Court affirms that only the drawer of a dishonored cheque can be prosecuted under Section 138 of the Negotiable Instruments Act.
In a significant ruling, the Delhi High Court has quashed the summoning order and all subsequent proceedings against Sudha Devi, who was implicated in a cheque bounce case concerning a dishonored cheque issued by her son. The judgment, delivered by Justice Saurabh Banerjee on March 30, 2026, clarifies the scope of criminal liability under Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonor of cheques.
The case originated from a complaint filed by Anil Kumar against Sudha Devi and her son, alleging that they had failed to honor a financial commitment related to the sale of a house. Kumar had paid a sum of Rs. 10,00,000 in installments, expecting the execution of an Agreement to Sell. When the sale did not materialize, Sudha Devi's son issued a cheque, which subsequently bounced due to insufficient funds. This led Kumar to initiate legal proceedings under Section 138 of the NI Act.
Sudha Devi's counsel, Mr. Prateek Kumar, argued that she could not be held liable as she neither signed the cheque nor maintained the account from which it was drawn. The High Court concurred, emphasizing that the essential ingredients of Section 138 necessitate that the cheque be drawn by the accused from an account maintained by them. Justice Banerjee noted that criminal liability under this provision is strictly confined to the 'drawer' of the cheque.
The court's decision rested on the principle that a person who is not the signatory of a dishonored cheque and does not maintain the relevant account cannot be prosecuted under Section 138. In support of this position, the court referenced precedents, including the Supreme Court's ruling in Alka Khandu Avhad v. Amar Syamprasad Mishra, which underscored the absence of joint liability under Section 138.
The judgment elucidates that even in cases of joint financial obligations, prosecution under Section 138 is untenable unless the accused is a signatory to the cheque and maintains the account in question. Consequently, the court quashed the criminal complaint and summoning order against Sudha Devi, thereby absolving her of any criminal liability in the matter.
This judgment reinforces the judiciary's commitment to upholding the precise legal standards set forth in the Negotiable Instruments Act and provides clarity on the limitations of criminal liability for cheque dishonor. Legal experts view the ruling as a reaffirmation of the principle that liability under Section 138 is strictly personal to the drawer of the cheque.
Bottom Line:
A person who is not the signatory of the dishonored cheque and does not maintain the account from which the cheque was issued cannot be prosecuted under Section 138 of the Negotiable Instruments Act, 1881.
Statutory provision(s):
Negotiable Instruments Act, 1881 Section 138, Code of Criminal Procedure, 1973 Section 482
Sudha Devi v. Anil Kumar, (Delhi) : Law Finder Doc id # 2874817
