Supreme Court allows proceedings against non-signatory to dishonored cheque, but keeps question of law open

Team SoOLEGAL 28 Jul 2023 11:24am

Supreme Court allows proceedings against non-signatory to dishonored cheque, but keeps question of law open

New Delhi: The Supreme Court on Tuesday permitted proceedings against a non-signatory to a dishonored cheque to proceed after noting that the Court could not rule on the allegation that such procedures were not legally valid in a petition to quash the case. [V Samhidha v. KS Senathypathy]

A bench of Justices BV Nagarathna and Ujjal Bhuyan dismissed a petition brought on behalf of a woman who had a joint bank account with her father, from which a cheque had bounced.

Justice Nagarathna stated to counsel for the petitioner that the question of law was left open since the same ground could be raised in a motion to quash the proceedings.

She stated "The point of law is correct. But not [a ground to grant relief] in this case, in a quashing petition."

In March, the Supreme Court issued a notice in the case, raising the question of whether a non-signatory to a dishonoured cheque can be charged under the NI Act for being a joint account holder or not.

The appeal was filed against a Madras High Court judgement that declined to stay the proceedings against the joint account holders on the grounds that the issue should be decided in the Trial court.

After a cheque bounced, a complaint was filed under Section 138 of the Negotiable Instruments (NI) Act, 1881 in 2016 in connection with a 20 lakh loan payment.

The bank account in question was held jointly by a mill owner and his daughter. Notably, the daughter did not sign the cheque that bounced and for which the case was filed.

In 2018, the mill owner and his daughter petitioned the High Court for the quashing of proceedings before a Coimbatore Magistrate, claiming that no loan was involved.

In January of this year, the High Court refused to hear the case on its merits and dismissed the petition.

V Samhidha, the daughter, was represented before the Supreme Court by advocates B Ragunath and Sriram Parakkat.

Tagged: Supreme Court  
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