SC Ruling - ‘In joint a/c, liability is on person signing cheque’ - Monday July 01,2013

In case of issuance of cheque from joint accounts, only the person who signs the cheque can be prosecuted in a cheque bouncing case under Section 138 of the Negotiable Instruments Act, the Supreme Court held on Monday July 01,2013

The other joint account holders cannot be prosecuted unless the cheque has been signed by them also, said a Bench of Justices P. Sathasivam and J.S. Khehar. The Bench said, “The proceedings filed under Section 138 cannot be used as an 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 of the N.I. Act. The culpability attached to dishonour of a cheque can in no case, except in case of Section 141 of the N.I. Act (offences by companies), be extended to 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.”

The Case
the appellant Aparna A. Shah and her husband Ashish Shah were joint account holders and her husband issued a cheque for Rs. 25 crore from their joint account and it bounced due to insufficiency of funds. A trial court in Mumbai issued summons to the husband and wife. On appeal, the Bombay High Court had refused to quash the summons.