Gaurav Lakhani Etc vs. Shama Enterprises Etc

Facts

The petitioners, Gaurav Lakhani and M/s Vivana International, sought to quash a criminal complaint filed under Section 138 of the Negotiable Instruments Act, 1881, along with the summoning order dated May 9, 2022, and a subsequent order dismissing their discharge application. The complaint was filed by Shama Enterprises against multiple accused, including the petitioners, concerning three dishonoured cheques totaling Rs. 11,04,452/-. The cheques were issued to discharge a liability arising from a CNF agreement. One cheque was dishonoured for "Drawer's signature differs," and two for "Payment stopped by drawer." The petitioners argued they were not signatories to the cheques and had no legally enforceable liability. The complainant contended that the petitioners were involved in the business operations and that the existence of liability was a matter for trial.

Held

The Court held that the complaint, insofar as it concerns the petitioners (accused Nos. 2 and 4), is not maintainable. The Court found merit in the petitioners' submission that they were not signatories to the dishonoured cheques and that there was no legally enforceable liability attributable to them. The Court noted that the partnership deed of 'Vivana International' did not show any connectivity of the listed partners with accused No.1, and the CNF agreement did not specifically assign responsibility to accused Nos. 2 and 4 concerning the business dealings or indicate payment from a joint account. The Court also found no evidence that accused No.4 was an authorized signatory of accused No.2. Applying the ratio from the Supreme Court in Alka Khandu Avhad v. Amar Syamprasad Mishra & Anr., the Court stated that a person cannot be prosecuted under Section 138 of the NI Act unless the bank account is jointly maintained and they were a signatory to the cheque. Therefore, the summoning order dated May 9, 2022, qua the petitioners, was quashed.

Key Issues

1. Whether the petitioners (accused Nos. 2 and 4) can be held liable under Section 138 of the Negotiable Instruments Act, 1881, when they are not signatories to the dishonoured cheques and there is no legally enforceable liability attributable to them? (Question of law) Petitioner's Arguments: The petitioners argued that they were not signatories to the cheques and that no legally enforceable liability existed against them. They contended that the cheques were issued by co-accused Nos. 1 and 3 to discharge their liability. They relied on judgments from the Rajasthan High Court ('M/s Tata Finance Ltd. vs. J.S. Fourwheel Motors Pvt. Ltd. and Another'), this High Court ('S.K. Sood vs. Tata Iron and Steel Company Ltd.'), and the Delhi High Court ('Jitendra Bhati vs. Santosh Devi') to support the proposition that a person cannot be held liable under Section 138 without a legally enforceable liability and without being a signatory to the cheque. Revenue/State's Arguments: The complainant (respondent No.1) argued that the petitioners were involved in managing the companies and the business operations. They presented a CNF agreement and contended that the existence of a legally enforceable debt or liability is a matter to be proved through evidence during the trial. They relied on the Supreme Court's decision in Alka Khandu Avhad v. Amar Syamprasad Mishra & Anr. to argue that even individuals jointly liable could be prosecuted if certain conditions are met.