The Meghalaya High Court has reiterated that for an offence under Section 138 of the Negotiable Instruments, Act to be made out, the dishonoured cheque must have been issued by the account holder under his name and signature.
Justice W. Diengdoh noted that only the holder of the account on which the cheque is drawn could be made liable and such culpability cannot be extended to others except as provided under Section 141 NI Act which deals with offences by and on behalf of the company or partnership, where the signatory to the cheque may be a Director of the company or a Partner of a partnership firm.
Two petitions were filed under Section 482 of the Criminal Procedure Code. It is directed against a common order passed by the Court of Judicial Magistrate First Class (JMFC) Shillong.
The respondent filed a complaint under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 for an alleged case of cheque bouncing, in which a cheque for ₹ 1,00,000/- (Rupees one lakh) was drawn on HDFC Bank, Mawlai Nonglum Branch. On being presented at the bank, the bank had accordingly transferred the fund to the respondent's account. The respondent had then visited the HDFC Bank, Police Bazar Branch, Shillong; it was found that the said amount only has been reverted to the bank account.
Being aggrieved by the alleged action, a complaint under Section 142 read with Section 138 of the Negotiable Instruments Act before the Court of the Chief Judicial Magistrate, Shillong, with a prayer to initiate action against the accused persons therein under the said provisions of the Negotiable Instruments Act. The JMFC, on perusal of the statement, directed that summons be issued to the accused persons therein. Being highly aggrieved and dissatisfied with the said order, the petitioners have approached this Court by way of the above-mentioned petitions with a prayer to quash the criminal proceedings against them.
On a thorough perusal of Section 138 of the Negotiable Instruments Act, the Court noted that the essential ingredients of the offence can be said to be the following:-
(i) that a person drew a cheque on an account maintained by him for payment of money to another for the discharge of any debts or liabilities;
(ii) that the said cheque has been presented to the bank of the drawee within three months;
(iii) that the cheque was returned by the bank unpaid due to 6 insufficiency of funds or that it exceeds that amount arranged to be paid from that account by an agreement made by the bank.
(iv) that the payee makes a demand for the payment of the money from the drawer of the said cheque, such demand is made within fifteen days from the date that said cheque was refused to be honored; and
(v) that the drawer fails to make payment to the payee within fifteen days from receipt of the notice.
The Court referred to the decision of the apex court in the case of Alka Khandu Afhad v. Amar Syamprasad Mishra & Anr, where the apex court observed that only a person who is the signatory to his cheque and such cheque having been returned by the bank unpaid can be said to have committed an offence under Section 138 NI Act. It remarked,
"This section does not speak about joint liability, even in case of a joint liability, in case of individual persons, a person other than a person who has drawn a cheque on an account maintained by him cannot be persecuted for an offence under Section 138 N.I. Act, unless the bank account is jointly maintained and that he was a signatory to the cheque."
Quashing the proceedings against HDFC Bank, the Court noted that no role could be attributed to the bank for issuance or the dishonor of cheque; it noted that the bank is only the custodian of the money of the customers and has to comply with the instructions of such customers.
"In case of insufficient funds, the bank is only to report the same and as such, cannot by any stretch of the imagination be liable for any act of the customer who has issued the cheque which was later dishonoured," added.
Case Title: HDFC Bank Ltd. Mawlai Nonglum Branch & Anr v. Sri Baklai Siej & Anr.
Citation: 2022 LiveLaw (Meg) 15
Read The Order