It is only the “drawer” of the cheque who can be made liable for the penal action under the provisions of the N.I. Act and as law is well settled, a strict interpretation is required to be given to penal statutes.
The Apex Court in the matter of Aparna A. Shah vs. M/s Sheth Developers Pvt. Ltd. and Anr., decided on July 1, 2013 by Justices P. Sathasivam and Jagdish Singh Khehar, viewed that it is only the “drawer” of the cheque who can be made liable for the penal action under the provisions of the N.I. Act and as law is well settled, a strict interpretation is required to be given to penal statutes. The Court clarified as under: • No one to be held criminally liable for an act of another. • The rule however is subject to exception on account of specific provision being made in statutes extending liability to others. • For example, Section 141 of the N.I. Act is an instance of specific provision that in case an offence under Section 138 is committed by a company, the criminal liability for dishonour of a cheque will extend to the officers of the company. • The provision creates a criminal liability and the conditions have to be strictly complied with. In other words, the persons who had nothing to do with the matter need not be roped in. • A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, it makes every person who, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. • However, in a situation involving proprietary concern and joint account holders, the rule is different. o If the drawer of the cheque is the sole proprietor, only he will be held liable and not any other person in the concern. o No person can be held liable merely on the ground that he was a joint account holder along with other person (eg. Husband and wife) though had neither drawn nor issued the cheque. The situation however would have been different, had the complaint apart from being under Section 138 of the N.I. Act also included Section 420 of the Indian Penal Code, 1860. o Where drawer of a cheque fails to make the payment on receipt of a notice, then the provisions of Section 138 of the Act could be attracted against him only, even if the cheque was drawn to a joint bank account, to be operated by either of the account holder. o Where cheque has been issued from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. This principle is an exception to Section 141 of the N.I. Act. • The Apex Court further viewed that the proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due. The author of this Article is Anupam Srivastava who can be reached at firstname.lastname@example.org