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R.Priyadharshini v. LIC Housing Finance Ltd. - Crl.OP No.1971 of 2005  RD-TN 295 (16 April 2005)
In the High Court of Judicature at Madras
The Hon'ble Mr.Justice S.R.SINGHARAVELU
Crl.OP No.1971 of 2005
Crl.M.P.No.912 of 2005
LIC Housing Finance Ltd.,
rep.by Deputy Manager,
R.Kumaran, 657, Tristar Towers,
Criminal Original Petition filed under section 482 of Criminal
Procedure Code for the relief as stated therein.
For Petitioner : Mr.S.Amarnath
For Respondent : Mr.Ramalingam
This Criminal Original Petition is filed to quash the summon issued to the petitioner by the learned Judicial Magistrate No.V, Coimbatore in C.C.No.836 of 2004.
2. The petitioner is accused No.2 in the above C.C.No.836 of 2004 on the file of Judicial Magistrate No.V, Coimbatore, which was filed by the respondent / complainant, namely, LIC Housing Finance Limited represented by the Deputy Manager, Coimbatore against this petitioner and her husband Mohamed Ansar, who figured as 1st accused. That case was initiated for an offence under section 138 of Negotiable Instruments Act. The drawer of the cheques was Mohamed Ansar, the husband of the petitioner. Those two cheques were dated 31.05.2004 each for a sum of Rs.one lakh. That was issued for the discharge of the loan raised by deceased Abdul Khader, the father of Mohamed Ansar (accused No.1). Subsequent to the death of Abdul Khader, both these accused including this petitioner, undertook to discharge the said loan. Thus the liability was shown to have arisen upon this petitioner and her husband following the death of Abdul Khader, father of Mohamed Ansar (1st accused), who raised the loan.
3. It is in pursuance of this, those two cheques were drawn by Mohamed Ansar. They were cheque No.921164 and 921165 each dated 31.05.20 04 issued to ICICI Bank Limited, Trichy Road, Coimbatore-18, wherein there was a joint account for both the accused. Although the cheques were drawn only by the 1st accused, the legality of the inclusion of this petitioner as second accused in that complaint under section 13 8 of Negotiable Instruments Act and the issuance of summons to petitioner by the Judicial magistrate V, Coimbatore are being challenged.
4. Counsel for the petitioner drew my attention to section 7 of Negotiable Instruments Act, which defines drawer, as follows:- "The maker of a bill of exchange or cheque is called the "drawer". So it was contended that though cheques were drawn to a Joint Account to be operated as E or S, inasmuch as the petitioner was not drawer of cheque, no liability under section 138 of Negotiable Instruments Act can be fastened upon the petitioner / 2nd accused.
5. In this connection, counsel for the petitioner relied upon the decision reported in G.Surya Prabhavathi ..vs.. Nekkanti Subrahmanyeswara Rao and another 1998(3) Crimes 543, wherein a private complaint was filed against the petitioner / 3rd accused and others alleging that accused No.1 and 2 constitute a joint Hindu family; that 1st accused was Manager of that family and the petitioner was the wife of 1st accused; it was alleged that accused 1 to 3 obtained financial accommodation and purchased a car under the name of petitioner / 3rd accused and 1st accused issued a post dated cheque, which was subsequently found dishonoured. A notice was issued to accused 1 to 3 demanding the amount; the learned Magistrate originally dismissed the complaint without recording the sworn statement against accused 2 and 3; against which, complainant filed revision; it was allowed by the learned Sessions Judge, directing the Magistrate to record the sworn statement and then pass appropriate orders; on behalf of the respondent complainant, it was contended that 3rd accused is the wife of 1st accused, who issued the cheque and the car was purchased in her name after obtaining loan from the complainant and the cheque was issued to discharge the liability; hence argument was advanced that the prosecution was maintainable; after elaborately going into the provision of section 13 8 of Negotiable Instruments Act and its Explanation, it was found that penal proceedings should be construed strictly and the emphasis in the said provision is on the words "such person". It is manifest from the expression of the words used in Section 138 of the Act, that " such person shall be deemed to have committed the offence" relate to the person who has drawn the cheque in favour of the payee, and if the said cheque is returned unpaid on account of the conditions mentioned under section 138, such person alone is liable but not other except the contingencies mentioned under section 141 of the Act". It was further held in that case that "simply because the car was purchased in the name of the petitioner, that does not fasten the liability for punishment under section 138 of the Act as the said provision contemplates of punishment only against the drawer of the cheque but not others. Therefore, the proceedings of the learned Magistrate in so far as the petitioner is concerned, were quashed".
