Determining Liability in a Cheque Bounce Cases

In cheque bounce cases, one of the recurring issues is determining the liability of the defaulter. Consider the following scenario:

There are two parties involved—Party A and Party X. Both parties wish to engage in business, and to that end, they enter into a contract. According to the terms of the contract, Party X is required to pay a specific sum of money to Party A. To fulfill this obligation, Party X issues a cheque, but the cheque is dishonored due to insufficient funds.

The twist in this scenario is that the contract was entered into by the husband, who represents Party X, but the cheque was signed and issued by the wife, making her the drawer of the cheque.

The question here is: Who bears the liability in this case? Is it the husband, with whom the contract was made, or the wife, who issued the cheque?

For that issue we have to delve into a little bit of Jurisprudence.

Jurisprudence on the Matter

The jurisprudence regarding cheque bounce cases indicates that such matters are treated as criminal offenses under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). Given that it is a criminal offense, the concept of vicarious liability does not typically apply. In simple terms, no one can be held liable for an act committed by another unless specifically provided for by law. Therefore, the drawer of the cheque is prima facie liable for its dishonor.

Conflict Between Section 138 and Section 141 of the N.I. Act

The case Aparna A. Shah vs. M/s Sheth Developers Pvt. Ltd. & Anr.  specifically dealt with this issue. To properly understand the nuances, it is essential to examine the interaction between Section 138 and Section 141 of the N.I. Act.

Section 138 of the Negotiable Instruments Act, 1881

Section 138 defines the offense of dishonor of cheques due to insufficiency of funds or other reasons and imposes criminal liability on the drawer. The key elements of this provision are:

1. The cheque must be drawn on an account maintained by the drawer.
2. The cheque must be issued to discharge a legally enforceable debt or liability.
3. The cheque is dishonored due to insufficient funds or because the amount exceeds the arrangement made with the bank.
4. A notice demanding payment must be sent to the drawer within 30 days of the dishonor.
5. The drawer has 15 days from the receipt of the notice to make the payment.

If these conditions are met, the drawer of the cheque is liable for prosecution under Section 138, with punishments including imprisonment for up to two years, a fine up to twice the cheque amount, or both.

Section 141 of the Negotiable Instruments Act, 1881

Section 141 extends liability for offenses under Section 138 to companies and their officers responsible for the conduct of the business. The provision clarifies that, in the case of a company, both the company and any person in charge of its affairs at the time the offense was committed are deemed guilty and liable for prosecution.

However, the question arises whether this provision can be extended to joint account holders who did not sign the cheque but were part of the account from which the dishonored cheque was issued.

The Supreme Court’s Ruling in Aparna A. Shah vs. M/s Sheth Developers Pvt. Ltd. & Anr.

In its judgment, the Supreme Court, led by Justice P. Sathasivam, made several key observations on the applicability of Section 138 in cases involving joint accounts:

1. Strict Interpretation of Penal Laws:

The Court emphasized that criminal liability under Section 138 can only be fastened to the drawer of the cheque. The provision must be strictly construed, meaning that liability cannot be extended to a non-drawer, even if they are a joint account holder.

2. Non-Applicability of Vicarious Liability:

Vicarious liability, as provided under Section 141 of the N.I. Act, applies only in cases involving companies and their officers. It cannot be applied to joint account holders under Section 138 unless the person is a signatory to the cheque. In essence, criminal liability cannot be imposed on a person for the actions of another unless explicitly provided for by law.

3. Prosecution of Non-Signatories:

The Court held that in cases where cheques are issued from a joint account, only the person who signed the cheque can be prosecuted under Section 138. This means that even if Aparna was a joint account holder, since she did not sign the cheque, she could not be prosecuted.

4. Judicial Precedents:

The Court referred to previous decisions, including Jugesh Sehgal vs. Shamsher Singh Gogi and S.K. Alagh vs. State of Uttar Pradesh, which reiterated that only the drawer of a cheque can be held liable under Section 138. These cases reinforced the principle that criminal liability under the N.I. Act is strictly confined to the drawer of the cheque.

