Whether original accused No. 2 can be convicted with the aid of Section 141 of the NI Act ?
Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque.
Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Learned counsel appearing on behalf of the original complainant has submitted that “Company” means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within “other association of individuals” and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly 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 r/w Section 141 of the NI Act.
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 258 OF 2021
Alka Khandu Avhad .. Appellant
Versus
Amar Syamprasad Mishra & Anr. .. Respondent
J U D G M E N T
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.
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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
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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.
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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 cheque nor the cheque was drawn from
the bank account of the appellant and therefore the appellant cannot be prosecuted
for the offence punishable under Section 138 of the NI Act. It is vehemently
submitted that the ingredients of Section 138 of the NI Act are not satisfied, and
therefore, the High Court ought to have quashed the criminal complaint against the
appellant.
3.1 It is further submitted by the learned counsel appearing on behalf of the
appellant that, in the facts and circumstances of the case, even Section 141 of the
NI Act shall not be applicable as the cheque was issued by a private individual.
4. The present appeal is vehemently opposed by the learned counsel appearing
on behalf of respondent No. 1 – original complainant.
4.1 It is submitted that the liability to pay the debt towards the professional bill
was the joint liability of both the accused as the complainant represented both the
accused and, therefore, as rightly observed and held by the High Court, Section
141 of the NI Act shall be applicable.
4.2 It is submitted that when the Trial Court issued the summons against the
appellant for the offence punishable under Section 138 r/w Section 141 of the NI
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Act after having come to the conclusion that a prima facie case has been made out,
the High Court has rightly refused to quash the criminal complaint.
4.3 It is further submitted that as the cheque was issued towards discharge of
legal liability of both the accused and thereafter when her husband issued the
cheque, the High Court has rightly refused to quash the complaint.
5. Learned counsel appearing on behalf of the State has supported the
impugned judgment and order passed by the High Court.
6. We have heard 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 No. 1 – husband of the appellant. It was
drawn from the bank account of original accused No. 1. The dishonoured cheque
was signed by original accused No. 1. Therefore, the dishonoured cheque was
signed by original accused No. 1 and it was drawn on the bank account of original
accused No. 1. The appellant herein-original accused No. 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 – original accused No.
2 can be prosecuted for the offence punishable under Section 138 r/w Section 141
of the NI Act?
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7. On a fair reading of Section 138 of the NI Act, before a person can be
prosecuted, the following conditions are required to be satisfied:
i) that the cheque is drawn by a person and on an account maintained by him
with a banker;
ii) for the 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; and
iii) the said cheque 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.
Therefore, a person who is the signatory to the cheque and the cheque is
drawn by that person on an account maintained by him and the cheque has been
issued for the discharge, in whole or in part, of any debt or other liability and the
said cheque has been returned by the bank unpaid, such person can be said to have
committed an offence. Section 138 of the NI Act does not speak about the joint
liability. Even in case of a joint liability, in case of individual persons, a person
other than a person who has drawn the cheque on an account maintained by him,
cannot be prosecuted for the offence under Section 138 of the NI Act. A person
might have been jointly liable to pay the debt, but if such a person who might have
been liable to pay the debt jointly, cannot be prosecuted unless the bank account is
jointly maintained and that he was a signatory to the cheque.
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8. Now, so far as the case on behalf of the original complainant that the
appellant herein – original accused No. 2 can be convicted with the aid of Section
141 of the NI Act is concerned, the aforesaid has no substance.
8.1 Section 141 of the NI Act is relating to the offence by companies and it
cannot be made applicable to the individuals. Learned counsel appearing on behalf
of the original complainant has submitted that “Company” means any body
corporate and includes, a firm or other association of individuals and therefore in
case of a joint liability of two or more persons it will fall within “other association
of individuals” and therefore with the aid of Section 141 of the NI Act, the
appellant who is jointly 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 r/w Section 141 of the NI Act. The criminal complaint filed against
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the appellant for the offence punishable under Section 138 r/w 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.
8. In view of the above and for the reasons stated above, the present appeal
succeeds. The impugned judgment and order dated 21.08.2019 passed by the High
Court in Criminal Writ Petition No. 2595 of 2019 refusing to quash the criminal
complaint against the appellant for the offence punishable under Section 138 read
with Section 141 of the NI Act is hereby quashed and set aside. The complaint case
pending in the Court of the learned Metropolitan Magistrate filed by respondent
No. 1 – original complainant being C.C. No. 2802/SS/2016 is hereby quashed and
set aside. The appeal is allowed accordingly.
……………………………………J.
[Dr. Dhananjaya Y. Chandrachud]
………………………………….J.
[M. R. Shah]
New Delhi,
March 8, 2021