6. Counsel for the petitioner again relied on the decision rendered by the Kerala High Court reported in Devi ..vs.. Haridas (I (2005) BC 273), wherein upon the question as to whether a person who has not signed the cheque, nevertheless a joint holder of the account which can be operated by any of the account holders, culpably liable under section 138 of the Act, it was held that the petitioner, who did not sign the cheque was not to be proceeded with, despite the fact that the account where from the cheque was drawn, stands jointly with the petitioner and the drawer. For this findings, proposition made in K.M.Mathew ..vs.. State of Kerala (1992 (1) KLT 1) was relied on. After going through the definition of "drawer" found in Section 7 of the Act and also the various ingredients to section 138 of Act, it was found that the mere fact that the account can be operated jointly by both the accused cannot, by any stretch of imagination, invite culpable liability under Section 138 of the Act against the petitioner, who was not the drawer and was only a joint account holder.
7. Per contra, counsel for the respondent relied upon the following three judgments, viz.,
(i) Ajit ..vs.. Kirti and another (I (2005) BC 315) (M.P) (ii) Kurapati Nageswara Gupta & others ..vs.. Madam Sekhar and another (CDJ 2004 AP HC 173) and
(iii) G.Rukkumani ..vs.. K.Rajendran (2001 Crl.L.J.3120) (Madras High Court).
8. In the judgment of Madhya Pradesh High Court (Ajit's case) cited supra, it was held that the law maker had used in the main body of section 138 of the Act regarding payment of money "from out of the account". In the main section, the word drawer or drawee is not mentioned. This is mentioned in the provisos (b) and (c). Since the husband and wife are having joint account, anyone can issue a cheque and in view of this, legally it would be considered as a cheque issued by the person, who has raised the loan. Therefore, a view was taken that even the joint account holder, who was not a drawer, is liable under section 138 of the Act.
9. The Andhra Pradesh High Court judgment (cited supra) was to the extent that there would be vicarious liability between the joint account holders and under such principle, the non drawer of the cheque would also be liable due to the fact that he was a joint account holder. This concept is derivable from the following observation made in that case. "Even assuming that A-1 drew the cheque on behalf or at the behest of petitioner also, there can be no vicarious liability for them because it is not even the case of 1st respondent that 1st accused and the petitioners have a joint account in the bank and A-1 issued the cheque on such joint account".
10. In the judgment of Madras High Court ( 2001 Crl.L.J.3120), ( cited supra), the nexus between the principal and agent was discussed. Cheque was issued by authorised signatory on authority given by principal and therefore, the cheque drawn by the agent, who is the mandate-holder, will also bind the principal, who gave the mandate. In that case, the petitioner was the principal and her son was the agent. Since the son had drawn the cheque based only upon the mandate of his father, the latter was held as bound by his mandate. For such derivation in that case law, reliance was made upon a case law in Sova Mukherjee ..vs.. Rajiv Mehra (1997 Current Criminal Reports 313), wherein the learned Judge pointed out that when a general power is given, it applies to everything in which the grantor is interested; that but when a special power is given, it applies to specific matter, such as the power to sign cheques, to make transfers, to receive money, to present documents for registration, etc. Under such circumstances, the mandate-giver cannot shrug off the claim of demand of the opposite party under the pretence that he or she owes no liability under the Negotiable Instruments Act, when the cheque was issued to discharge the partial liability. The learned Judge has pointed out that a principal is always bound by the act of his or her attorney so long as the attorney does not exceed his right. The view of the learned Judge, is that the principal cannot plead that she will be only bearing the fruit, but not the burden of the act of her agent.
11. That was the direct view taken against the observation held in Sudesh Kumar Sharma ..vs.. K.S.Selvamani (1994-1 Mad.L.W.(Crl.) 337). In that case, when a question arose whether the father is criminally liable, the Judge held that the drawer of the cheque was the second accused-son and the first accused-father was the proprietor of the concern for whose liability, the son-second accused has issued the cheque and so, criminal liability cannot be fastened on the first accused. In that case, the learned Judge did not go into the question whether an agent can bind the principal i.e. whether an authorised signatory can bind the mandate-giver. Considering all those aspects, it was held in the above Madras High Court Judgment as follows:- "Section 138 of the Negotiable Instruments Act excludes mens rea by creating strict liability. It does not say that there should be a direct nexus between the person who commits the act and the offence. But, from the words, 'such person shall be deemed to have committed an offence' giving room for a deeming provision would show that not only the principal or direct offender, an indirect offender who has allowed room for perpetuation of the offence, is also liable. The exclusion of mens rea as a necessary ingredient of an offence under section 138 is very explicit. Therefore, when the petitioner had permitted the second accused to act as an authorised signatory, she is bound by the act and as such she is also liable". But the above view was held as not correct one and it was so held in Soya Mikherjee's case (cited supra).
