Cheque dishonour liability under Section 138 cannot extend to a non-signatory joint account holder on loan agreement alone.

Section 138 liability under the Negotiable Instruments Act attaches to the drawer or signatory of the dishonoured cheque, and the provision must be strictly construed because it is penal in nature. A joint account holder who merely signed the loan agreement, but did not sign the cheque, cannot be prosecuted on that basis alone; vicarious liability cannot be extended beyond what the statute permits. The proceedings against the applicant were therefore liable to be quashed.

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Issues: Whether a person who is not the drawer or signatory of a cheque, but is a joint account holder and a signatory to the loan agreement, can be prosecuted for the offence under Section 138 of the Negotiable Instruments Act.

Analysis: The complaint alleged dishonour of a cheque issued by the applicant's husband in discharge of a loan liability. The applicant had signed the loan agreement, but she had not signed the cheque. Liability under Section 138 arises from the act of drawing the cheque, and the provision is penal in nature and requires strict construction. The exception of vicarious liability under Section 141 applies only where the statute so permits, and the Court found that a joint account holder who has not signed the cheque cannot be roped in merely because of her association with the transaction or the loan agreement.

Conclusion: The applicant could not be prosecuted under Section 138 as she was not the drawer or signatory of the cheque; the proceedings against her were liable to be quashed.

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