Safina Shihaz v. Pius Mathew and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **TUESDAY, THE 7TH DAY OF FEBRUARY 2017/18TH MAGHA, 1938** **Crl.MC.No. 403 of 2017 () -------------------------ST 171/2016 of JUDICIAL FIRST CLASS MAGISTRATE COURT-III, KOTTAYAM** **PETITIONER(S)/ACCUSED NO.2 :** **--------------------------** **SAFINA SHIHAZ W/O. SHIHAZ, 5/1992, ST.VINCENT COLONY P.O, ERANHIPALAM, KOZHIKKODE - 673 006, NOW RESIDING AT FLAT NO. 2F, SYLVAN HEIGHTS, CHILVANNUR ROAD, CHILAVANNUR, ERNAKULAM - 682 020.** **BY ADVS.SRI.VIPIN NARAYAN SRI.C.JAYAKIRAN** ## **RESPONDENT(S)/COMPLAINANT/STATE:** **--------------------------------** ## **1. PIUS MATHEW** **S/O. LATE MATHEW, MOOLAYIL HOUSE, VAZHAPPALLY P.O., CHANGANASSERY - 686 673.** ## **2. STATE OF KERALA** **REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031.** **R1 BY ADV. SRI.C.S.MANU** **R2 BY PUBLIC PROSECUTOR SRI.SAIGI JACOB PALETTY** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 07-02-2017, ALONG WITH CRMC. 404/2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **bp** **Crl.MC.No. 403 of 2017 () --------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS ----------------------ANNEXURE A: TRUE COPY OF THE COMPLAINT IN ST NO. 171/2016 ON THE FILE OF THE COURT OF JUDICIAL FIRST CLASS MAGISTRATE- III, KOTTAYAM. RESPONDENT(S)' EXHIBITS : NIL. //TRUE COPY// P.A. TO JUDGE** ## **bp** ## ALEXANDER THOMAS, J. ================== Crl.M.C.Nos.403 and 404 of 2017 ================== Dated this the 7[th] day of February, 2017 ## O R D E R ## Crl.M.C.No.403/2017 The petitioner herein is the 2[nd] accused in S.T.No. 171/2016 on the file of the Judicial First Class Magistrate's Court-III, Kottayam, which has been instituted as a complaint alleging offence under Sec. 138 of the Negotiable Instruments Act, on the basis of the complaint filed by the 1[st] respondent. The case of the 1[st] respondent complainant is that the petitioner along with the 1[st] accused (husband of the petitioner herein) owed an amount of Rs.10 lakhs and towards the payment of the said amount, a cheque dated 27.8.2015 was issued by the 1[st] accused. The cheque was issued from the joint account maintained by the 1[st] accused and the petitioner herein (A-2). But it is common ground that the petitioner accused No.2 has not signed the said cheque. Accordingly, it is contended by the petitioner that she cannot be prosecuted under Sec.138 of the Negotiable Instruments Act. Crl.M.C.403/17 - : 2 :- ## Crl.M.C.No. 404/2017: 2. The petitioner herein is accused No.2 in S.T.No. 170/ 2016 on the file of the file the Judicial First Class Magistrate's Court-III, Kottayam, alleging offence under Sec.138 of the Negotiable Instruments Act on the basis of the complaint instituted by the 1[st] respondent. The case of the 1[st] respondent complainant is that the petitioner along with the 1[st] accused (husband of the petitioner) owed an amount of Rs.10 lakhs, and towards the payment of the said amount, a cheque dated 27.8.2015 was issued by the 1[st] accused. The cheque was issued from the joint account of the 1[st] accused and the petitioner (2[nd] accused). It is common ground that the 2[nd] accused is not signatory in the cheque. Accordingly, it is contended that the petitioner cannot be prosecuted. 3. Heard Sri.Vipin Narayan, learned counsel appearing for the petitioner in these Crl.M.Cs., Sri.C.S.Manu, learned counsel appearing for R-1 complainant in these cases and Sri.Saigi Jacob Palatty, learned Prosecutor appearing for R-2 State. 4. It is common ground that the cheques in question, which resulted in the Sec. 138 complaint, have been issued from the joint Crl.M.C.403/17 - : 3 :- account of the 1[st] accused and the 2[nd] accused, who are spouses. It is also common ground that the cheques in question in these cases have been issued from a joint account maintained by both the accused and further that the cheques have been signed only by the 1[st] accused and that the petitioner (A-2) is not a signatory to the said cheque. 