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2021 Supreme(SC) 305

SUPREME COURT OF INDIA
Dhananjaya Y. Chandrachud, M. R. Shah, JJ.
Alka Khandu Avhad – Appellant
Versus
Amar Syamprasad Mishra & Anr. – Respondent
CRIMINAL APPEAL NO. 258 OF 2021
Decided On : 08-03-2021

Advocates appeared:
For the Appellant(s) : Mr. Himanshu Shekhar, AOR
For the Respondent(s): Mr. Zulfiker Ali P.S., AOR Mr. Augustine Peter, Adv. Ms. Lakshmi Sree P., Adv.

IMPORTANT POINTS
(1) Dishonour of cheque – A person might have been jointly liable to pay debt, but if such a person who might have been liable to pay debt jointly, cannot be prosecuted unless bank account is jointly maintained and that he was a signatory to cheque.
(2) Two private individuals cannot be said to be “other association of individuals”.

Headnote:

(A) Negotiable Instruments Act, 1881 – Section 138 r/w Section 141 – Dishonour of cheque – Offence by company – Joint liability – Dishonoured cheque was signed by original accused No. 1 and it was drawn on bank account of original accused No. 1 – Appellant herein-original accused No. 2 is neither signatory to cheque nor dishonoured cheque was drawn from her bank account – Account in question was not a joint account – Section 138 of NI Act does not speak about joint liability – Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn cheque on an account maintained by him, cannot be prosecuted for offence under Section 138 of NI Act – A person might have been jointly liable to pay debt, but if such a person who might have been liable to pay debt jointly, cannot be prosecuted unless bank account is jointly maintained and that he was a signatory to cheque. (Paras 6 and 7)

(B) Negotiable Instruments Act, 1881 – Section 138 r/w Section 141 – Dishonour of cheque – Offence by company – Joint liability – Section 141 of NI Act is relating to offence by companies and it cannot be made applicable to individuals – Two private individuals cannot be said to be “other association of individuals” – There is no question of invoking Section 141 of NI Act against appellant, as liability is individual liability (may be joint liabilities), but cannot be said to be offence committed by a company or by it corporate or firm or other associations of individuals – Appellant is neither a Director nor a partner in any firm who has issued cheque – Appellant cannot be convicted with aid of Section 141 of NI Act – High Court has committed grave error in not quashing complaint against appellant for offence punishable under Section 138 r/w Section 141 of NI Act – Criminal complaint filed against appellant, can be said to be abuse of process of law and same is required to be quashed and set aside – Impugned judgment and order quashed and set aside – Complaint case pending in Court of Metropolitan Magistrate filed by respondent No. 1-original complainant quashed and set aside. (Paras 8.1 and 8.2)

Facts of the case:

Appellant assails judgment and order dated 21.08.2019 passed by High Court of Judicature at Bombay in Criminal Writ Petition by which High Court has dismissed application preferred by appellant herein under Article 226 of Constitution of India and has refused to quash complaint filed against appellant for offences punishable under Section 138 r/w Section 141 of Negotiable Instruments Act, 1881.

Findings of Court:

A person who is signatory to cheque and cheque is drawn by that person on an account maintained by him and cheque has been issued for discharge, in whole or in part, of any debt or other liability and said cheque has been returned by bank unpaid, such person can be said to have committed an offence.

Result : Appeal allowed.

Judgement Key Points

Key Points: - A person can be liable under Section 138 NI Act if they are the signatory to the cheque drawn on an account maintained by them and the cheque is issued to discharge debt; joint liability does not by itself create liability unless the account is jointly maintained and the signatory relation is established (!) (!) (!) . - Section 141 NI Act relates to offences by companies; it cannot be applied to individuals, and two private individuals cannot be said to be "other association of individuals" for invoking Section 141; liability against a non-signatory individual cannot be framed under Section 141 unless the person is a director or partner with signatory responsibility (!) . - The High Court’s refusal to quash a complaint under Section 138 r/w Section 141 is overturned; the complaint against a non-signatory individual where the cheque was not drawn from that account and the account was not joint is quashed, as the liability cannot be imputed under Section 141 to an individual not meeting the criteria (!) (!) (!) .

