Case Note & Summary
The petitioners, Banwarilal L. Saini and another, were accused nos.1 and 3 in a criminal case under Section 138 of the Negotiable Instruments Act, 1881 pending before the Metropolitan Magistrate, 71st Court, Mazgaon, Mumbai. The case arose from a complaint filed by respondent no.2. The cheques in question were issued by accused no.2, Amit Saini, who is the son of the first petitioner and husband of the second petitioner. The Magistrate issued process against all three accused after examining the complainant on oath under Section 200 CrPC. The petitioners challenged the process by filing a revision before the Sessions Court, which was dismissed. They then approached the High Court by way of a writ petition. The petitioners contended that they had not issued the cheques and that the bank account on which the cheques were drawn was not maintained by them. The respondent no.2 argued that the cheques were issued in discharge of a liability that was of all the accused, and that a Memorandum of Understanding had been executed wherein the petitioners admitted their liability. The court examined the provisions of Section 138 of the NI Act and held that the offence is committed only by the drawer of the cheque. Since the petitioners did not issue the cheques, no prima facie case was made out against them. The court further held that the admission of liability in the MOU did not make them liable under Section 138. The court quashed the process against the petitioners and allowed the writ petition.
Headnote
A) Criminal Law - Negotiable Instruments Act - Section 138 - Liability of Drawer - The offence under Section 138 is committed only by the drawer of the cheque. Persons who did not issue the cheque cannot be prosecuted even if they admitted liability in a settlement agreement. The court held that the Magistrate erred in issuing process against the petitioners as there was no allegation that they issued the cheques. (Paras 3-10) B) Criminal Procedure - Quashing of Process - Section 482 CrPC - Inherent Powers - Where the complaint does not disclose any offence against the accused, the High Court can quash the process to prevent abuse of process. The court held that continuing the prosecution against the petitioners would be an abuse of process. (Paras 8-10)
Issue of Consideration
Whether the petitioners, who did not issue the cheques, can be prosecuted under Section 138 of the Negotiable Instruments Act, 1881 merely because they admitted liability in a Memorandum of Understanding.
Final Decision
The court allowed the writ petition and quashed the process issued against the petitioners. The criminal case against the petitioners was set aside.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881 imposes liability only on the drawer of the cheque
- vicarious liability not applicable
- process can be quashed if no prima facie case against accused
