The Punjab & Haryana High Court quashed a cheque bounce complaint under Section 138 of the Negotiable Instruments Act (NI Act). Justice Harpreet Singh Brar ruled that the cheque, drawn on a joint account, was invalid since it was signed by only one of the account holders.
Key Case Details
The cheque in question was issued from an account jointly held by the petitioner and his wife. However, it was signed solely by Jasbir Kaur, the petitioner’s wife, and not by the petitioner himself.
The court referred to the Supreme Court judgment in Mrs. Aparna A. Shah vs. M/s Sheth Developers Pvt. Ltd. (2013). It stated that all joint account holders must sign a cheque for it to be valid. A joint account holder cannot be prosecuted under Section 138 unless they have signed the cheque.
Case Background
In May 2018, the petitioner borrowed ₹7,50,000 from the respondent as a friendly loan to expand his business. He promised repayment by April 2019 but delayed repeatedly. Finally, the petitioner issued a cheque dated 12.06.2019 for ₹7,50,000.
When presented for encashment, the cheque was returned on 13.06.2019 with the remark “funds insufficient.” The respondent sent a legal notice dated 05.07.2019, but it was mistakenly addressed to a different person, Rishi Jain. Later, a corrigendum notice dated 24.07.2019 was issued to the petitioner.
Court’s Findings
The court noted that a valid legal notice is essential under Section 138 NI Act. It gives the accused an opportunity to settle the debt before facing criminal proceedings. Justice Brar observed that the notice sent to the wrong person created “incurable illegality” in the case.
The corrigendum notice issued on 24.07.2019 was also found invalid as it was served after the statutory 30-day period. The court ruled that the procedural defects vitiated the proceedings, making them legally unsustainable.
Conclusion
In light of the defects in the notice and the absence of joint signatures on the cheque, the Punjab & Haryana High Court quashed the cheque bounce complaint and summoning order.