What is the scope of liability under Section 138 read with Section 141 NI Act for an individual who is not a signatory to the dishonoured cheque or to the account?

What is the interpretation of "other association of individuals" under Section 141 NI Act in relation to private individuals?

What are the grounds for quashing a criminal complaint under Section 138 read with Section 141 NI Act where the cheque is issued by one party and the respondent is not a signatory or joint account holder?


JUDGMENT

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 21.08.2019 passed by the High Court of Judicature at Bombay in Criminal Writ Petition No. 2595 of 2019, by which the High Court has dismissed the said application preferred by the appellant herein under Article 226 of the Constitution of India and has refused to quash the complaint filed against the appellant for the offences punishable under Section 138 r/w Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’), the original accused No. 2 has preferred the present appeal.

2. That respondent No. 1 herein has filed a criminal complaint against the appellant and her husband for the offences punishable under Section 138 r/w Section 141 of the NI Act in the Court of the learned Metropolitan Magistrate, 43rd Court at Borivali, Mumbai, which has been numbered as C.C. No. 2802/SS/2016. That respondent No. 1 – original complaint (hereinafter referred to as ‘the original complainant’) is a practicing advocate and partner in a solicitor firm in Mumbai. As per the case of the complainant, both the accused who are husband and wife, approached the original complaint in a legal matter. That the original complainant assisted accused Nos. 1 and 2 in preparing replies and notice of motion, conference, coordinating with counsel, filing Vakalatnamas and appearing through advocates’ office and also as counsel in Summary Suit. That the original complainant raised a professional bill for the legal work done by him to represent accused Nos. 1 and 2 in the legal proceedings. That, thereafter, original accused No. 1 – husband of the appellant herein handed over to the complainant a postdated cheque dated 15.03.2016 bearing No.227050 drawn on Union Bank of India for Rs.8,62,000/-. The said cheque was presented for encashment and the same came to be returned unpaid with the endorsement “funds insufficient”. That, thereafter, the original complainant served a legal notice dated 21.05.2016 calling upon the accused to pay the amount of Rs.8,62,000/- within 15 days from the date of receipt of the said notice. That the said notice was duly served upon the accused, however, the accused neither replied the said notice nor made the payment of the aforesaid dishonoured cheque. Therefore, the complainant filed a complaint against both the accused – husband and wife for the offence punishable under Section 138 of the NI Act. That the learned Metropolitan Magistrate, 43rd Court, Borivali, Mumbai directed to issue process against both the accused for the offence punishable under Sections 138 r/w Section 141 of the NI Act.

2.1 That, thereafter, the appellant herein – original accused No. 2, wife of the original accused No. 1 filed Criminal Writ Petition No. 2595 of 2019 in the High Court to quash the criminal complaint filed against her mainly on the ground that the appellant was neither a signatory to the cheque dishonoured nor there was a joint bank account.

2.2 It was further submitted that the appellant cannot be prosecuted for the offence punishable under Sections 138 r/w Section 141 of the NI Act.

2.3 However, it was the case on behalf of the original complainant that it was the joint liability of both the accused Nos. 1 and 2 to pay the professional bill as the original complainant represented both the accused and therefore considering Section 141 of the NI Act, the appellant herein – original accused No. 2 is also liable for the offence punishable under Section 138 r/w Section 141 of the NI Act.

2.4 By the impugned judgment and order, the High Court has refused to quash the criminal complaint filed against the appellant, giving rise to the present appeal.

3. Learned counsel appearing on behalf of the appellant has vehemently submitted that the dishonoured cheque was issued by her husband and not the appellant and even the account in question was not a joint account and that the appellant was neither the signatory to the chequ

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