5. This Court in the judgment in Devi v. Haridas reported in 2004(3) KLT 355, has held that a person who has not signed the cheque, nevertheless a joint holder of the account, which can be operated by any of the account holders, cannot be culpably liable under Sec.138 of the N.I. Act. It has been held by this Court therein that in order to be liable under Sec.138 of the N.I. Act, the cheque must be one drawn by the indictee on an account maintained by him, etc. and that he becomes liable only if the drawer of the cheque, is given notice as insisted by Sec.138 proviso (b) of the N.I. Act and if he does not make payment within the stipulated period, etc. Accordingly, it was held that it is inevitable that only a drawer of the cheque can be held liable under Sec.138 of the N.I. Act and that the mere fact that the petitioner happens to be the spouse of the 1[st] accused and the account can be operated by either of them Crl.M.C.403/17 - : 4 :- cannot make the petitioner culpably liable under Sec.138 of the N.I. Act for cheques issued by her husband to the complainant for the discharge of his liability, etc. 6. The Apex Court had also considered the said issue in the judgment Aparna A.Shah v. Sheth Developers provision. Ltd. & Anr. reported in 2013 (8) SCC 71. Thereunder, the respondent company was interested in developing a Township Project and that the appellant had represented to the respondent company that the land belonging to the appellant and her husband could utilised for said development project and that they were looking for a suitable person, interested in developing their land jointly with them. That on believing the above said representations, the respondentCompany had agreed for developing the land belonging to the appellant and her husband jointly and in that transaction the respondent company had issued a cheque for Rs.25 crores in favour of the appellant therein and her husband and the said monies were allegedly spent by the appellant and her husband in order to meet the initial requirements. Ultimately the proposed joint venture did not materialise and that it was claimed by the appellant that the whole amount of Rs.25 crores was spent in order to meet the Crl.M.C.403/17 - : 5 :- requirements of the initial joint venture in the manner as requested by the respondent company. Thereafter, an understanding was reached between the company and the appellant and her husband, whereby a cheque of Rs. 25 crores was issued by the appellant's husband from the joint account, to the respondent company. The said cheque on dishonour, resulted in Sec.138 complaint. The Apex Court held in para 18 of the said judgment that the liability primarily falls only on the drawer and only in a case of corporate liability involving company, etc., such liability is extended to the officers of the company. Further, in para 27 of the said judgment, it was held that under Sec.138 of the N.I. Act, it is only the drawer of the cheque, who can be prosecuted in the case on hand, the appellant is not a drawer of the cheque and she has not signed the same and her husband alone put his signature. In para 28 of the said ruling it was held as follows: “28. We also hold that under Section 138 of the NI Act, 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. 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 Crl.M.C.403/17 - : 6 :- Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding 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, a 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.” 7. The legal principles laid down by this Court in Devi v. Haridas supra as well as by the Apex Court in Aparna A.Shah's case supra are squarely applicable to the facts of this case. The complainant has no case so as to rope in a corporate vicarious liability as envisaged in Sec.141 of the N.I. Act. In the result, it is only to be held that the the impugned criminal complaints in these 2 cases to the extent it relate to the petitioner herein (A-2) are liable to be quashed and accordingly it is so ordered. However, it is made clear that the impugned complaints in these 2 cases to the extent it relate to accused No.1 could proceed further, in accordance with law. Sri.C.S.Manu, learned counsel appearing for the R-1 complainant further submits that the complainant has also been advised to institute appropriate criminal complaints against the petitioner and her husband for other offences like Sec.420 of the Crl.M.C.403/17 - : 7 :- I.P.C., etc. and that it may be clarified that nothing in this order should prejudicially affect the conduct of such proposed prosecution against the petitioner. It is made clear that the expression of opinion in this case is related only to the limited issue as to whether the petitioner herein, who is not a signatory to the cheque, could be prosecuted for the offence under Sec.138 of the N.I. Act and if the complainant has any other allegations against the petitioner, it is for him to proceed in appropriate proceedings strictly in accordance with law. With these observations and directions, both the Crl.M.Cs. stand disposed of. Sd/sdk+ ALEXANDER THOMAS, JUDGE ///True Copy/// P.S. to Judge