Madras High Court
R. Chamundeswari vs M/S.Housing Development Finance on 22 June, 2022
Crl.O.P.No.3400 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 22.06.2022
CORAM:
THE HON'BLE MR.JUSTICE G.K.ILANTHIRAIYAN
Crl.O.P.No.3400 of 2020
and
Crl.M.P.Nos. 1973 & 1974 of 2020
R. Chamundeswari ... Petitioner
Vs.
M/s.Housing Development Finance
Corporation Ltd.,
By its Legal Officer Shareen Velloath
29, Kamaraj Road,
Near Circuit House,
Coimbatore 641018 ... Respondent
Prayer: Criminal Original Petition filed under Section 482 of Criminal
Procedure Code, to call for the records in C.C.No.388 of 2018 on the file
of the Fast Track Court No.I (Magisterial Level), Coimbatore and quash
the same.
For Petitioner : J. Prithivi
For Respondent : Ms.V.V.Uthra
for Mr.J.K.Parthasarathy
1/12
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
ORDER
This petition has been filed to quash the proceedings intiated
by the respondent for the offence under Section 138 of Negotiable
Instruments Act in C.C.No.388 of 2018 on the file of the Fast Track
Court No.I (Magisterial Level), Coimbatore.
2. The respondent lodged a complaint alleging that on
19.01.2018, the first accused owes a sum of Rs.41,12,499/- and the
second accused owes a sum of Rs.4,76,167/- to the respondent herein.
Both A1 and A2 have been irregular in repayment of loan. On demand,
both the accused had jointly issued a cheque for a sum of Rs.45,88,666/-
to the amount due under the loan. On instruction, the cheque was
presented for collection and the same was dishonoured with the
endorsement 'funds insufficient'. After issuance of statutory notice, the
respondent lodged a complaint for the offence under Section 138 of
Negotiable Instruments Act.
3. The learned counsel for the petitioner would submit that
though the cheque was issued from their joint account maintained by the
first accused, petitioner/2nd accused and another, the alleged cheque was
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
issued without the knowledge of the petitioner herein. That apart, the
petitioner is not a drawer of the alleged cheque issued by the first
accused. Therefore, she cannot be held liable to be punished for the
alleged offence under Section 138 of Negotiable Instruments Act, as the
liability can be fastened only on the drawer of the cheque as
contemplated under Section 138 of Negotiable Instruments Act. Though
the first accused and the petitioner, along with another, are the joint
account holders and the drawer of the cheque alone can be prosecuted for
the offence punishable under Section 138 of Negotiable Instruments Act.
In support of her contention, she relied upon the Judgment reported in
2013 (8) SCC 71 and 2021 (4) SCC 675.
4. Per contra, the learned counsel appearing for the
respondent would submit that the first accused had availed housing loan
for a sum of Rs.43,50,000/- from the respondent in Loan
A/c.No.603725063 on 31.01.2012 and also executed loan agreement,
demand promissory note and other necessary documents in favour of the
respondent. Likewise, the second accused/petitioner also borrowed a
loan for a sum of Rs.5,50,000/- in Loan A/c.No.351328331 on
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
03.03.2004 and executed necessary documents. Both were irregular in
repayment of bank dues. On demand, in order to discharge the entire
liability, both the accused A1 and A2 issued a cheque for a sum of
Rs.45,88,666/-. However, it was dishonoured for the reason that
'insufficient fund'. Though the first accused is the drawer of the cheque,
both accused are jointly and severally liable to be punished for the
offence under Section 138 of Negotiable Instruments Act, since both are
having joint account holder from which the cheque was issued in favour
of the respondent herein.
5. He further submitted that the grounds raised by the
petitioner are all mixed questions of fact which cannot be considered by
this Court as it can be considered only before the Trial Court, in a ful1-
fledged trial by letting-in-evidence.
6. Heard both sides and perused the materials available on
record.
7. The cheque dated 10.12.2017 drawn on the Lakshmi Vilas
Bank, Salem, was issued in favour of the respondent herein for a sum of
Rs.45,88,666/- towards the full discharge of the amount due under the
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
said loan availed by A1 and A2. The petitioner is arrayed as A2. The
complaint is lodged by the respondent herein under Section 138 of
Negotiable Instrument Act. The first accused, petitioner/2 nd accused and
one Kanthamani are having joint account with Lakshmi Vilas Bank in
A/c.No.06603010000039226, Swarnapuri Branch, Salem. Even then, the
first accused alone signed the cheque and issued it in favour of the
respondent herein. The only ground raised by the petitioner is that the
drawer of the cheque is only liable to be punished for the offence
punishable under Section 138 of Negotiable Instruments Act.
8. It is relevant to extract the provisions under Section 138 of
Negotiable Instruments Act, which 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 insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that account
by an arrangement made with that bank, such person shall
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
be deemed to have committed an offence and shall, without
prejudice to any other provisions of this Act, be punished
with imprisonment for a term which may extend to two
years, or with fine which may extend to twice the amount of
the cheque, or with both :
Provided that nothing contained in this section
shall apply unless-
(a) the cheque has been presented to the bank
within a period of six months from the date on which it is
drawn or within the period of its validity, whichever is
earlier.
