OVERVIEW
The Supreme Court on Monday held that a person cannot be held liable under section 138 of the Negotiable Instruments Act, 1881, even if they jointly hold an account with the person who drew the cheque.
The division bench of Justice D.Y. Chandrachud and Justice M.R. Shah were addressing a case registered by an advocate against a couple regarding a cheque, under their joint account, that bounced.
BACKGROUND
The complainant had raised a professional bill for providing his legal assistance and representing the couple in legal proceedings. Unfortunately, the cheque issued got dishonoured.
Consequentially, the lawyer proceeded to file a complaint against both, the husband and the wife, for the offence punishable under section 138 of the Negotiable Instruments Act.
The accused wife approached the High Court in order to sought the dismissal of the criminal complaint filed against on the grounds that she was neither a signatory of the impugned cheque, nor the joint holder of the bank account. The High Court however dismissed the petition.
RECENT DEVELOPMENTS
The complainant contended that as per section 138 of the Negotiable Instruments Act, it was the joint liability of both the accused to pay the bill as the complainant had initially represented both of them.
The Apex Court bench, on analysis of section 138 of the Act, observed that ‘before a person can be prosecuted, the following conditions are required to be satisfied – (i) that the cheque is drawn by a person and on an account maintained by him with a banker; (ii) for the 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; and (iii) the said cheque is returned by the bank unpaid either due to insufficiency of amount standing credit in the account or in excess of the amount arranged to be paid from the said account.’
The Court however observed that the complaint against the wife-accused is not maintainable, since the cheque was issued towards discharge of legal liability of both the accused.
“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/she was a signatory to the cheque.”
The complainant also insisted that the accused be convicted under section 141 of the Act, which was rejected by the bench stating that the said provision is applicable to ‘offence by companies’ and not to individuals.
CONCLUSION
Thus, on the basis of the aforementioned observations, the Supreme Court bench honoured the appeal filed by the accused and dismissed the complaint filed by the complainant against the wife-accused.
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