It is a settled law that in case of dishonour of a cheque on the ground of insufficiency of funds, the drawer of the cheque who is also the signatory to it is guilty of an offence and is liable to be punished with imprisonment or fine or both, this has been provided by the Sec. 138 of the Indian NI (Negotiable Instruments), Act, 1881.
However, a peculiar matter has come before the Honourable Supreme Court by way of Special Leave Petition where the petitioners have sought relief from the top court by way of absolving a joint account holder who was a non-signatory to a dishonoured cheque from Sec. 138 proceedings.
Non-Signatory Joint Account Holders in Cheque Dishonour Cases: Supreme Court to Decide on Liability
The Honourable Supreme Court has agreed to look into the matter and decide upon the pertinent question of law as to whether the Non-Signatory Joint Account Holder in the case of a Dishonoured Cheque would be insulated from Cheque Dishonour proceedings or would he be subject to the relevant prosecution.
A petition pertaining to the said issue was before the Supreme Court bench of Justice B.V. Nagarathna and Justice K.M. Joseph who in this present Case “K. Venkidapathy and Another vs. K.S. Senathypathy” went on to issue notice regarding the Special Leave Petition that was filed by the Second Petitioner and further dismissed the petition by the First Petitioner.
Brief Facts Of The Case:
- The present petition in this case before the Honourable Supreme Court lies as a result of an order given by the Honourable Madras High Court, where the High Court had refused to quash proceedings against the present petitioners on the basis that the cheque was not disputed by the petitioners.
- Aggrieved by the order of the Honourable Madras High Court The petitioners approached the Supreme Court.
- In the present case, the First and Second Petitioner are related, the First Petitioner is the father of the Second Petitioner.
- Further, the First Petitioner is a cotton mill owner
- A complaint was filed against the said First and Second Petitioner under Sec. 138 of the NI, Act, in 2016 by the Respondent. The said complaint under section 138 was in relation to an Rs. 20,00,000 loan payment.
- The First and Second Petitioner were joint account owners but the Second Petitioner was not a signatory to the cheque when the same was issued to the Respondent.
- The post-dated cheque issued by the petitioners bearing the requisite amount was dishonoured.
- Consequently, the said petitioners had first approached the Honourable High Court and had sought the quashing of Sec.138 NI, Act, proceedings in 2018, the petitioners had argued that the matter did not involve a loan. The Honourable Madras High Court had dismissed the plea of the petitioners and also had refused to delve into the merits of the case.
- Aggrieved by the said decision of the Honourable Madras High Court the petitioners in the present case had approached the Supreme Court seeking relief.
- The petitioners in their attempt to support their case before the Honourable Supreme Court had also relied upon the judgement given in the case of “R.Kalyani vs. Janak C. Mehta And Others”
The Supreme Court in this present matter had dismissed the Special Leave Petition by the First Petitioner that is the father but had agreed to entertain the Special Leave Petition by the Second Petitioner that is the daughter and had issued notice in this regard. Further, the Honourable Court ordered the matter to be listed on 21st April 2024.