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice in
writing, to the drawer of the cheque, within thirty days of
the receipt of information by him from the bank regarding
the return of the cheque as unpaid ; and
(c) the drawer of the such cheque fails to make the
payment of the said amount of money to the payee or as the
case may be, to the holder in due curse of the cheque within
fifteen days of the receipt of the said notice.
Explanation : For the purposes of this section,
'debt or other liability' means a legally enforceable debt or
other liability”.
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
9. Thus, it is only the person, who is signatory to cheque and
cheque is drawn by that person on 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, who
can be prosecuted under Section 138 of Negotiable Instrument Act. The
provision under Section 138 of Negotiable Instruments Act does not
speak about the joint liability. Even in case of joint liability, in case of
individual persons, a person other than a person who had drawn cheque
on an account maintained by him, cannot be prosecuted for the offence
under Section 138 of Negotiable Instrument Act. A person might have
been jointly liable to pay the debt. But such a person cannot be
prosecuted unless bank account is jointly maintained and that he was a
signatory to the cheque.
10. In the case on hand, admittedly, the first accused,
petitioner and another are having joint account. However, the first
accused and the petitioner availed loan from the respondent herein. The
first accused only signed in the cheque and issued towards payment of
dues. In this regard, the learned counsel for the petitioner relied upon
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
the Judgment reported in 2013 (8) SCC 71 in the case of Aparnaa.Shah
Vs. Sheth Developers Private Limited and another, the Hon'ble
Supreme Court of India held as follows :
““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 out 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 show that the appellant has not signed
the cheque.
28.We also hold that under Section 138 of the N.I.Act,
in case of issuance of cheque from joint accounts, a
joint account-holder cannot be prosecuted unless the
cheque has been signed by each and every person who
is a joint account-holder. The said principle is an
exception to Section 141 of the N.I.Act which would
have no application in the case on hand. The
proceedings filed under Section 138 cannot be used as
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
arm-twisting tactics to recover the amount allegedly
due from the appellant. It cannot be said that the
complainant has no remedy against the appellant but
certainly not under Section 138. The culpability
attached to the dishonour of a cheque can, in no case
“except in case of Section 141 of the N.I.Act” be
extended those on whose behalf the cheque is issued.
This Court reiterates that it is only the drawer of the
cheque who can be made an accused in any
proceeding under Section 138 of the Act. Even the
High Court has specifically recorded the stand of the
appellant that she was not signatory of the cheque but
rejected the contention that the amount was not due
and payable by her solely on the ground that the trial
is in progress. It is to be noted that only after issuance
of process, a person can approach the High Court
seeking quashing of the same on various grounds
available to him. Accordingly, the High Court was
clearly wrong in holding that the prayer of the
appellant cannot even be considered. Further, the
High Court itself has directed the Magistrate to carry
out the process of admission /denial of documents. In
such circumstances, it cannot be concluded that the
trial is in advanced stage.””
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
11. This Court also held that under Section 138 of the
Negotiable Instrument Act, in case of issuance of cheque from joint
accounts, a joint account holder cannot be prosecuted unless the cheque
has been signed by each and every person who is a joint account holder.
The said principle is an exception to Section 141 of the Negotiable
Instrument Act which would have no application in the case on hand.
12. The learned counsel for the petitioner also relied upon the
Judgment reported in 2021 (4) SCC 675 in the case of Alka Khandu
Avhad Vs. Amar Syamprasad Mishra, held that two private individuals
cannot be said to be “other association of individuals”. Therefore, there
is no question of invoking Section 141 of the Negotiable Instrument Act,
as the liability is an individual liability, but cannot be said to be the
offence committed by a company or by a corporate or firm or other
associations of individuals. Therefore, a person cannot be convicted
with the aid of Section 141 of the Negotiable Instrument Act.
13. The petitioner is not a signatory of the cheque, though she
is a joint account holder. The present proceedings for the offence
punishable under Section 138 of Negotiable Instrument Act cannot be
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
used as arm-twisting tactics to recover the amount allegedly due to the
petitioner. Therefore, the petitioner cannot be held liable for the offence
punishable under Section 138 of Negotiable Instrument Act.
14. In view of the above, the proceedings in C.C.No.388 of
2018 on the file of the Fast Track Court No.I (Magisterial Level),
Coimbatore is quashed. The Trial Court is directed to complete the Trial
as against the first accused within a period of three months from the date
of receipt of a copy of this order.
15. In the result, this Criminal Original Petition stands
allowed. Consequently, connected miscellaneous petitions are closed.
22.06.2022
Internet : Yes / No
Index : Yes / No
Speaking / Non Speaking order
Lpp
To
1. The Judicial Magistrate,
Fast Track Court No.I (Magisterial Level),
Coimbatore
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.3400 of 2020
G.K.ILANTHIRAIYAN, J.
Lpp
Crl.O.P.No.3400 of 2020
and
Crl.M.P.Nos. 1973 & 1974 of 2020
22.06.2022
https://www.mhc.tn.gov.in/judis
