Criminal Liability Under NI Act Cannot Be Inherited: Calcutta High Court Quashes Cheque Bounce Case Against Deceased Drawer's Brother

The Calcutta High Court has held that criminal liability under Section 138 of the Negotiable Instruments Act is strictly personal to the drawer of the cheque and cannot be inherited by legal heirs or business associates after the drawer's death.

Justice Uday Kumar quashed criminal proceedings initiated against a man whose deceased brother had allegedly issued a cheque towards repayment of a ₹27 lakh loan.

The Court observed: “Criminal liability is not a heritable estate.”

The case arose from a complaint filed by Golam Saharia alleging that Tapan Kumar Dey, a ration dealer, had borrowed ₹27 lakh and issued a cheque dated February 1, 2022 towards repayment. However, Tapan Kumar Dey died on February 3, 2022, before the cheque was presented.

The complainant later presented the cheque in April 2022. It was dishonoured with the endorsement “Funds Insufficient.” A statutory demand notice was then issued to the deceased drawer's brother, Gautam Dey, describing him as a “legal representative” and “business associate.”

After proceedings under Section 138 of the Negotiable Instruments Act were initiated, Gautam Dey moved for discharge contending that he was neither the signatory to the cheque nor the holder of the bank account from which it was issued.

The trial court rejected the plea on the ground that summons-triable cases do not contemplate a formal discharge stage and held that the question of liability was a matter for trial.

Allowing the revision petition, the High Court held that the prosecution itself was legally incompetent from inception.

The Court emphasized that Section 138 NI Act applies only to the person who draws the cheque on an account maintained by him.

Relying on Alka Khandu Avhad v. Amar Shyamprasad Mishra, the Court reiterated that even where a debt is jointly owed, only the signatory drawer can be prosecuted for cheque dishonour.

“A person might have been jointly liable to pay the debt, but if such a person was not a signatory to the cheque, [he] cannot be prosecuted,” the Court noted while referring to the Supreme Court ruling.

The Court further relied on Ganga Prasad Ratnakar v. Fanindra Kumar Chandra, which held that legal heirs of a deceased drawer cannot be prosecuted under Section 138 NI Act.

Rejecting the complainant's argument that the petitioner inherited the ration business and therefore stepped into the shoes of the deceased, the Court held that inheritance of assets does not result in inheritance of criminal culpability.

The Court observed that while civil liability may survive against the estate of a deceased person, criminal liability dies with the offender.

It further held that the mandatory “concatenation of acts” under Section 138 NI Act — including service of statutory notice upon the drawer and failure to pay within the stipulated period — could never be completed because the drawer had already died before presentation of the cheque and issuance of notice.

“A dead person cannot receive a notice, nor can they commit the 'default' of non-payment,” the Court said.

The Court also criticized the magistrate's refusal to terminate the proceedings merely because summons cases do not contain a specific discharge provision.

Observing that procedural law is a “handmaid of justice,” the Court held that trial courts cannot mechanically continue proceedings where the complaint itself discloses no legally recognizable offence.

Accordingly, the High Court quashed the entire proceedings against Gautam Dey and clarified that the complainant would still be at liberty to pursue appropriate civil remedies against the estate of the deceased borrower.

Case Title: Gautam Dey v. Golam Saharia

Case No.: CRR 3672 of 2023

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