2022 (1) TMI 251 - HC - Indian Laws

Dishonor of cheque - Proceedings against the Joint Account Holder who is not the signatory of the cheque - the petitioner/A.2 is not a signatory to the subject cheques but contended that the petitioner/A.2 is aware of the money transactions and handing over of the subject cheques - HELD THAT - As per the mandate given under Section 138 of N.I Act, where any cheque drawn by a person on an account maintained by him with a banker for 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, 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 by an agreement made with that bank, such person shall be deemed to have committed an offence. 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. In the instant case, it is evident from the entire material placed on record, particularly, the complaints filed by the respondent No.2/complainant under Section 138 of N.I. Act r/w Sec.200 Cr.P.C, the petitioner/A.2 is merely a joint account holder and she is not the signatory to the subject cheques - The Courts below erred in taking cognizance against the petitioner/A.2, particularly, when she is not a signatory to the disputed cheques. So the contentions raised on behalf of the respondents do not merit consideration. In view of these circumstances, when no ingredients under Section 138 of N.I.Act are made out against the petitioner/A.2, continuation of the subject proceedings against the petitioner/A.2 is abuse of process of law - Petition allowed.

Summary

Issues Involved:
- Quashing of proceedings under Section 138 of Negotiable Instruments Act against the petitioner/A.2 based on being a joint account holder but not a signatory to the cheques.

Analysis:
1. Issue of Quashing Proceedings: The Criminal Petitions were filed seeking to quash the proceedings against the petitioner/A.2 under Section 138 of the Negotiable Instruments Act. The petitioner/A.2 argued that she was not a signatory to the cheques in question and was falsely implicated. The petitioner's counsel relied on legal precedents to support the argument that the petitioner/A.2, as a joint account holder, cannot be prosecuted unless she is a signatory to the cheques. The respondent No.2, however, contended that the petitioner/A.2 was aware of the transactions and maintained a joint account with her husband, who was the primary account holder. The respondent argued that the petitioner/A.2 had knowledge of the transactions and received most of the amounts in her account. The trial had already commenced, and the respondent sought dismissal of the Criminal Petitions.

2. Legal Analysis: The court analyzed Section 138 of the Negotiable Instruments Act, which outlines the conditions for prosecuting a person for dishonoring a cheque. Legal precedents were cited, emphasizing that only the drawer of the cheque can be prosecuted under Section 138. In cases of joint accounts, a joint account holder cannot be prosecuted unless they are a signatory to the cheque. The court referred to specific cases where the Supreme Court held that joint account holders cannot be prosecuted under Section 138 unless they have signed the cheque. The court highlighted that penal provisions should be strictly construed, and the language of the law indicates that only the drawer of the cheque can be deemed to have committed an offense under Section 138.

3. Judgment: After considering the arguments and legal principles, the court concluded that the petitioner/A.2, being a joint account holder and not a signatory to the cheques, could not be prosecuted under Section 138 of the Negotiable Instruments Act. The court found that the petitioner/A.2 was falsely implicated, and the continuation of proceedings against her was an abuse of process of law. Therefore, the court allowed the Criminal Petitions and quashed the proceedings against the petitioner/A.2 in the mentioned cases. The court directed the closure of any pending miscellaneous petitions related to the Criminal Petitions.

In conclusion, the judgment focused on the legal principle that joint account holders cannot be prosecuted under Section 138 of the Negotiable Instruments Act unless they are signatories to the cheques. The court's decision to quash the proceedings against the petitioner/A.2 was based on this legal interpretation and the absence of evidence implicating the petitioner/A.2 in the offense.