Just Handing Over The Cheque To The Complainant Does Not Make The Person Liable Under NI Act: Rajasthan HC [Read Order]

The Rajasthan High Court has held that the mere fact of handing over the cheque that was later dishonored would not be enough to make out a case under Section 138 of the Negotiable Instrument Act.

The Court was hearing a Petition filed under Section 482 of the Code of Criminal Procedure, seeking quashing of proceedings initiated against the Petitioner under Section 138 of the Act.

The Court noted that the cheque was issued by the Petitioner’s son and that the Petitioner was added as a Partner of the firm only later. Reliance was then placed by the Petitioner on Section 141(2) of the Act, according to which allegations can be levelled against the Company or its partners only when the offence was committed with the consent or connivance or, is attributable to, any neglect on their part.

The complainant had, on the other hand, relied on the fact that it was the Petitioner who had handed over the cheque to him and had, hence, contended that she was responsible for any proceedings arising in consequence of giving the cheque.

Justice Pushpendra Singh Bhati, however, did not agree to this argument and observed, “On a bare reading of the complaint as well as the record, it is clear that only role of the petitioner is that she handed over the cheque but it has not been alleged that what was her role in consenting to the offence that is a default or dishonoring of the cheque.”

The Court, thereafter, quashed the proceedings against the Petitioner, observing, “A bare reading of the complaint as well as the relevant law, on the face of it, makes it clear that the offence is not made out against the present petitioner as she neither issued the cheque and it has not been attributed to her and the allegation was that she had handed over the cheques which does not mean she had consented to offence by any stretch of imagination. Since the basic ingredients itself are missing, therefore, the present misc. petitions deserve to be allowed.”