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[S. 138 NI] Telangana HC | A joint account holder cannot be prosecuted unless and until he/she is a signatory to subject cheque

Telangana High Court

Telangana High Court

Telangana High Court: Shameem Akhter J. allowed criminal petition and quashed the proceedings against the petitioner/A.2 on the ground that it is only the drawer of the cheque who can be proceeded.

The instant Criminal under Section 482 of the Code of Criminal Procedure, 1973 i.e. ‘Cr.P.C.’ was filed by the petitioner seeking to quash the proceedings against her on the file of VII Special Metropolitan Magistrate, Ranga Reddy District, at Hastinapur and on the file of XiI Special Metropolitan Magistrate, Ranga Reddy District, at Hastinapur, respectively.

Counsel for petitioner submitted that the petitioner, who is arrayed as A.2 in the subject C.Cs, is not a signatory to the subject cheques and she is falsely implicated in the subject C.Cs. No ingredients constituting the offence under Section 138 of Negotiable Instruments Act, 1881 (i.e. “N.I.Act”) are made out against the petitioner/A.2 and therefore, continuation of proceedings against the petitioner/A.2 is nothing but abuse of process of law

Counsel for respondent submitted that petitioner is not a signatory to the subject cheques but is aware of the money transactions and handing over of the subject cheques’. It was further submitted that the petitioneris maintaining joint account with her husband i.e, A1 and the subject cheques relate to the said joint account only. The petitioner has knowledge of the subject transactions and most of the amounts were paid to her account only. Thus, the Courts rightly took cognizance of the offence under Section 138 of Negotiable Instruments Act i.e. N.I. Act against the petitioner/A2 along with A1.

The Court observed that as per the mandate given under Section 138 of N.I Act, 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 insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence.

The Court observed that in the instant case, it is evident from the entire material placed on record, particularly, the complaints filed by the respondent 2/complainant under Section 138 of N.I. Act r/w Sec.200 Cr.P.C, the petitioneris merely a jolnt account holder and she is not the signatory to the subject cheques.

It was further observed that though the account relating to the disputed cheques is a joint account, only one signature, which appears to be of A1, are seen on those disputed cheques. Penal provisions should be construed strictly, but not in a routine/casual manner. The words used in Section 138 of N.I.Act  that “such person sha, 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.  Hence, petitioner/A2, who is a mere joint account holder but not a signatory to the subject cheque, cannot be proceeded under Section 138 of N.I.Act, merits consideration, inasmuch as a joint account holder cannot be prosecuted, unless and until he/she is a signatory to the subject cheque.

The Court held “when no ingredients under section 138 of N.I.Act are made out against the petitioner/A.2, continuation of the subject proceedings against the petitioner/A.2 is abuse ot process of law. Therefore, the proceedings in the subject C.Cs against the petitioner/A.2, are liable to be quashed.”

[Kodam Danalakshmi v. State of Telangana, 2021 SCC OnLine TS 1431, decided on 29-10-2021]


Arunima Bose, Editorial Assistant has reported this brief.

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