‘Not tenable under law’: Telangana High Court upholds Rs 1 crore cheque bounce case against wife who stood surety for husband

Justice J Sreenivas Rao, in his judgment dated September 23, relied on various Supreme Court rulings and held that “the dishonest drawers cannot escape liability merely by dodging postal delivery.”

The judge found no grounds to interfere with the lower court’s proceedings, reaffirming the legal principle that proceedings under Section 138 of the NI Act apply even against a surety who issues a cheque.

According to the section, the payee must issue a written notice to the drawer demanding payment of the said amount. This notice must be sent within 30 days of receiving the information (bank memo) about the dishonour. The drawer must fail to make the payment of the said amount to the payee within 15 days of receiving the demand notice.

The petitioner sought to quash the proceedings on the grounds that the legal notice was sent to a “wrong address” and was returned with the endorsement “no such addressee.”

The court, however, noted that she had received the subsequent court summons at the very same address, treating the matter of the notice address as a “disputed question of fact and the same cannot be adjudicated in the present case and the same will be determined during the course of trial.”

The court stated that it is trite law that once the issuance of the cheque is not in dispute, a statutory presumption under Section 139 of the NI Act operates in favour of the payee that the cheque has been issued towards the discharge of a legally enforceable debt or liability. However, the court added, “the presumption is rebuttable and the drawer is entitled to present a plausible defense that the cheque was not issued to discharge a legally enforceable debt or liability.”

The petitioner argued that she was not the principal borrower and that there was no “legally enforceable debt” between her and the complainant, SBPL Infrastructure Limited — an argument rejected by the court.

Justice Rao, citing another Supreme Court ruling, stated, “The issue as regards the coextensive liability of the guarantor (surety) and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein.” The court emphasized that “any cheque” and “other liability” are the two key expressions that clarify the legislative intent, concluding that “The [Kerala] High Court, it seems, got carried away by the issue of guarantee and guarantor’s liability and thus has overlooked the true intent and purport of Section 138 of the Act.”

The court went on to add that, in view of the principles laid down by the apex court, the ground raised by the petitioner that there is no legally enforceable debt existing between the petitioner and the respondent No.1, as the loan was availed by the petitioner’s husband and she acted merely as a surety, and that initiation of proceedings under Section 138 of the NI Act against the petitioner is abuse of the process of law, “is not tenable under law.”

The criminal petition was dismissed, clearing the way for the trial to proceed. However, taking into consideration that the petitioner is a woman, the court “dispensed with [her] presence before the trial court, unless her presence is specifically required during the course of the trial.”

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