(2021) 4 SCC 675
JUSTICE D.Y CHANDRACHUD
JUSTICE M.R. SHAH
The problem of joint liability under Section 138 of the Negotiable Instruments Act, as well as the requirements for it, is the subject of this case.
FACTS OF THE CASE:
In this case, the first complainant, a lawyer, submitted a professional bill for the services he performed to represent a couple in court. The husband’s check was returned as unpaid. The lawyer filed a complaint against both the defendants – husband and wife – for a violation of the Negotiable Instruments Act’s Section 138. According to the complainant, both the defendants were jointly liable for the professional bill because the original complainant represented both of them. The accused wife filed a writ petition under Art. 226 of the Constitution with the High Court, requesting that the criminal case against her be dismissed, based on the fact that she was not a signatory to the dishonored check and that there was no joint bank account. The High Court ruled against the petition. The accused parties filed a petition against the High Court’s ruling, feeling aggrieved and displeased with it. The Supreme Court is presently hearing the case.
- Whether the provisions of Section 141 of the Negotiable Instruments Act apply to the defendant.
- When a person owes money to another jointly with someone else, whether or not he can be condemned under the terms of Sec. 138 of the Negotiable Instruments Act.
CONTENTIONS OF THE PARTIES
- The appellant’s counsel argued that the dishonored check was issued by her husband, not the appellant, and that the account in question was not a joint account, that the appellant was neither a signatory to the cheque nor was the cheque drawn from the appellant’s bank account, and that as a result, the appellant could not be prosecuted for the offense punishable under Section 138 of the Negotiable Instruments Act.
- He further claimed that the requirements of Section 138 of the Negotiable Instruments Act were not met and that the High Court should have dismissed the criminal complaint against the appellant.
- The appellant’s lawyer also told the court that, given the facts and circumstances of the case, even Section 141 of the Negotiable Instruments Act would not apply because the check was written by a private individual.
- The complainant’s counsel refuted the appellant’s argument, arguing that because the complainant represented both the accused, the liability to pay the debt towards the professional bill was a joint liability of both of them, and thus Section 141 of the Act would apply, as the High Court correctly observed and held.
- The complainant’s counsel also argued that when the Trial Court issued the summons against the appellant for the offense punishable under Section 138 r/w Section 141 of the Negotiable Instruments Act after concluding that a prima facie case had been established, the High Court acted correctly in refusing to quash the criminal complaint and quashing the appellant’s petition in the High Court.
- The complainant’s lawyer further claims that the High Court was correct in refusing to quash the complaint because the cheque was provided to discharge the legal liability of both the accused and her husband.
In this instance, the court found against the plaintiff. Joint liability is not mentioned in Section 138 of the Act. In the event of individual persons, a person other than the person who has drawn the cheque on an account kept by him cannot be prosecuted for the act under Section 138 of the Act, even if there is a shared liability. A person may have been jointly obligated to pay the obligation, but he or she cannot be charged unless the bank account is jointly maintained and he was a signatory to the check. The court found that there was no issue of invoking Section 141 of the Act against the appellant because the obligation is an individual liability and cannot be claimed to be an offense committed by a corporation, corporate or firm, or other associations of individuals. According to the court, the appellant is neither a director nor a partner in any of the firms that issued the check.
After hearing both arguments, the court found in favour of the appellants. The complainant’s argument that the case against the appellant is maintainable because the check was issued to discharge both the accused’s legal liability was rejected by the court.
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