Appukuttan v. State of Kerala and Baladevan

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS MONDAY, THE 20TH DAY OF MARCH 2017/29TH PHALGUNA, 1938 Crl.MC.No. 4092 of 2014 () --------------------------- AGAINST THE ORDER/JUDGMENT IN CC No.3183/2015 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II,THRISSUR CRIME NO. 189/2011 OF TOWN EAST POLICE STATION , TRISSUR PETITIONER/ACCUSED:-: ----------------------- APPUKUTTAN, AGED 55 YEARS S/O.VELIATHU CHANDRA SEKHARAN, 105, B WING, PRAVITHA HOUSING SOCIETY, DEENDAYAL CROSS ROAD, THAKKURVADY, DOMBIVALLY (WEST), THANE, MAHARASHTRA. BY ADVS.SRI.S.RAJEEV SRI.K.K.DHEERENDRAKRISHNAN RESPONDENT(S)/COMPLAINANT/STATE:-: ---------------------------------- 1. STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031. 2. BALADEVAN, S/O.RAMANUNNI, PATTALI HOUSE, PRANAVAM NAGAR, P.O.OLLUKKARA, MANNUTHY, THRISSUR - 680 651. R2 BY ADV. SRI.P.R.SHAJI BY PUBLIC PROSECUTOR SHRI JESTIN MATHEW THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 20-03-2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.MC.No. 4092 of 2014 () --------------------------- ## APPENDIX PETITIONER(S)' EXHIBITS ----------------------- ANNEXURE I. COPY OF THE COMPLAINT IN ST NO.5380/12 ON THE FILE OF THE JUDICIAL MAGISTRATE OF FIRST CLASS-II, THRISSUR. ANNEXURE II. COPY OF FINAL REPORT IN CRIME NO.189/2011 OF THRISSUR EAST POLICE STATION. RESPONDENT(S)' EXHIBITS:NIL ----------------------- /TRUE COPY/ P.A. TO JUDGE SKV ALEXANDER THOMAS, J =================== Crl. M.C. No.4092 of 2014 ======================= Dated this the 20[th] day of March, 2017 ## ORDER The petitioner is arrayed as accused No.2 for offence punishable under Section 138 of the Negotiable instruments Act in C.C. No.3183 on the files of Judicial First Class Magistrate Court-II, Thrissur, instituted on the basis of a complaint preferred by the 2[nd] respondent herein. The 1[st] accused in the above complainant is the wife of the petitioner. 2. The gist of the allegations in the impugned Annexure -I complaint is that the 1[st] accused (wife of the petitioner, who is A2) had induced (R2) to invest money in the business run by 1[st] accused and the 2[nd] accused and as per the instruction given by A1, the complainant is alleged to have invested an amount of Rs.45,00,000/in the business of the accused. Further that the complainant did not receive any adequate returns on his investments and that he found that the accused persons had diverted his investment, etc. and when Crl.M.C.No.4092 of 2014 2 the complainant had demanded his moneys back, the 1[st] accused had issued cheque dated 18.08.2010 for Rs.45,00,000/- drawn on 30.10.2010 at ICICI Bank, Mumbai Branch in favour of the complainant and the cheque when presented by the complainant was dishonoured on the ground of insufficiency of fund, etc. Later the complainant had issued statutory demand notice calling upon the accused to make the payment of the amount covered by the cheque within 15 days' time, etc. and the said notice was duly served on the accused and as the amount was not paid, instant complaint was paid. It is specifically averred in para 6 of impugned Annexure I complaint that the dishonoured cheque in question has been signed only by A1 and that the cheque was signed and executed by A1 with the full knowledge and concurrence of A2(the petitioner) and that the said cheque was issued by A1 discharging the liability of A1 and A2 and that the cheque was issued from the joint account of both the accused, etc. The learned Magistrate has taken cognizance in the matter and has issued summons to both the accused. The petitioner, who is accused No.2 in the impugned Annexure A1 complaint, has filed the instant Crl.M.C. seeking the prayer of quashment of the Crl.M.C.No.4092 of 2014 3 impugned Annexure A1 complaint to the extent it is directed against the petitioner (A2), etc. The main contention raised by the petitioner is that even going by the admitted averments in the impugned complaint, the cheque is signed and executed only by A1, though it is allegedly issued from a joint account of both the accused, etc. 3. Heard Shri S.Rajeev, learned counsel appearing for the petitioner (A2), Shri P.R.Shaju learned counsel appearing for R2 complainant and Shri Jestin Mathew, learned Prosecutor appearing for R-1. 4. As indicated herein above, the admitted averments in the impugned Annexure A1 complaint are to the effect that the dishonoured cheque in question involved in this case has been signed and executed only by accused No.1 (who is the petitioner's wife). It is also averred that the cheque was issued and executed by A1 with the full knowledge and concurrence of the petitioner (A2) so as to discharge the liabilities owed by both the accused to the complainant, etc. and that the cheque in question has been issued from a joint account maintained by both the accused. 