Can't Summon Husband As An Accused In NI Act Case For Cheque Issued By Wife As A Sole Proprietor Of A Firm: Allahabad HC

The Allahabad High Court has observed that a husband can't be summoned as an accused for offence under Section 138 of the Negotiable Instruments Act in a case where his wife, as the sole proprietor of a Business, issues the cheque.

The bench of Justice Umesh Chandra Sharma, while allowing the petition filed by petitioner Pawan Garg seeking to quash the court's summoning order, said, "applicant cannot be summoned as accused under Section 138 of the NI Act and the summoning order in respect of the applicant is bad in law in light of the above facts and circumstances of the case."

In this case, a cheque of Rs. 3 Lakh was issued by the firm namely M/s Aircon Gallery through its' proprietor Smt. Kajal Garg to the opposite party no. 2 in August 2020 for the fabrication work done by him. 

When the said cheque was produced on September 1, 2020 by the opposite party no 2 in the bank, the same was dishonoured with the endorsement exceed arrangement. Pursuant to this, he issued notices as mandated by the NI Act to the partnership firm and its sole proprietor Kajal Garg and when the payment was not made, he filed a complaint before the Court.

On August 12, 2021, the applicant Pawan Garg and Kajal Garg were summoned by the concerned court as proprietors under Section 138 of the N.I.Act. Challenging this order, the applicant moved to the High Court arguing that he is not a Proprietor, Director, Owner or otherwise of the firm Aircon - Gallery.

The applicant contended that the firm is a proprietorship firm run by a single proprietor, Kajal Garg, his wife and that he himself, has no concern with the aforesaid firm and he has been arrayed in the complaint with a mala-fide intention to mount pressure for recovery of money being the husband of Kajal Garg, proprietor of the aforesaid firm.

Against this backdrop, the Court noted that as per the papers available on record, it is clearly established that only Kajal Garg is the sole proprietor of M/s Aircon Gallery and the applicant - Pawan Garg is neither the Proprietor, Co-proprietor nor the Authorised Officer or Signatory Owner or the principal officer of the aforesaid firm.

"There is no paper to establish that the applicant is an authorized signatory, agent or co-proprietor of the Firm. In the eye of the law, the wife and husband have separate entities. It is also not a case that the wife, sole proprietor of the Firm had provided the cheque signed by or on behalf of the applicant," the bench noted.

The Court also observed that the sole proprietor Kajal Garg, wife of the applicant had issued the cheque and the applicant is neither the guarantor nor has acted in the capacity of the authorized signatory or the agent of his wife.

Hence, the Court held that the applicant, the husband of the sole proprietor of a partnership firm, cannot be summoned as accused under Section 138 of the NI Act. Consequently, the Court set aside the summoning order so far as it relates to the applicant.

Appearances

Counsel for Applicant: Shyam Shankar Mishra, Vijay Kumar Mishra

Counsel for Opposite Party: G.A.

Case title - Pawan Garg vs. State of U.P. and Another [APPLICATION U/S 482 No. - 28748 of 2022]

Case Citation: 2023 LiveLaw (AB) 133

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