Joint Account Holder Who Is Not A Signatory To Cheque Shall Not Be Prosecuted Under Section 138 Of NI Act: Telangana High Court

Relying on the Supreme Court ruling in Alka Khandu Avhad vs. Amar Syamprasad Mishra, Justice Shameem Akhtar held that a mere joint account holder but not a signatory cannot be prosecuted under Section 138 of NI Act, unless and until his/ her signatures are on the cheque.

Facts

A joint account holder/Petitioner moved the High Court by filing a Criminal petition under Section 482 of the Code of Criminal Procedure, 1973 to quash the trial proceedings against her in criminal cases registered pursuant to dishonor of a cheque drawn by her husband, with whom she held a joint account.

Advocate B. Mohan for the Petitioner who is Accused No. 2 contended that she is not a signatory to the subject cheques and she is falsely being implicated. He relied on the Supreme Court judgments Alka Khandu Avhad v. Amar Syamprasad Mishra and Ors., AIR 2021 SC 1616 and Mrs. Aparna A. Shah v. M/s Sheth Developers Pvt. Ltd. & Anr., AIR 2013 SC 3210 to contend that the criminal proceedings against the petitioner be quashed.

Advocate V.V.L.N. Sarma for the complainant contended that the the petitioner is maintaining a joint account with her husband and the subject cheques are drawn from the joint account. He further contended that petitioner is aware of the money transactions and handing over of the subject cheques.

Section 138 of the Negotiable Instrument Act

Section 138 deals with dishonour of cheque for insufficiency of funds in the account. As per the provision, where any cheque drawn by a person on 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 of any debt, is returned by the bank unpaid, because the account has insufficient funds to honour the cheque, such person shall be deemed to have committed an offence and is punishable under Section 138 of the Negotiable Instrument Act.

The Court's holding

The court relied upon the decision in Alka Khandu Avhad (supra) as cited by the petitioner in which the Apex Court has stated that,

"Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. 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 was a signatory to the cheque."

Justice Shameem Akhter also relied on the decision in Mrs. Aparna A. Shah (supra), where the Apex Court had held that under Section 138 of NI Act, it is only the drawer of the cheque that can be proceeded against. A joint account holder cannot be prosecuted unless the cheque has been signed by each and every person.

Based on the extracts from the aforementioned judgments, the Court in the instant matter laid down that the petitioner who is the wife of the signatory of the cheque is merely a joint account holder and she is not the signatory to subject cheques.

The Court further observed that penal provisions are to be construed strictly and not in a routine/casual manner.

"The words used in Section 138 of N.I. Act that "such person shall be deemed to have committed an offence," refers to a person who has drawn the cheque, but not any other person, except the contingencies mentioned under Section 141 of the N.I.Act," the Court said.

The petition was thus allowed and the criminal proceedings against the petitioner were quashed.

Case Title: Kodam Danalakshmi v. State of Telangana

Citation: 2022 LiveLaw (Tel)1

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