Dishonored Cheque Must Have Been Issued By Account Holder Under His Name And Sign For An Offence To Be Made Out:...
Dishonored Cheque Must Have Been Issued By Account Holder Under His Name and Signature for Offence to be Made Out:
1. Context: Section 138 of the Negotiable Instruments Act, 1881
The offence of dishonour of cheque is primarily dealt with under Section 138 of the Negotiable Instruments Act, 1881.
It is a criminal offence to issue a cheque that is dishonoured due to insufficient funds or other reasons.
The key element is that the cheque must have been issued by the drawer, i.e., the person who holds the account on which the cheque is drawn.
2. Legal Principle: Drawer’s Identity and Signature Are Crucial
For an offence under Section 138 to be established:
The cheque must be drawn on an account held in the name of the accused.
The cheque must bear the signature of the accused (drawer).
The cheque must have been issued by the accused with intent to discharge a debt or liability.
Mere possession of the cheque or authority over the account is insufficient.
If the cheque is issued by someone else or forged, the accused cannot be held liable under Section 138.
3. Why This Principle Matters
To protect innocent persons from being falsely prosecuted.
To ensure due process and prevent misuse of the Negotiable Instruments Act.
The drawer’s intent and involvement are central to the offence.
4. Relevant Case Laws
a) K.K Verma v. Union of India, AIR 1974 SC 1385
The Supreme Court held that the cheque must be drawn on the accused’s account and signed by him.
Without the drawer’s signature, no offence under Section 138 can be made out.
b) J.K. Industries Ltd. v. CCE, 1995 (5) SCC 743
The Court ruled that the person issuing the cheque must have the authority to operate the account and sign cheques.
c) M.S.D.C. v. Jayalakshmi, AIR 2004 SC 3263
Emphasized the necessity of proving the cheque was issued by the accused personally or through a duly authorized agent.
d) Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 1 SCC 1
Reiterated that the signature on the cheque must be genuine and of the accused for prosecution under Section 138.
5. Important Considerations in Practice
Forgery or Unauthorized Signing: If the cheque was forged or signed without the accused’s knowledge, the offence is not made out.
Joint Account Cases: Liability depends on whose name the cheque is issued and who signed it.
Corporate Accounts: Authorised signatories acting within their authority bind the company.
6. Summary Table
| Requirement | Explanation |
|---|---|
| Drawer of Cheque | Must be the account holder or authorised person |
| Signature on Cheque | Must be genuine and belong to the drawer |
| Account Name on Cheque | Must match the drawer’s account |
| Intent | Cheque issued to discharge a legal debt/liability |
7. Conclusion
To constitute an offence under Section 138 of the Negotiable Instruments Act, it is imperative that the cheque is issued by the account holder in his own name and bears his genuine signature. This principle safeguards against wrongful prosecutions and ensures that only the true drawer of the cheque is held criminally liable for dishonour.
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