Rachna vs. Joginder Singh And Anr

Facts

The petitioner, Rachna, sought to quash a criminal complaint filed under Section 138 of the Negotiable Instruments Act, 1881, along with the summoning order and a subsequent revision order. The complaint alleged that the petitioner, her husband Rachpal Singh, and their company M/s Rachna Trading Company took a loan of Rs. 10 lacs from the complainant, Joginder Singh. Rachpal Singh allegedly issued a cheque for Rs. 1 lac which was dishonoured. The petitioner argued she was not a signatory to the cheque, not a joint account holder, and not a partner in her husband's sole proprietorship concern, M/s Rachna Trading Company. Evidence presented included the firm's GST registration certificate showing Rachpal Singh as proprietor and the petitioner's bank statement showing no receipt of funds. The State's reply noted that Rachpal Singh had gone missing and was later found to have died in a road accident.

Held

The Court held that under Section 138 of the Negotiable Instruments Act, 1881, only the drawer of the cheque can be prosecuted. The petitioner, Rachna, was neither the signatory to the cheque in question nor an office holder in the proprietorship concern, M/s Rachna Trading Company, as evidenced by the GST registration certificate. The Court found no specific allegations against the petitioner regarding the issuance of the cheque. Relying on the Supreme Court judgments in 'Mrs. Aparna A. Shah versus M/s Sheth Developers Pvt. Ltd. and another' and 'Alka Khandu Avhad versus Amar Syamprasad Mishra & Anr.', the Court reiterated that a person cannot be prosecuted under Section 138 unless they are the drawer of the cheque or, in the case of companies, fall under Section 141. Since the petitioner was neither a signatory nor a partner in the sole proprietorship, her liability under Section 138 did not arise. Consequently, the complaint, summoning order, and revision order were quashed against the petitioner.

Key Issues

1. Whether the petitioner, Rachna, can be prosecuted under Section 138 of the Negotiable Instruments Act, 1881, when she is neither the signatory to the dishonoured cheque nor a partner in the proprietorship concern from which the cheque was issued? The petitioner argued that as she did not sign the cheque, was not a joint account holder, and was not a partner in her husband's sole proprietorship (M/s Rachna Trading Company), she could not be held liable under Section 138 of the Negotiable Instruments Act. She relied on the firm's GST registration certificate showing her husband as the proprietor and her bank statement indicating no receipt of funds. The petitioner contended that the proceedings against her were an abuse of process. The State argued that the petitioner was liable based on the averments in the complaint, the summoning order, and the dismissal of her revision petition. The State also noted the disappearance and subsequent death of the petitioner's husband, Rachpal Singh.