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CHEQUE BOUNS CASE

When a cheque was issued by the husband from the joint account of wife and husband, the wife can not be arrayed as party when the cheque was bounced, in a cheque bounce case.

Dhanalakshmi Bank headquarters in Thrissur city

Dhanalakshmi Bank headquarters in Thrissur city (Photo credit: Wikipedia)

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 31/01/2011

CORAM
THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH

Crl.O.P.(MD)No.9815 of 2010
&
M.P.(MD).Nos.2, 3 and 4 of 2010 and
Crl.O.P.(MD)No.9816 of 2010 &
M.P.(MD).Nos.2, 3 and 4 of 2010

Kannukiniyal .. Petitioner in both the petitions

Vs.

Sri.Santhosimatha Finance
Rep.by it’s Partner K.S.Rajavel
32, Big Chetty Street,
Trichy-8 .. Respondent in both the petitions

Prayer

These petitions are filed to quash the complaint proceedings of the
Judicial Magistrate No.I, Trichy in C.C.No.228 and 229 of 2010 against her as
illegal and void.

!For Petitioner … Mr.S.Ramachandran
^For Respondent … Mr.R.Sundar

:COMMON ORDER
Crl.O.P.(MD).No.9815 of 2010 has been filed by the petitioner, who
is ranked as second accused in the complaint in C.C.No.228 of 2010 on the file
of the learned Judicial Magistrate No.I, Trichy under Section 138 of the
Negotiable Instruments Act, 1881, to quash the said complaint proceedings
against her.

2. Crl.O.P.(MD).No.9816 of 2010 has been filed by the petitioner, who is
ranked as second accused in the complaint in C.C.No.229 of 2010 on the file of
the learned Judicial Magistrate No.I, Trichy under Section 138 of the Negotiable
Instruments Act, 1881, to quash the said complaint proceedings against her.

3. The petitioner in both the petitions is ranked as second accused in the
proceedings pending before the learned Judicial Magistrate No.I, Trichy in
C.C.Nos.228 and 229 of 2010 and the first accused in both the cases is her
husband and the complainant in both the cases is one and the same person.

4. Heard Mr.S.Ramachandran, the learned counsel appearing for the
petitioner and Mr.R.Sundar, the learned counsel appearing for the respondent in
both the petitions.

5. The learned counsel for the petitioner would submit in his arguments
that the case in C.C.No.228 of 2010 was taken on file by the lower Court on a
private complaint filed by the respondent/complainant under Section 138
Negotiable Instruments Act, 1881 in which it was stated by the respondent that a
sum of Rs.5,00,000/- was borrowed jointly by the petitioner and her husband on
20.04.2007, from the complainant, agreeing to repay the same with interest at 6%
per annum and the petitioner and her husband have issued a cheque for a sum of
Rs.8,00,000/- in discharge of the above debt on 24.04.2010 and since the cheque
was dishonoured for want of sufficient funds, a complaint has been filed.

6. Similarly, the respondent had preferred yet another private complaint
before the Court and the said complaint was taken on file as C.C.No.229 of 2010
for the allegations that the petitioner and her husband borrowed a sum of
Rs.5,00,000/- on 09.07.2007 agreeing to repay the same with interest at 6% per
annum and have executed a promissory note on the same date in favour of the
respondent and deposit of title deeds were done by the petitioner with an
intention to create an equitable mortgage on 10.07.2007 and executed a
memorandum of deposit of title deeds also and thus, created an equitable
mortgage. In discharge of the said loan, on 27.04.2010, the first accused on
behalf of his wife, the petitioner herein also has issued a cheque at Trichy
dated 27.04.2010 for a sum of Rs.7,75,000/- drawn at Dhanalakshmi Bank limited,
Trichy and the said cheque was not honoured, when it was presented and it was
returned as insufficient fund and therefore the complaint was filed.

7. He would also submit that both the complaints were taken on file by the
lower Court without looking into the fact that the first complaint was already
barred by law of limitation and also the fact that the petitioner in both the
petitions is said to be a promisor of the alleged debts in favour of the
respondent. The cheque was given by the first accused only from a joint account
held by both the accused persons and the petitioner herein was not admittedly
the drawer of the said cheques and therefore, the lower Court ought not to have
taken cognizance of the complaints against the petitioner, who was ranked as
second accused.

8. He would further submit in his arguments that the petitioner cannot be
impleaded as one of the accused, since she was not a drawer of the cheques in
both the cases. He would also submit that it cannot be construed that the
issuance of the cheque by her husband/first accused, was done on behalf of the
second accused, the petitioner herein also. He would draw the attention of the
Court to a judgment of this Court reported in II (2007) BC 30 in between
(M.SEETHALAKSHMI v. SURESH BAFNA) for the principle that only the drawer of the
cheque can be tried for the commission of offence under Section 138 of the
Negotiable Instruments Act, 1881. He would also draw attention of this Court to
yet another judgment of Andhra Pradesh High Court reported in 1998 (3) Crimes
543 in between (G.SURYA PRABHAVATHI v. NEKKANTI SUBRAHMANYESWARA RAO & ANR.) for
the same proposition. He would therefore request the Court that the petitioner,
who admittedly not a drawer of the cheque in both the cases, cannot be impleaded
as a party to the complaint or accused in the proceedings and therefore, the
proceedings initiated against the petitioner as second accused in both the cases
may be ordered as quashed.