5. This Court in the judgment in **Devi v. Haridas** reported in Crl.M.C.No.4092 of 2014 4 [2004 (3) KLT 355] has laid that the person who has not signed the cheque, nevertheless a joint holder of the account can be operated by account holders cannot be culpably made liable under Section 138 of the Negotiable Instruments Act. It has been held by this Court in paragraphs 3 and 5 of the said decision that it is evident from a plain reading of Section 138 that in order to be deemed to be liable under Section 138, the cheque must be one drawn by the indictee on an account maintained by him. He becomes liable only if he, the drawer of the cheque, is given notice as insisted in Section 138(b) the Negotiable Instruments Act and the drawer does not make payment within the stipulated time and therefore the conclusion appears to be inevitable that only a drawer of the cheque can be held liable under Section 138 of the Negotiable Instruments Act. The mere fact that the petitioner assumes to be spouse of the 1[st] respondent and the account can be operated by either of them cannot make the petitioner culpably liable under Section 138 of the Negotiable Instruments Act for a cheque issued by the husband to the complainant for discharge of the liability. 6. Similar issue has also been considered by the Apex Court Crl.M.C.No.4092 of 2014 5 in the judgment dated **Aparna A Shah v. Sheth Developers Private Limited And Another** [(2013) 8 SCC 71] wherein it has been held in paragraphs 27 and 28 thereof that under Section 138 only the drawer of the cheque can be prosecuted. In a case where the appellant is not a drawer of the cheque and she has not signed the same, she cannot be made liable. In that case, the appellant's husband alone had signed in the cheque and that itself make it clear that the appellant had not signed the cheque. Accordingly, it was held that in a case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless a cheque is signed by each and every person who is a joint account holder and that the said principle is an exception to Section 141 of the Negotiable Instruments Act which would have no application in the case on hand and that proceedings under Section 138 of the Negotiable Instruments Act cannot be used as arm twisting tactics to recover the amount allegedly due to the appellant. It is profitable to refer to paragraphs 27 and 28 of the judgment, which read as follows:- “27. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the Crl.M.C.No.4092 of 2014 6 same. A copy of the cheque was brought to our notice, though it contains the name of the appellant and her husband, the fact remains that her husband alone had put his signature. In addition to the same of the complainant and a bare look at the cheque would should that the appellant has not signed the cheque. 28. We also hold that under Section 138 of the NI Act, in case of issuance of cheque from joint account, a joint holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account-holder. The said principle is an exception to Section 141 of the NI Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to the dishonour of a cheque can, in no case 'except in case of Section 141 of the NI Act' be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceedings under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage.” A bare perusal of the impugned Annexure A 1 complaint would Crl.M.C.No.4092 of 2014 7 also make it clear that the 2[nd] respondent complainant has no case that corporate vicarious liability as envisaged in Section 141 of the Negotiable Instruments Act is not applicable in the facts in this case. Though the cheque is allegedly issued from the joint account of the accused, it is admitted case of the complainant that the dishonoured cheque in question has been signed and executed only by accused No.1 and not by the petitioner, who is A-2. So the impugned complaint will not make out an offence under Section 138 of the Negotiable Instruments Act, as against the petitioner who is A-2. In this view of the matter, the impugned Annexure A1 complaint to the extent it is directed the petitioner A-2, therein, will stand quashed. However, it is made clear that the impugned complaint to the extent it is directed against A-1 could continue in accordance with law. It is also made clear that none of the observations and findings of the judgment can be taken as an expression of opinion on merits of the case on the part of this Court, as regard the main issue pending in trial. So it is ordered that the trial court will proceed further with the complaint as against A-1 strictly in accordance with law and untrammeled and uninfluenced in any manner with the observations Crl.M.C.No.4092 of 2014 8 and findings in the order. The petitioner will produce certified copy of the order before the trial court for information. With these observations and findings, the Crl.M.C. stands finally disposed of. **Sd/-** ALEXANDER THOMAS, JUDGE SKV