TaxTMI 
TaxTMI 
2026 (6) TMI 1003
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.... 138 of the Negotiable Instruments Act, 1881, as well as under Section 420 IPC, with the allegations that relations between the complainant and Rahul Thind were very cordial ad due to this, the complainant advanced Rs. 3,00,000/- and Rs. 5,00,000/- in December, 2004 as loan for business purposes, on the assurance that the said amount would be repaid within two months, failing which interest @ 18% per annum would be paid. 3. Relying upon the said assurance, the complainant advanced the aforesaid sum to Rahul Thind. However, upon expiry of the stipulated period, the amount was not repaid. Upon repeated demands, Rahul Thind issued two cheques bearing no. 128736 dated 01.04.2006 for Rs. 3,00,000/- and cheque no. 128733 dated 04.04.2006 for Rs. 5,00,000/-, both drawn on HDFC Bank Ltd., Raj Nagar, Ghaziabad, with an assurance that the same would be honoured upon presentation. 4. Acting upon such assurance, the complainant presented the cheques in his bank account; however, both cheques were dishonoured and returned on 08.04.2006 and 13.04.2006 with the remark that the account of the drawer had been closed. 5. Thereafter, upon receiving information from the bank, the complainant ....
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....cheque. 11. In support of his submissions, learned counsel has placed reliance upon the judgments of the Hon'ble Supreme Court in Aparna A. Shah vs. Sheth Developers Pvt. Ltd. & Another (2013) 8 SCC 71, Jugesh Sehgal vs. Shamsher Singh Gogi (2009) 14 SCC 683 and Alka Khandu Avhad vs. Amar Syamprasad Mishra & Another (2021) 4 SCC 675. 12. Despite sufficient service, none appeared on behalf of the complainant/respondent no. 2. 13. I have heard learned counsel for the applicant and perused the record, as well as the case laws cited. 14. The Apex Court in Jugesh Sehgal (supra) while elaborately considering the essential ingredients constituting an offence under Section 138 of the N.I. Act, held as under:-. "12. Section 138 of the Act reads as follows: "138. Dishonour of cheque for insufficiency, etc., of funds in the account.-Where any cheque drawn by a person on an 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, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is in....
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....he drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act. **** 16. The next question for consideration is whether or not in the light of the aforementioned factual position, as projected in the complaint itself, it was a fit case where the High Court should have exercised its jurisdiction under Section 482 of the Code? 17. The scope and ambit of powers of the High Court under Section 482 of the Code has been enunciated and reiterated by this Court in a series of decisions and several circumstances under which the High Court can exercise jurisdiction in quashing proceedings have been enumerated. Therefore, it is unnecessary to burden the judgment by making reference to all the decision....
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....is not used in the sense in which it is used with reference to punishment for offences under Section 302 IPC, but to emphasise that the power under Section 482 CrPC to quash the FIR or criminal proceedings should be used sparingly and with circumspection." 21. Bearing in mind the above legal position, we are of the opinion that it was a fit case where the High Court, in exercise of its jurisdiction under Section 482 of the Code, should have quashed the complaint under Section 138 of the Act." 15. Further, the Apex Court in Aparna A. Shah (supra), has considered the issue as to whether all joint account holders can be held liable for dishonour of cheque, when a cheque is issued from a joint account. It was held as under:- "14. In Jugesh Sehgal [(2009) 14 SCC 683 : (2009) 5 SCC (Civ) 482 : (2010) 2 SCC (Cri) 218], after noting the ingredients for attracting Section 138 on the facts of the case, this Court concluded that there is no case to proceed under Section 138 of the Act. In that case, on 20-1-2001, the complainant filed an FIR against all the accused for the offence under Sections 420, 467, 468, 471 and 406 of the Penal Code, 1860 (hereinafter referred to a....
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....tion 141 of the NI Act is an instance of specific provision that in case an offence under Section 138 is committed by a company, the criminal liability for dishonour of a cheque will extend to the officers of the company. As a matter of fact, Section 141 contains conditions which have to be satisfied before the liability can be extended. Inasmuch as the provision creates a criminal liability, the conditions have to be strictly complied with. In other words, the persons who had nothing to do with the matter, need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, the officers of the company, who are responsible for the acts done in the name of the company, are sought to be made personally liable for the acts which result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub-section (1) of Section 141 enables certain persons to prove that the offence was c....
