Wife, mother can't be considered a company: Karnataka HC

Bengaluru: The High Court of Karnataka has quashed a case against a woman whose husband issued a cheque which was dishonoured. The case was registered by invoking the Negotiable Instruments Act (NI).

The court said the wife and mother, both also accused in the case, do not constitute a company under the Act. In effect, a wife or mother cannot be made party to a cheque bounce case.

Veenashri approached the High Court in 2019 with a petition challenging the case pending against her before the ACMM Court in Bengaluru.

An individual Shankar filed a complaint against Veenashri, her husband, and mother-in-law. The allegation was that the three had taken a loan from Shankar and failed to redischarge it.

Veenashri’s husband had issued four cheques to Shankar which were dishonoured. So, Shankar filed a complaint against the three.

In her petition, Veenashri submitted that she never signed the cheque which had been dishonoured and that it was signed by her husband and she cannot be prosecuted under the provisions of the NI Act.

Justice MI Arun, in his order dated October 19, 2022, noted that “it is seen that accused is not a signatory to the cheque and it is specifically averred that it is not a joint account also. In the complaint also, it is specifically stated by the complainant that accused No.1, who is the husband of the petitioner, issued the cheque. The three accused do not constitute a company or a firm or association of individuals as contemplated under the NI Act.” Therefore, the High Court said, the wife cannot be prosecuted in the case.

“Under the circumstances, the petitioner cannot be made accused for dishonour of the cheques issued by her husband and he alone can be prosecuted for it,” it said.

The High Court quashed the proceedings before the ACMM ordering, “Proceedings insofar as it relates to the petitioner (Veenashri) herein is concerned is quashed.”