Cheque Bounce | Signature Of Both Parties Required If Cheque Is Drawn On Joint Account: Punjab & Haryana High Court

The Punjab & Haryana High Court quashed a cheque bounce complaint under Section 138 Negotiable Instrument Act (NI Act) observing that the disputed cheque was not signed by both the holders of the bank account.

Justice Harpreet Singh Brar noted that the disputed cheque was drawn on the account jointly held by the petitioner and his wife. However, the same was only signed by Jasbir Kaur and not the petitioner.

Reliance was placed on Mrs. Aparna A. Shah vs. M/s Sheth Developers Private Limited and another (2013) to underscore that in case of issuance of cheque 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.

These observations were made while hearing a plea under Section 482 of the Code of Criminal Procedure seeking the quashing of a cheque bounce complaint under Section 138 NI Act and summoning order.

In May, 2018, the petitioner approached the respondent for a friendly loan of Rs.7,50,000 to expand his business. At the time of taking the said loan, the petitioner promised to return the same in the month of April, 2019. The petitioner kept delaying the repayment of the loan but ultimately, issued a cheque dated 12.06.2019 for an amount of Rs.7,50,000 was issued.

However, on the presentation for encashment, the same was returned vide memo dated 13.06.2019 with the remarks 'funds insufficient.'

Subsequently, a legal notice dated 05.07.2019 was served on the petitioner. However, it was later realised by the counsel for the respondent that the notice was erroneously sent in the name of one Rishi Jain.

Accordingly, a corrigendum-cum-rejoinder dated 24.07.2019 was issued to the petitioner and his counsel. Since the petitioner failed to repay the said amount in the stipulated period, the complaint was instituted.

After examining the submissions, the Court found that the legal notice sent by the complainant was suffering from "incurable illegality"

Justice Brar highlighted that a notice is a sine qua non for instituting a complaint under Section 138 NI Act and the intention behind the said requirement is to give him an opportunity to settle the debt before criminal proceedings are initiated against him.

While stating that Section 138(b) NI Act does not specify the ingredients of a valid notice, the Court said that, "it cannot overlook the fact that the notice was issued in the name of a different person altogether."

The Court noted that in the present case the "infirmity as such, is not merely formal in nature and impacts the heart of the case."

"Further still, the memo qua the disputed cheque was issued on 13.06.2019 and legal notice was originally issued on 05.07.2019, however, not to the petitioner, as such, the defective notice would vitiates the entire proceedings rendering it suffering from incurable illegality," the Court added.

It observed that a corrigendum was issued on 24.07.2019 and even if for the sake of arguments, "the corrigendum is considered to be valid, the same was issued after the lapse of the 30-day-period stipulated by the statute."

In light of the above, the Court quashed the complaint and summoning order.

Mr. Bikramjit Singh Baath, Advocate for the petitioner.

Ms. Sushma Sharma, Advocate for Mr. Ramesh Sharma, Advocate for the respondent.

Title: Charanjeet Singh v. Kulwant Singh

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