9. The learned counsel for the respondent would submit in his arguments
that the question of limitation as argued by the learned counsel for the
petitioner in C.C.No.228 of 2010 would not sustain because there was an
agreement in between the parties after the lapse of three years period for
repaying the earlier time barred debt and in pursuance of the said agreement
only the cheque was issued on 24.04.2010 and therefore, the issuance of the
cheque itself would be amounting to extending the period of limitation.
Therefore, the issuance of the cheque in pursuance of a subsequent agreement is
valid in law and therefore, the lower Court was right in taking cognizance of
the offence under Section 138 of the Negotiable Instruments Act, 1881 and the
complaint to the file. He would further submit in his argument that the drawer
of the cheque had issued the cheque for the debt incurred by both the accused
and that too from a joint account. Therefore, the first accused who issued the
cheque has acted as an agent of the second accused and therefore, the second
accused is also liable for the offence committed by the first accused. He would
further submit in his argument that the liability of both the accused namely the
petitioner and her husband are joint and several and one of the promisor’s
acknowledgment to debt is also amounting to the acknowledgment of the co-
contractor and therefore, the issuance of cheque will equally bind the
petitioner also and the petitioner is liable for the offence committed by the
first accused. Consequently the second accused, the petitioner herein, is also
liable to answer the same and the complaint cannot be quashed without adducing
full fledged evidence being recorded. He would also submit that both the
complaints are to be disposed of only after recording evidence and the point at
issue can only be decided on the test of evidence and therefore, the request of
the petitioner cannot be granted in these petitions. He would further submit
that the judgments cited by the petitioner are not applicable to the present
facts of the case, since the petitioner is also under the liability to repay the
said debt along with the first accused, her husband. Therefore, he requests the
Court to dismiss both the petitions.

10. I have given anxious consideration to the arguments advanced on either
side. The complaint sought to be quashed are filed by the respondent as
complainant before the lower Court under Section 138 of Negotiable Instruments
Act, 1881. The alleged transactions namely borrowing Rs.5,00,000/- on two
different dates and the issuance of cheques for Rs.8,00,000/- and for
Rs.7,75,000/- by the first accused from a joint account with the second accused
namely the petitioner herein are not seriously disputed in this case. However,
the petitioner had disputed the liability of the payment of the debt borrowed on
24.04.2007 as a time barred one. What ever it may be, it has to be dealt with in
a detailed enquiry.

11. As far as this case is concerned, the only point raised before this
Court is that the two cheques issued by the first accused only, payable from the
joint account of the first accused and the second accused, the petitioner
herein, for Rs.8,00,000/- and Rs.7,75,000/- on 24.04.2010 and 27.04.2010, which
were drawn by the first accused only. It has been averred in the complaint that
the first accused had issued the cheque on behalf of the second accused also.
Therefore, it is clear that the second accused, the petitioner herein, did not
draw the cheques along with the first accused when they were issued on both
occasions, to the respondent.

12. The concept of Section 138 of the Negotiable Instruments Act, 1881 is
that the intention of the drawer, at the time of issuing the cheque has to be
considered for ascertaining the commission of any offence as per the provisions
of the said Section. No doubt the petitioner is a joint account holder along
with the first accused. But, she is not the drawer in both the cheques produced
in both the proceedings. According to the judgment of this Court reported in II
(2007) BC 30 (cited supra), it has been laid down as follows;
“8. Not only from the construction of the provision of law under Section
138 of the Act, but also from the propositions held by the upper forums, two of
which were cited above, particularly the first case cited above wherein the
learned Single Judge of the Andhra Pradesh High Court has clearly held that
“under any pretext, no person other than one who has issued the cheque can be
made an accused for the commission of the offence under Section 138 of the said
Act”, thereby quashing the proceedings against the petitioner therein and since
in the case in hand also similar facts and circumstances prevail, the same
decision could be arrived at in the present case also.

9. For the cheque issued by the husband for the loan obtained by him, just
for the reason that in the borrowing of the loan a guarantee has been given by
the wife, the petitioner herein, which could only be enforced in a civil forum
for the liability and since the petitioner is not a party to the issuance of the
cheque, she cannot be made a party or an accused for the prosecution of the
bounced cheque under Section 138 of the Act and hence this Court is of the
considered view that the case registered as against the petitioner in
C.C.No.4099 of 2001 on the file of the VIII Metropolitan Magistrate, George
Town, Chennai only becomes liable to be quashed.”
In the said judgment, the judgment of the Andhra Pradesh reported in 1998 (3)
Crimes 543 (cited supra) has been followed. The relevant passage of the said
judgment would be thus;
“It is settled principle of law that penal provisions should be construed
strictly and the emphasis is on the words “such person”. It is manifest from the
expression of the words used in Section 138 of the Act “Such person shall be
deemed to have committed the offence”. relate to the person who has drawn the
cheque in favour of the payee and if the said cheque is returned unpaid on
account of the conditions mentioned under Section 138 of the Act, such person
alone is liable but not other except the contingencies mentioned under Section
141 of the Act.”

13. Admittedly, the petitioner and the first accused in both the
complaints are individual persons. The first accused is not a company, for which
the petitioner is attracted by the provisions of Section 141 of the Negotiable
Instruments Act, 1881 as a Director or Chairman of the said company or as
partner of the accused firm. Since the accused 1 and 2 are individual persons,
the first accused being the drawer of the cheque, the second accused who has not
signed the cheque as a drawer cannot be impleaded in the commission of such
offence under Section 138 of the Negotiable Instruments Act. Therefore, no
offence could be inferred against the second accused namely the petitioner
herein in both the petitions under the provisions of Section 138 of the
Negotiable Instruments Act, 1881. Therefore, this Court has no hesitation to
pass an order of quashment of the complaints filed against the petitioner as
second accused. Accordingly, both the petitions are ordered and the lower Court
is directed to proceed with the complaints only against the first accused in
accordance with law.

14. For the aforesaid reasons the criminal original petitions are ordered.
Consequently, the connected miscellaneous petitions are closed.

jikr

To
The Judicial Magistrate No.I,
Trichy

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