ALKA KHANDU AVHAD versus AMAR SYAMPRASAD MISHRA & ANR.
[2021] 2 S.C.R. 633, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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ALKA KHANDU AVHAD
v.
AMAR SYAMPRASAD MISHRA & ANR.
(Criminal Appeal No.258 of 2021)
MARCH 08, 2021
[DR. DHANANJAYA Y. CHANDRACHUD AND
M. R. SHAH, JJ.]
Negotiable Instruments Act, 1881 – s.138 r/w S.141 –
Complaint filed against appellant – High Court refused to quash
the same – On appeal, held: Dishonoured cheque was issued by
original accused no.1-husband of the appellant – It was drawn on
his bank account and was signed by him – Appellant-original
accused no.2 was neither the signatory to the cheque nor the
dishonoured cheque was drawn from her bank account – Account
in question was not a joint account – s.138 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 offence u/s.138 – Appellant cannot be convicted with the aid of
s.141 either – High Court committed grave error in not quashing
the complaint against the appellant – Impugned judgment set aside
– Complaint case filed by respondent no.1-original complainant is
quashed.
Allowing the appeal, the Court
Held: 1.1 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. 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. 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
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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. [Paras
6,7][637-G-H; 638-A-G]
1.2 Section 141 of the NI Act is relating to the offence by
companies and it cannot be made applicable to the individuals.
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 impugned judgment and order
dated 21.08.2019 passed by the High Court refusing to quash
the criminal complaint against the appellant for the offence
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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. [Paras 8, 8.1][639-A-F]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 258 of 2021
From the Judgment and Order dated 21.08.2019 of the High Court
of Judicature at Bombay in Cr. Writ Petition No. 2595 of 2019.
Samarth S. Karmarkar, Jamnesh Kumar, Ms. Supriyanka
Karmarkar, Himanshu Shekhar, Advs. for the Appellant.
Zulfiker Ali P. S, Adv. for the Respondents.
The Judgment of the Court was delivered by
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
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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 post-dated 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
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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 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
ALKA KHANDU AVHAD v. AMAR SYAMPRASAD MISHRA & ANR.
[M. R. SHAH, J.]
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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?
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.
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.
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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 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.
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.
ALKA KHANDU AVHAD v. AMAR SYAMPRASAD MISHRA & ANR.
[M. R. SHAH, J.]
Divya Pandey  
Appeal allowed.