2022 (9) TMI 671 - HC - Indian Laws

Court allows petition, sets aside order. Dismisses complaint under Section 138. Upholds justice through inherent powers.

Jasween Sandhu Versus State & Anr.

The petition was allowed, and the impugned order was set aside in favor of the petitioner. The court dismissed the criminal complaint against the ... Dishonor of Cheque - existence of lawful liability or debt towards the petitioner or not - joint or vicarious liability of a person under section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The petitioner is not the drawer of the cheque in question. The trial court misdirected itself while passing the impugned order. The petitioner is not a joint account holder or vicariously liable with Amrit Sandhu Coster. The cheque in question was not issued by the petitioner but was issued by the sister of the petitioner namely Amrit Sandhu Coster. It was prayed that impugned order be set aside. The legal issue pertaining to joint or vicarious liability of a person under section 138 of the Negotiable Instruments Act, 1881 has been considered by the various High Courts and the Supreme Court. In Gita Berry V Genesis Educational Foundation, [2008 (1) TMI 978 - DELHI HIGH COURT] decided by a Coordinate Bench of this court, the petitioner/wife filed a petition under Section 482 of the Code seeking quashing of the complaint filed under Section 138 of the Negotiable Instrument Act,1881 on the ground that she was a joint account holder along with her husband. She has neither drawn nor issued the cheque in question and, therefore, according to her, the complaint against her was not maintainable. It was observed that the complaint was only under section 138 of the Act and nothing was elicited from the complaint to the effect that the petitioner was responsible for the cheque in question and accordingly proceedings were quashed. The Supreme Court in Aparna A. Shah V M/s Sheth Developers Pvt. Ltd. &another, [2013 (7) TMI 718 - SUPREME COURT] endorsed views expressed by the Madras, Delhi and Punjab & Haryana High Courts and held that it is only the drawer of the cheque who can be prosecuted under section 138 of the Act. The case of the respondent no 2 is that the petitioner and Amrit Sandhu Coster in discharge of their liability towards the respondent no 2 handed over cheque in question and promised that the said cheque would be obliged on presentation to discharge their legally enforceable debt - The petitioner is not holder of account bearing no 90112010051035 in Syndicate Bank and is not operational in the name of the petitioner but is operational in name of Amrit Sandhu Coster. Amrit Sandhu Coster in notice under section 251 also admitted that she issued the cheque in question to the respondent no 2 in the year 2011 for my food court business vide proceedings dated 06.02.2019. The liability regarding dishonouring of cheque in question cannot be fastened on the petitioner. The impugned order cannot be legally sustained qua the petitioner and as such the petition is allowed and impugned order is set aside qua the petitioner - Petition allowed. Issues Involved:1. Quashing of the criminal complaint and summoning order.2. Legally enforceable debt or liability.3. Vicarious liability under Section 138 of the Negotiable Instruments Act, 1881.4. Application of Section 141 of the Negotiable Instruments Act, 1881.5. Cognizance by the Magistrate.6. Exercise of inherent powers under Section 482 of the Code of Criminal Procedure.Issue-wise Detailed Analysis:1. Quashing of the criminal complaint and summoning order:The petitioner sought to quash the criminal complaint and summoning order dated 03.06.2017, arguing that she was not the drawer or signatory of the cheque in question and had no dealings with the respondent. The trial court had summoned the petitioner and her sister based on the complaint filed under Section 138 of the Negotiable Instruments Act, 1881, for dishonor of a cheque amounting to Rs. 20,00,000.2. Legally enforceable debt or liability:The petitioner contended that there was no legally enforceable debt against her, as she never issued nor directed her sister to issue the cheque in question. The complaint was claimed to be a coercive tactic to settle another criminal case filed against the respondent.3. Vicarious liability under Section 138 of the Negotiable Instruments Act, 1881:The petitioner argued that she could not be held vicariously liable with her sister, as she was neither the drawer nor the signatory of the cheque. The court referred to the Supreme Court's judgments in Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. and Jugesh Sehgal v. Shamsher Singh Gogi, which outlined the ingredients for taking cognizance under Section 138, emphasizing that only the drawer of the cheque can be deemed to have committed an offense.4. Application of Section 141 of the Negotiable Instruments Act, 1881:The petitioner was arrayed as accused No. 2 under Sections 141 and 142 of the Negotiable Instruments Act, which deal with offenses by companies and their officers. The court noted that these sections are not applicable to individuals in cases of joint liability unless the cheque is signed by all joint account holders. The Supreme Court in Aparna A. Shah v. M/s Sheth Developers Pvt. Ltd. clarified that a joint account holder cannot be prosecuted unless they signed the cheque.5. Cognizance by the Magistrate:The trial court took cognizance of the offense based on the complaint and documents presented. The court emphasized that cognizance requires the Magistrate to apply their mind to the facts and allegations, ensuring there is sufficient material to proceed with the case. The Supreme Court in Fakhruddin Ahmad v. State of Uttaranchal reiterated that cognizance is taken regarding the offense, not the offender, and must be done with judicial application of mind.6. Exercise of inherent powers under Section 482 of the Code of Criminal Procedure:The court highlighted that the inherent powers under Section 482 should be exercised sparingly to prevent abuse of the process of the court or to secure the ends of justice. The court found that the complaint did not disclose any cause of action against the petitioner, as she was not the drawer of the cheque, and thus, the impugned order could not be legally sustained.Conclusion:The petition was allowed, and the impugned order was set aside concerning the petitioner. The criminal complaint was dismissed against the petitioner, emphasizing that only the drawer of the cheque can be held liable under Section 138 of the Negotiable Instruments Act. The inherent powers under Section 482 were exercised to prevent abuse of the court's process and to secure justice.