5. Rejection of the Argument on Association of Individuals:

The respondents in the case argued that Aparna and her husband should be treated as an "association of individuals" under Section 141 of the N.I. Act, thereby making Aparna liable. However, the Court rejected this argument, clarifying that the term "association of individuals" as used in Section 141 applies only to companies or firms and not to joint account holders.

Conclusion of the Judgment

The Supreme Court allowed the appeal and quashed the criminal proceedings against Aparna. It held that under Section 138, only the drawer of the cheque can be prosecuted, and in cases involving joint accounts, a non-signatory joint account holder cannot be held liable unless they have signed the cheque.

In conclusion, the case of Aparna A. Shah vs. M/s Sheth Developers Pvt. Ltd. & Anr. provides a comprehensive legal precedent for understanding liability in cheque bounce cases, especially where multiple individuals are involved in joint accounts or transactions. The ruling ensures that only the actual signatories of dishonored cheques can be prosecuted under Section 138 of the N.I. Act, safeguarding others from undue criminal liability.

Laws Relating to Live-in Relationship in India

 

Live-in relationships are already a controversial topic in India, sparking debate between old India and new India. The new generation seems to support this, while the old generation not only opposes it but also sees it as a very inferior or degenerate way of life. However, the law in India has an interesting take on this subject. The judiciary in India has gone a step further and added the concept of alimony in live-in relationships.

Development of Judicial Precedents relating to Live-in Relationships

The question of live-in relationships may be new in India, but foreign courts have been dealing with this subject for a long time. However, those interpretations cannot be used in the Indian context as personal laws in India govern such provisions.

One of the very famous cases in Common Law relating to live-in relationships is Louisa Adelaide Piers & Florence A.M. De Kerriguen v. Sir Henry Samuel Piers [(1849) II HLC 331], in which the House of Lords held that the law will presume in favour of marriage, and such presumption could only be rebutted by strong and satisfactory evidence.

Then, in the case Lieutenant C.W. Campbell v. John A.G. Campbell [(1867) Law Rep. 2 HL 269], also known as the Breadalbane case, the House of Lords held that cohabitation, with the required repute as husband and wife, was proof that the parties had mutually contracted the matrimonial relation between themselves. A relationship that may be adulterous at the beginning may become matrimonial by consent.

Following the precedent of English Common Law, the Supreme Court in India also supported a similar view in the case Gokal Chand v. Parvin Kumari [AIR 1952 SC 231].

The above interpretations are clear on the presumption of marriage; therefore, the concept of alimony should be applicable even if the marriage is not valid, as per family law. This is the exact reason the Supreme Court of India has supported alimony in live-in relationships. Sir James Fitz Stephen, a legal member of the Viceroy's Council and the man who piloted the Criminal Procedure Code, stated the view of Section 125, which is maintenance, describing the object of Section 125 of the Code (it was Section 536 in the 1872 Code) as a mode of preventing vagrancy or at least preventing its consequences.

Thus, the Supreme Court of India, in the case Chanmuniya vs Virendra Kumar Singh Kushwaha & Anr on 7 October 2010, held that where a man lived with a woman for a long time, even though they may not have undergone the legal necessities of a valid marriage, he should be made liable to pay the woman maintenance if he deserts her. The man should not be allowed to benefit from legal loopholes by enjoying the advantages of a de facto marriage without undertaking the duties and obligations. Any other interpretation would lead the woman to vagrancy and destitution, which the provision of maintenance in Section 125 is meant to prevent.

The Supreme Court, in the case D. Velusamy vs D. Patchaiammal on 21 October 2010, went a step further and provided guidelines on the presumption of marriage following these principles. The Court held that a `relationship in the nature of marriage' is akin to a common-law marriage. Common-law marriages require that, although not being formally married:

• The couple must hold themselves out to society as being akin to spouses.
• They must be of legal age to marry.
• They must be otherwise qualified to enter into a legal marriage, including being unmarried.
• They must have voluntarily cohabited and held themselves out to the world as being akin to spouses for a significant period of time.

Then, in the case Indra Sarma vs V.K.V. Sarma on 26 November 2013, the Hon'ble Supreme Court held that a live-in or marriage-like relationship is neither a crime nor a sin, though it is socially unacceptable in this country. The decision to marry or not to marry or to have a heterosexual relationship is intensely personal. In this case, the Court considered the view of live-in relationships as they are described in society, not as a "Presumption of Marriage" in common law. This is why this judgement discussed in detail every other aspect of live-in relationships.