12. Unlike in the decision in 2001 (Crl.L.J.3120) cited supra, there is no authority or mandate given by the petitioner / 2nd accused to 1st accused to draw the cheque. There is absence of such mandate in between them. In considering the definition of 'drawer' in section 7 of Negotiable Instruments Act, if the fact that the petitioner has not given any mandate to her husband / 1st accused nor her husband is an authorised agent of the petitioner, whether the husband's act as drawer of the cheque is bound while the wife is simply a joint account holder, is a question before us. Before adverting to the same, let me, for a moment go into the aspect of Mens Rea in this connection.
13. In the decision reported in MayuriPulse Mills ..vs.. Union of India (1995(1)Crimes 226 (Bom), it has been held that the rigour of sec.138 creates dishonour of cheque for insufficiency of funds in the account as an absolute offence by legal fiction. In Sadhu Ram ..vs.. State 2002 Crl.L.J.2760 (Del), it was held that any dishonest intention of the drawer, whether at the time of issuance of cheque or at any subsequent stage, would be immaterial. A similar view was also expressed by the Andhra Pradesh High Court in OPTs Marketing ..vs.. State ((2001) 105 Comp Cas 794. In the decision reported in T.Omanakultam ..vs.. State ((2002) 108 Comp Cas 503 (Ker), it has been held that the drawer's intention to cheat need not be e stablished in a proceeding under section 138. Thus, it is true that mens rea is not a material ingredient. The exclusion of mens rea as a necessary ingredient of the offence under section 138 is clear and explicit from the language of section 140 of the Act and there is no room for any ambiguity or doubt as regards the intention of the legislature in this regard.
14. The Division Bench of the Andhra High Court says that "a statute creating an offence excluding mens rea, in our considered view, cannot be said to be arbitrary falling within the inhibition of Article 14 of the Constitution of India".
Accordingly, that Court in B.Mohana Krishna ..vs.. Union of India (19 96 Crl.L.W.636)(AP) held that absence of mens rea in section 138 for fastening criminal liability is not arbitrary and not violative of Article 14 of the Constitution of India.
15. It is with this backdrop, while analysing the liability of the petitioner in this case, who happens to be the Joint Account Holder of E or S, without being a drawer of cheque, counsel for the respondent / complainant contended that there was a tripartite agreement between the bank and the account holders when such account was opened and there was a clear binding agreement between the three regarding the fact that either or survivor can operate the account which, according to the counsel for the respondent / complainant, indicates that among the account holders one can sign for the other; and this competence of one to sign in cheque for the other arose from Tripartite agreement. Even if we go into the said tripartite agreement, the agreement is that either of the Account Holder can simultaneously draw the sum from the said account. This will only indicate that each of the two were individually permitted to draw the sum; that will never go to suggest that one authorising the other. Therefore, one permitting the other to draw sum in the said account is distinguishable from one authorising the other to draw the sum. Permission is to do the said act is for the drawer for himself and only on his behalf. But authorising another means, drawing money on behalf of the person giving the mandate. In a joint account for E or S, the understanding that is understandable is that both would simultaneously and individually operate over the account each for himself and not on behalf of another. If only there is an agreement that action of one in operating the account will bind the other, there can be a mandate presumed and unless the mandate is found, no act of one individual in operating the account will bind the other.
16. For the reasons mentioned supra, I find that the petitioner is not liable for the cheques drawn by her husband since a drawer of a cheque from a joint account of E or S draws that cheque only for himself and the fact that there was a joint account along with the petitioner / 2nd accused may not make her t o have issued a mandate under the guise of tripartite agreement between the husband/1st accused, wife/2nd accused and the bank. That agreement only presupposes that at a given point of time, anyone of the husband or wife can independently issue a cheque and draw the amount from their joint account for which the banker had agreed to oblige them. Thus, no liability can be fastened upon the petitioner / 2nd accused and the proceedings is liable to be quashed in so far as the petitioner / 2nd accused is concerned and not against the drawer of the cheque namely, the husband.
17. Hence, this criminal original petition is allowed and the summon issued to the petitioner / 2nd accused by the learned Judicial Magistrate No.V, Coimbatore in C.C.No.836 of 2004 is quashed. Consequently, Crl.M.P.No.912 of 2005 is closed.
The Judicial Magistrate No.V,
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