Outstanding fees of an Advocate re Joint case filed by Husband and wife- Cheque issued by husband returned due to insufficient funds -whether Wife is liable u/s 138 of Negotiable Instrument Act-Supreme Court settles the law.
Forum-Supreme Court of India
Date- 08th March 2021
Citation-Alka Khandu Avhad Vs Amar Syamprasad Mishra & Anrs

An interesting issue arose before Hon’ble Apex court a couple had engaged a practising lawyer in relation to a dispute and in settlement of the fees of the lawyer, a cheque was issued by the husband from his personal account to the lawyer which was returned dishonoured due to insufficient funds. The lawyer filed case u/s 138 as well as 141 of the Act roping in wife also in view of the fact that she was also the creditor for payment of fees. The Apex Court while interpreting Section 138 and 141 of the NI Act, 1881 held that On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied:
i) that the cheque is drawn by a person and on an account maintained by him with a banker;

ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability; and

iii) the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account.
Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque.

On these facts the appeal was allowed by holding wife was not liable.

Ramesh Patodia
09-03-2021