Liability in Cheque Bounce Cases – Drawer Alone Liable: Delhi High Court

In a significant legal development, the Delhi High Court delivered a judgment on December 6, 2023, that has clarified the liability of individuals in cases of dishonored cheques. The court emphasized that only the drawer of a dishonored cheque can be held criminally liable under Section 138 of the Negotiable Instruments Act, 1881.

The judgment came in response to a petition filed by Arushi Gupta seeking the quashing of Complaint Case No. 4061/2020, which was based on a dishonored cheque allegedly issued by her. The court examined the legal provisions and relevant case law to arrive at its conclusion.

Justice Saurabh Banerjee, presiding over the case, stated in the judgment, “If the cheque in question is returned unpaid on account of the conditions mentioned under Section 138 of the Act, such person alone is liable to be prosecuted for the offence under Section 138 of the Act.”

The court’s decision reaffirmed the principle that the liability for a dishonored cheque falls squarely on the drawer of the cheque. The judgment also highlighted that even in cases of joint liability, individuals other than the drawer cannot be prosecuted unless they are signatories to the cheque and have drawn it on their account.                                                  

Date of Decision: December 6, 2023

ARUSHI GUPTA VS AJAY CHANANA