Liability under Section 138 of NI Act is restricted to the drawer and signatory of the cheque.

The applicant invoked Section 482 CrPC seeking quashing of Criminal Case No. 33341 of 2019, pending before the In-charge Additional Chief Judicial Magistrate, Vadodara, for offences under Section 138 of the Negotiable Instruments Act, 1881 ("NI Act"), and the summons order dated 25.10.2019

The complainant (Respondent No.2) had placed a purchase order for an HVAC system on 31.12.2018, terminated it vide letter dated 01.04.2019 for non-execution, thereafter revised it, and cancelled it again when the revised terms remained unfulfilled

Upon the accused raising a proforma invoice demanding further amounts, accused No.2 — Brijesh Ashvinbhai Pathak, husband of the applicant, who introduced himself as CEO of the proprietary firm Jay Jaganath Air Equipments — assured completion by 10.06.2019 and issued two cheques for Rs.70,00,000/- (Cheque No. 072454) and Rs.40,00,000/- (Cheque No. 072455) drawn on Union Bank of India, Nizampura Branch, Vadodara

The cheques were returned on 09.09.2019 with the endorsement "Payment stopped by the drawer"; the complainant issued a statutory demand notice on 18.09.2019 and, upon non-payment within the statutory period, lodged the impugned complaint, whereupon the Magistrate issued process under Section 204 CrPC

The applicant's husband had separately moved Criminal Misc. Application No. 8635 of 2022, which he was permitted to withdraw on 10.06.2026 with liberty to raise defences before the trial court

The applicant contended that the cheques were issued by her husband from his personal savings account, not the firm's account, were neither signed nor issued by her, and that the complaint suppressed material facts, including an alleged excess payment of Rs.79,11,340/-

The complainant countered that the applicant is the sole proprietor, handled the business jointly with her husband, and the cheques were issued on behalf of the firm, so deletion of the firm's/grant of relief to the applicant would prejudice the prosecution

1. Whether a complaint under Section 138 of the NI Act is maintainable against the applicant, who is neither the drawer nor a signatory of the dishonoured cheques, merely because she is the proprietor of the firm on whose behalf the cheques were purportedly issued?

2. Whether the High Court, in the exercise of its inherent powers under Section 482 CrPC, ought to quash the criminal proceedings and summons order qua the applicant?

Section 138 of the NI Act, which creates a deeming offence against the person who draws a cheque on an account maintained by him, where such cheque is returned unpaid for insufficiency of funds or exceeding the arranged amount, subject to the provisos requiring presentation within six months, a written demand notice within thirty days of information of dishonour, and the drawer's failure to pay within fifteen days of receipt of notice

It is only the drawer of the cheque, who can be made liable for penal action under the provisions of Section 138 of the NI Act.

Inherent jurisdiction under Section 482 CrPC to prevent abuse of process, reiterating that Section 138 proceedings cannot be employed as "arm twisting tactics" for recovery of amounts allegedly due from another person

The impugned complaint itself — at Paragraph 9 — and its verification disclosed that the two cheques were issued by accused No.2, Brijesh, "on behalf of accused No.1" firm, and that he, "as a CEO had taken responsibility of the said cheques"

It stood admitted that the applicant did not sign the cheques either in her personal capacity or as proprietor, and the cheques were drawn on the husband's own savings account, not the firm's account

Since the statutory deeming fiction of criminal liability under Section 138 attaches exclusively to the drawer of the dishonoured instrument, and the applicant was neither the drawer nor the signatory, the essential ingredients of the offence were ex facie absent against her

The Court expressly declined to adjudicate the rival factual disputes — concerning excess payment, breach of commercial terms, and delays in execution — confining its determination to the "technical issue of the present applicant not being the drawer of the cheques in question"

Continuing prosecution against a non-drawer, the Court reasoned, would amount to using Section 138 as an arm-twisting device for recovery of dues allegedly owed by the husband

The prosecution shall continue in accordance with law against the remaining accused, namely the firm Jay Jaganath Air Equipments and accused No.2, Brijesh Ashvinbhai Pathak

The Court clarified that it had not examined any disputed questions of fact beyond the non-drawer issue, and that all rights and contentions of both sides were kept open before the trial court