings filed under Section 138 of the Negotiable Instrument Act cannot be used as arm-twisting tactics to recover the amount allegedly due from the petitioner. It cannot be said that the complainant has no remedy against the petitioner but certainly not under the provisions of Section 138 of the Negotiable Instrument Act. The criminal proceedings under Section 138 of the Negotiable Instrument Act is not maintainable as against the petitioner herein - petition allowed.

Summary

Issues:
Quashing of criminal proceedings under Section 138 of Negotiable Instrument Act based on the authenticity of the cheque and the liability of the petitioner as the drawer.

Analysis:
The case involves a quash petition seeking to nullify criminal proceedings in C.C.No.35 of 2014 under Section 138 of the Negotiable Instrument Act. The complainant alleged that the petitioner borrowed ?3 lakhs and issued a cheque for repayment, which was dishonored due to insufficient funds. The petitioner denied being the signatory of the cheque, which was drawn by P.David Rajan from the current account of CANNAN CITY. The petitioner argued that only the drawer of the cheque can be prosecuted under Section 138, citing a Supreme Court judgment emphasizing the necessity of the drawer's signature for prosecution.

The respondent contended that the petitioner, despite not being the signatory, issued the cheque with dishonest intent to cheat. However, the petitioner's defense relied on the principle that joint account holders cannot be prosecuted under Section 138 unless all sign the cheque. The court referred to the Supreme Court judgment, clarifying that only the drawer of the cheque can be prosecuted, emphasizing the importance of the drawer's signature for liability under Section 138.

The court concluded that as the petitioner was not the signatory of the cheque and being the wife of the drawer, she cannot be considered the drawer herself. The cheque in question was signed by P.David Rajan, the husband of the petitioner, from the account of CANNAN CITY. Therefore, the criminal proceedings against the petitioner were quashed, as she could not be implicated under the provisions of the Negotiable Instrument Act. The judgment highlighted the necessity of the drawer's signature for prosecution under Section 138, ultimately leading to the quashing of the criminal proceedings against the petitioner.