The Allahabad High Court has quashed criminal proceedings against a woman accused in a cheque bounce case after finding that she was not a signatory to the dishonoured cheques. The Court observed that liability under Section 138 of the Negotiable Instruments Act primarily rests on the person who signed the cheque.
Background of the Case
According to the complaint, Hari Om Pathak alleged that he had advanced Rs. 8 lakh to Rahul Thind in 2004 for business purposes after receiving assurances that the money would be repaid within two months. The complainant claimed that two cheques worth Rs. 3 lakh and Rs. 5 lakh were later issued towards repayment.
However, when the cheques were presented before the bank, they were dishonoured because the account had already been closed. A legal notice was then issued to the accused persons, but the payment was not made within the statutory period.
Following this, a complaint was filed under Sections 138 and 141 of the Negotiable Instruments Act along with Section 420 IPC. The trial court summoned both Rahul Thind and Madhu Singh to face proceedings under Section 138 of the NI Act.
Counsel appearing for Madhu Singh argued that although the bank account was jointly maintained by Rahul Thind and Madhu Singh, the disputed cheques had been signed only by Rahul Thind. It was submitted that Madhu Singh was not the drawer or signatory of the cheques and therefore could not be prosecuted under Section 138 of the NI Act.
The defence also argued that Section 141 of the NI Act, which deals with vicarious liability, applies only to companies and firms and not to private individuals operating joint accounts.
The bench Justice Sandeep Jain relied upon several Supreme Court rulings, including Aparna A. Shah v. Sheth Developers Pvt. Ltd., Jugesh Sehgal v. Shamsher Singh Gogi, and Alka Khandu Avhad v. Amar Syamprasad Mishra.
Referring to settled law, the Court noted that criminal liability for cheque dishonour can generally be fastened only upon the “drawer” of the cheque.
The Court observed,
“Section 141 of the N.I. Act, which deals with vicarious liability, is applicable only to companies and partnership firms and not to individuals.”
Justice Sandeep Jain further noted that merely being a joint account holder does not automatically attract criminal prosecution unless the person has signed the cheque in question.
The Court also found that the complaint mainly contained allegations against Rahul Thind and no specific role had been assigned to Madhu Singh except stating that she was jointly liable for repayment of the alleged loan.
Allowing the petition, the High Court quashed the criminal proceedings against Madhu Singh in Complaint Case No. 958 of 2006 pending before the Special Court (NI Act), Ghaziabad.
At the same time, the Court clarified that proceedings against co-accused Rahul Thind would continue in accordance with law before the trial court.
Case Details
Case Title: Madhu Singh vs State of U.P. and Others
Case Number: Application U/S 482 No. 19215 of 2007
Judge: Justice Sandeep Jain
Decision Date: May 6, 2026
