Case Note & Summary
The applicant, Dr. (Mrs) Rajul Ketan Raj, was accused no.1 in three complaints filed by Reliance Capital Ltd. under Section 138 of the Negotiable Instruments Act, 1881. The complaints alleged that the applicant, along with her husband Ketan Raj and Jeevandeep Hospital & Critical Care Centre, had taken a medical equipment loan and issued cheques that were dishonoured. The applicant challenged the issuance of process and the dismissal of her revision applications before the Sessions Court. The High Court examined the cheques and found that they were drawn on the account of Jeevandeep Hospital, a proprietorship concern, and not on the applicant's personal account. The court held that the applicant was not the drawer of the cheques and could not be vicariously liable under Section 138. The court quashed the proceedings against the applicant, finding that continuing them would be an abuse of process.
Headnote
A) Criminal Law - Negotiable Instruments Act - Section 138 - Vicarious Liability - Cheque drawn on account of proprietorship firm - Applicant not drawer - Held that the applicant cannot be held liable under Section 138 as the cheque was not drawn on her account and she is not the drawer. (Paras 6-10)
B) Criminal Procedure Code - Section 482 - Quashing of Proceedings - Abuse of Process - Held that continuation of proceedings against the applicant would be an abuse of process of law as no prima facie case is made out against her. (Paras 11-12)
Issue of Consideration
Whether the applicant, who is not the drawer of the cheque, can be prosecuted under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheques drawn on the account of a proprietorship firm.
Final Decision
The High Court allowed the applications and quashed the impugned orders dated 24.4.2015 as well as the orders of issuance of process against the applicant in all three complaints.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- vicarious liability
- cheque drawn on account of proprietorship firm
- accused not drawer of cheque
- quashing of criminal proceedings under Section 482 CrPC
Case Details
2016 LawText (BOM) (02) 80
Criminal Application No. 716 of 2015 with Criminal Application No. 717 of 2015 with Criminal Application No. 718 of 2015
Mr. Manohar H. Ramsinghani a/w. D.M.Galani for the Applicant, Ms. Krupali Rajani for the respondent, Mrs.R.V.Newton, APP for the Respondent/State
Dr. (Mrs) Rajul Ketan Raj
Reliance Capital Ltd. & Anr.
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Nature of Litigation
Criminal applications under Section 482 CrPC for quashing of process and revision orders in complaints under Section 138 of the Negotiable Instruments Act.
Remedy Sought
The applicant sought quashing of the orders dated 24.4.2015 passed by the Sessions Court dismissing her revision applications and the orders of issuance of process by the Magistrate.
Filing Reason
The applicant was accused in three complaints for dishonour of cheques under Section 138 NI Act. She contended that the cheques were drawn on the account of Jeevandeep Hospital, a proprietorship concern, and not on her personal account, and therefore she could not be held liable.
Previous Decisions
The learned Magistrate issued process against the applicant on 11.7.13 and 13.11.2013. The revision applications against those orders were dismissed by the Sessions Court on 24.4.2015.
Issues
Whether the applicant, who is not the drawer of the cheque, can be prosecuted under Section 138 of the Negotiable Instruments Act for dishonour of cheques drawn on the account of a proprietorship firm.
Submissions/Arguments
The applicant argued that the cheques were drawn on the account of accused no.3 Jeevandeep Hospital, a proprietorship concern, and not on her account. She is neither the drawer nor the signatory of the cheques.
The respondent argued that the applicant was a partner/director and liable for the acts of the firm.
Ratio Decidendi
A person cannot be held vicariously liable under Section 138 of the Negotiable Instruments Act for dishonour of a cheque unless the cheque is drawn on an account maintained by that person or the person is the drawer of the cheque. Since the cheques were drawn on the account of a proprietorship firm and the applicant was not the drawer, no prima facie case was made out against her.
Judgment Excerpts
The subject cheques were drawn on the account maintained by the accused no.3 Jeevandeep Hospital, a proprietorship concern and not on the account maintained by the applicant accused no.1.
The applicant is neither the drawer nor the signatory of the cheques. Hence, the applicant cannot be held liable for the offence under Section 138 of the Negotiable Instruments Act.
Procedural History
The respondent filed three complaints under Section 138 NI Act against the applicant and others. The Magistrate issued process on 11.7.13 and 13.11.2013. The applicant filed revision applications before the Sessions Court, which were dismissed on 24.4.2015. The applicant then filed these applications under Section 482 CrPC before the High Court.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973: 482
