Nigotiable Instrument Act
Dinesh Suryawanshi
(Querist) 07 February 2010
This query is : Resolved
1)whether borrower is also liable if the cheque is issued and signed by guarantor is discharge of the liability of the borrower?
2)And whether can we issue process against the borrower also?
B K Raghavendra Rao
(Expert) 07 February 2010
No. You can lodge complaint under Section 138 of NI Act before the jurisdictional Magistrate only against the guarantor as he has issued the cheque which bounced. Guarantor and principle borrower stand on the same footing and hence he is liable to be prosecuted. Guarantor says 'if borrower does not pay, then I will pay' and therefore he is legally liable to discharge the debt.
You cannot issue notice or even if it is issued you cannot proceed further against the borrower as the borrower has not issued the cheque that bounced. If you make him a party, there are chances of the complaint being dismissed.
Parveen Kr. Aggarwal
(Expert) 07 February 2010
Section 138 of the N. I. Act provides that, "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 and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two year, or with fine which may extend to twice the amount of the cheque, or with both"
So, only such person is liable under section 138 of the N. I. Act who has drawn a cheque on an account maintained by him and no other person is liable. It may be that the cheque has been issued for liability of another as is evident from the language of the provision. That being so, the principal debtor or the borrower shall not be liable for an offence under the said section if the cheque has been issued by the guarantor. In case you file a complaint impleading both, the complaint qua the principal debtor only will be dismissed and not qua the drawer of the cheque.
In such case, however, the creditor may avail any other remedy against the principal debtor.
Raj Kumar Makkad
(Expert) 07 February 2010
No. 138 NI Act is a specific criminal proceeding which can be brought only against the person who issued cheque and it was bounced and who despite of notice didn't deposit the amount of cheque within 15 days of the receipt of such notice no matter he is guarantor or borrower or any other person.
Borrower is not liable to face such criminal case.
Guest
(Expert) 07 February 2010
this querry has already been answered by my learned friends.
reply for querry (1)
i m agreed with Mr Makkad. its true that complaint under section 138 NI Act can be brought against the drawer of cheque.So the borrower is not liable.
reply for querry (2)
borrower is not liable under section 138 NI Act, but it doesn't mean that he escapes from his criminal liability.the creditor can file an fir against the debtor.
