Section 138 NI Act: Case not maintainable if account is blocked

High Court of Punjab & Haryana has held that if bank account has been blocked, it cannot be treated as beiing maintained by the account holder and therefore, no liability can be attached to the drawer of cheque of that bank account.

A bench of Justice Bajaj has passed the order in the case titled as Rajesh Meena vs State of Haryana on 01.07.2019

It is argued on behalf of the complainant that of course the provisions of Section 138 NI Act do contemplate that the penal provisions would be attracted in case the cheque in question is dishonoured on account of "insufficient funds" or "the amount exceeds the arrangement", but these provisions have been interpreted on number of occasions by this Court as well as by the Hon'ble Supreme Court, wherein it was held that in cases where the account is "closed" or "payment was stopped" by drawer even then complaint under Section 138 NI Act would be maintainable. It is vehemently argued that on the same analogy, the complaint is maintainable as it is not disputed by the accused that the blocked account belongs to it which resulted in dishonour of the cheques. According to the respondent, the trial Court has passed the summoning order carefully after examining the material on record and therefore, the petition deserves to be dismissed.

High Court observed "A careful analysis of Section 138 NI Act reveals that the first and foremost requirement to maintain the complaint under Section 138 NI Act is that the cheque issued by the account holder must be from the account maintained by account holder with the drawer-Bank for discharge in whole or in part of any debt or other liability".

High Court further observed and held "Therefore, the said expression "account maintained by him" cannot be construed narrowly to mean that if the account belongs to the accused, the necessary ingredient would be complete. This expression "account maintained by him" must necessarily include that the said account is not only alive and operative, but the account holder is capable of executing command to govern the financial transactions which include the clearance of cheques etc. The authority and control of the account holder upon the account must exist on the effective date i.e. when the cheque becomes valid for presentation in the bank. It is settled law that mere issuance of a cheque is not an offence, but it becomes punishable when the said cheque is dishonoured. Mere fact that the record of the drawer bank shows a particular name as account holder would not be sufficient to establish that account is being maintained by the account holder, unless the said account holder holds the authority and control over the said account. In other words, if an account holder is deprived off his authority, control and dominion over the bank account, it cannot be said that the account is being maintained by the said account holder".