Friday, December 13, 2013

Only drawer of cheque was liable under Negotiable Instrument Act even if cheque was issued from joint account

The Supreme Court held as under:

1) Considering the language used in section 138 of the Negotiable Instrument Act, 1881 (‘NI Act’) and taking note of background agreement pursuant to which a cheque was issued by more than one person, it was opined that it was only the drawer of the cheque who could be made liable for the penal action under the provisions of the NI Act;

2) Thus, under section 138 of the NI Act, it was only the drawer of the cheque who could be prosecuted. In the instant case, admittedly, the appellant was not a drawer of the cheque and she had not signed the same;

3) As per the provisions of the NI Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted, unless the cheque has been signed by each and every person who is a joint account holder. It couldn’t be said that the complainant had no remedy against the appellant, but certainly not under section 138;

4) Under these circumstances, the appeal deserved to be allowed and process in Criminal case pending before the Court of Metropolitan Magistrate deserved to be quashed accordingly, against the appellant - Mrs. Aparna A. Shah v. Sheth Developers (P.) Ltd. [2013] 40 43 (SC)