An interesting view in this regard was taken by America. In the case of Marvin v. Marvin [(1976) 18 Cal.3d 660], in the context of the case, a new expression of  'palimony' was coined, which is a combination of 'pal' and `alimony', by the famous divorce lawyer in the said case, Mr. Marvin Mitchelson. However, American courts have allowed the concept of enforcing contracts in marriage, which is why "Pre-Nuptial" Agreements are legal in America.

Personal Opinion

Many of my friends, when they read the news where a large amount was decided by the court to grant alimony to the wife, say that they will not be marrying. At best, they will be living in live-in relationships. Well, my friends, you cannot escape, as you will still have to pay alimony based on the above judicial interpretations. The law in India is very chappy and venomous for men, as the court has taken the view of vagrancy in marriage to grant alimony, and that is why men always have to pay.

However, there is a very rare chance that wives generally leave their husbands and ask for alimony, but there are chances nevertheless. You cannot escape paying alimony if your wife decides to leave you. I think that is very unfair, as men are the real losers here, as women only have the right to stay in a relationship, and if they don't, they are still entitled to alimony. Men may have choices, but women always have the options, and that is why men become the sore losers in divorces.

I think the court must at least decide a reasonable time for which a live-in relationship will be presumed to be a marriage, but since there isn't, we are just dependent on the definition of "reasonable time." What a time to live as a man.

A Case for Armed Forces (Special Powers) Act

When it comes to the Armed Forces (Special Powers) Act, or AFSPA, opinions are as polarized as they come. While I resonate with the sentiment that national integrity must be preserved at all costs, I stand firmly against the existence of AFSPA. The reasons are many, and I'm ready to lay them out. But before diving into my case, let's first understand the perspectives of both its supporters and detractors—those who view AFSPA as a necessary shield and those who see it as a violation of fundamental rights.. 

People Who Support AFSPA

The Government is the main supporter of this Act. Since it was enacted in 1958, nearly every Government in India and all its Prime Ministers have utilized this Act to uphold the national integrity of India. The Law Commission, under Justice Jeevan Reddy, proposed a review of this legislation, but those recommendations were rejected by the Government. The Government had to reject that report because it cannot afford to repeal the Act.

People Who Oppose AFSPA

My understanding of the opposition to AFSPA has developed from a document by Amnesty International titled Briefing on the Armed Forces (Special Powers) Act, 1958. The article discusses how the Act causes violations of International Human Rights Law, including:

• Violation of the Right to Life
• Violation of the Right to Liberty and Security of a Person
• Torture, Ill-treatment, and Disappearances
• Violation of the Right to Remedy

They argue that the Indian Army violates provisions of the International Covenant on Civil and Political Rights, to which India is a signatory. The report also highlights alleged abductions and killings of civilians in areas where this Act is applicable.

The Ideal Situation

The ideal situation for India would be one where there is no violence that could threaten the country's territorial integrity. However, the reality is that militancy exists in these areas, posing a potential threat. Those who oppose AFSPA should propose a plan that repeals the Act while also addressing the militancy problem. "Talks" are not a sufficient solution, as the Home Ministry has already been in dialogue with militants, and many have surrendered. However, this process will take time.

Personal Opinion

I believe that AFSPA should not exist, as there should be no violence in any part of the country. However, if violence does occur, the police should handle it immediately. The Armed Forces are like the sword of the country, and using them to curb violence in any part of India is akin to cutting vegetables with that same sword. The police in our states should be capable enough to deal with any challenges faced by the state. Unfortunately, the police in India are in a pathetic condition and severely underfunded, but I will leave that topic for another blog. Returning to my point, if we want to stop violence, we must first ensure that those who are not fighting the state are protected. We cannot allow any individual to undermine the credibility of Indian institutions, as reports like the one by Amnesty International do. It is not the Army's job to police; that responsibility lies with the police. The Indian Army is often tasked with jobs it should not be doing. As the quote from General Patton in the picture states, "I am a soldier, I fight where I am told, and I win where I fight." The Army has no choice but to use force to control the situation.