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....e since it was never the case of Respondent 1 in the complaint filed before the learned Magistrate that the appellant wife is being prosecuted as an association of individuals and, therefore, on this ground alone, the above submission is liable to be rejected. Since, this expression has not been defined, the same has to be interpreted ejusdem generis having regard to the purpose of the principle of vicarious liability incorporated in Section 141. The terms "complaint", "persons", "association of persons", "company" and "Directors" have been explained by this Court in Raghu Lakshminarayanan v. Fine Tubes [(2007) 5 SCC 103 : (2007) 2 SCC (Cri) 455]. 21. The above discussion with reference to Section 138 and the materials culled out from the statutory notice, reply, copy of the complaint, order, issuance of process, etc. clearly show only the drawer of the cheque being responsible for the same. 22. In addition to our conclusion, it is useful to refer to some of the decisions rendered by various High Courts on this issue. 23. The learned Single Judge of the Madras High Court in Devendra Pundir v. Rajendra Prasad Maurya [2008 Cri LJ 777 (Mad)], following decis....
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....g of which can be fastened on the drawer of it. After saying so, learned Single Judge accepted the plea of the petitioner and quashed the proceedings insofar as it relates to her and permitted the complainant to proceed further insofar as against others. 26. In the light of the principles as discussed in the earlier paragraphs, we fully endorse the view expressed by the learned Judges of the Madras [Devendra Pundir v. Rajendra Prasad Maurya, 2008 Cri LJ 777 (Mad)], Delhi [Gita Berry v. Genesis Educational Foundation, (2008) 151 DLT 155] and Punjab and Haryana [(2008) 2 PLR 796] High Courts. 27. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains the name of the appellant and her husband, the fact remains that her husband alone had put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would....
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...., who draws a cheque on an account maintained by him, for paying the payee, alone attracts liability." (emphasis supplied) 17. Similarly, the Apex Court in Alka Khandu Avhad (supra), reiterated that in the case of a joint bank account, only the person who has signed the cheque can be prosecuted for its dishonour. It was held as under:- "8. We have heard the learned counsel appearing on behalf of the respective parties at length, considered material on record and also considered the averments and allegations in the complaint. It emerges from the record that the dishonoured cheque was issued by original Accused 1 husband of the appellant. It was drawn from the bank account of original Accused 1. The dishonoured cheque was signed by original Accused 1. Therefore, the dishonoured cheque was signed by original Accused 1 and it was drawn on the bank account of original Accused 1. The appellant herein-original Accused 2 is neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account. That the account in question was not a joint account. In the light of the aforesaid facts, it is required to be considered whether the appellant herein-origina....
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....tly liable to pay the debt, can be prosecuted. The aforesaid cannot be accepted. Two private individuals cannot be said to be "other association of individuals". Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act. The criminal complaint filed against the appellant for the offence punishable under Section 138 read with Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quashed and set aside." (emphasis supplied) 18. The Apex Court in the case of Bijoy Kumar Moni vs. Paresh Manna and Another 2024 SCC On....
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....ision has to be strictly construed in keeping with the provisions alleged to have been violated. The proceedings in such matters are in personam and cannot be used to foist an offence on some other person, who under the statute was not liable for the commission of such offence." 41. In Jugesh Sehgal v. Shamsher Singh Gogi reported in (2009) 14 SCC 683, this Court emphasised on the importance of the dishonoured cheque having been drawn by the accused person on an account held in his name for the offence to be made out and held thus: "22. As already noted hereinbefore, in Para 3 of the complaint, there is a clear averment that the cheque in question was issued from an account which was non-existent on the day it was issued or that the account from where the cheque was issued "pertained to someone else". As per the complainant's own pleadings, the bank account from where the cheque had been issued, was not held in the name of the appellant and therefore, one of the requisite ingredients of Section 138 of the Act was not satisfied. Under the circumstances, continuance of further proceedings in the complaint under Section 138 of the Act against the appellant would ....