Supreme Court allows proceedings against non-signatory to dishonored cheque

Supreme Court allows proceedings against non-signatory to dishonored cheque

Earlier, the Madras High Court had refused to quash the action against the joint-account holder stating the issue be decided in trial

The Supreme Court has allowed proceedings to continue against a non-signatory to a dishonored cheque. It noted that the court could not decide on the contention that such proceedings were not legally valid in a plea to quash the case.

In the V Samhidha vs KS Senathypathy case, a bench of Justice BV Nagarathna and Justice Ujjal Bhuyan dismissed a plea filed on behalf of a woman, V Samhidha, who operated a joint bank account with her father, and a cheque had bounced.

Justice Nagarathna remarked, "The point of law is correct. But not (a ground to grant relief) in this case, in a quashing petition.”

In March, the Apex Court issued a notice in the matter, raising a question of whether a non-signatory to a dishonored cheque could be prosecuted for being a joint-account holder.

The appeal was filed against an order of the Madras High Court, which refused to quash the proceedings against the joint-account holders on the ground that the issue ought to be decided in trial.

In 2016, a complaint was lodged under Section 138 of the Negotiable Instruments Act, 1881 in connection with a Rs. 20 lakh loan payment, after a cheque bounced. The bank account was jointly held by a mill owner and his daughter, V Samhidha. Pertinently, the daughter did not sign the cheque and lodged a complaint.

In 2018, she approached the High Court seeking the quashing of proceedings before a Coimbatore magistrate and alleging that no loan was involved.

Early this year, the High Court refused to enter the merits of the matter and dismissed the plea.

V Samhidha was represented by advocates B Ragunath and Sriram Parakkat.