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Joint account: only signatory of cheque to be tried, says SC

The Supreme Court has held that a joint account holder cannot be prosecuted in a cheque bounce case unless the cheque has been signed by each and every person of such account.

The apex court said only the person, who issues a cheque from a joint account, can be made accused in proceedings under section 138 of Negotiable Instruments (NI) Act for dishonour of the cheque.

"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," a bench of justices P Sathasivam and J S Kehar said.

"This 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," the bench further said.

The verdict gave relief to a woman who had challenged the summons issued to her for the dishonour of cheque issued by her husband from their joint account.

The Bombay High Court had refused to quash the summons issued by the trial court to her along with her husband.

The apex court had, in its judgement, said "considering the language used in Section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, we are of the view that it is only the 'drawer' of the cheque who can be made liable for the penal action under the provisions of the N.I. Act. It is a settled law that strict interpretation is required to be given to penal statutes."

"The proceedings filed under Section 138 cannot be used as an 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 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," it said.

Article referred: http://realtime.rediff.com/news/business/Joint-account-only-signatory-of-cheque-to-be-tried-says-SC/305766c25ef8eb35?src=interim_page

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