Wife Not Liable in Joint Account - Only the Drawer Liable Under Section 138 N.I. Act: High Court Quashes Complaint

In a significant ruling that clarifies the scope of liability in cheque dishonour cases, the High Court of Punjab and Haryana has set a precedent in the case of Shalu Arora Vs. Tanu Bathla (CRM M-21768-2022). The court, led by Hon’ble Mr. Justice N.S. Shekhawat, emphatically stated that “only the drawer of the cheque can be prosecuted under Section 138 of the Negotiable Instruments Act, 1881.”

This landmark judgement, delivered on November 30, 2023, revolved around a complaint filed under Section 138 of the Act, concerning a cheque issued from a joint account but signed by only one of the account holders. The petitioner, Shalu Arora, who was not the signatory of the disputed cheque, sought the quashing of the complaint and subsequent summoning order.

Justice Shekhawat, in his observation, underscored the principle of specificity in liability, asserting that the onus of the offence under Section 138 lies solely with the signatory of the cheque. This assertion is grounded in the interpretation of Section 7 of the Act, which delineates the definition of ‘drawer’ and explicitly states the liability of the signatory in cases of cheque dishonour.

The court’s decision has been widely appreciated for its clear demarcation of accountability in cheque dishonour cases, especially those involving joint accounts. Advocates Karan Suneja and R.K. Chaudhary represented the petitioner and respondent, respectively, in this pivotal case.

Date of Decision: 30.11.2023

Shalu Arora VS Tanu Bathla