Person who is not a signatory to the cheque cannot be prosecuted under Section 138 of the NI Act, even if there is joint liability to pay the debt.

ALKA KHANDU AVHAD

VERSUS

 AMAR SYAMPRASAD MISHRA & ANR.

Criminal Appeal No. 258 of 2021, Decided on 08.03.2021.

Judges:Dr. Dhananjaya Y Chandrachud, M.R. Shah, JJ.

Facts:In this case, the original complainant (respondent) is a practising advocate, he raised a professional bill for the legal work done by him to represent the husband and wife (appellant). The cheque issued by the husband got dishonoured due to insufficiency of funds and the complainant served legal notice to them. Thereafter, the complainant filed a complaint against husband and wife for the offence punishable under Section 138 of the NI Act. The wife approached the High Court to quash the criminal complaint against her mainly on the ground that she was neither a signatory to the dishonoured cheque nor there was a joint bank account. It was the case of complainant that both the husband and wife are liable under Section 138 r/w Section 141 of the NI Act because it was the joint liability of both to pay the professional bill.

High Court refused to quash the criminal complaint against the appellant, giving rise to the present appeal in the Supreme Court. The Supreme Court allowed the appeal and ordered to quash the criminal complaint against wife.

Issue:Whether wife (appellant) can be prosecuted for the offence punishable under Section 138 r/w Section 141 of the NI Act, even when the dishonoured cheque was neither drawn from her bank account nor she was a signatory to the cheque?

Held: Court held that 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 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.

Issue:Can Section 141 of the NI Act be made applicable to the individuals?

Held: The Court held that 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 liability), but cannot be said to be the offence committed by a company or by corporate or firm or other association of individuals. Therefore, the appellant cannot be convicted with the aid of Section 141 of the NI Act.