Authority: High Court of Punjab and Haryana at Chandigarh

Order Date: 08 July 2026

Case Overview

  • Parties: Petitioner M. Manikya Reddy vs. Respondent Skylark Hatcheries Pvt. Ltd.
  • Case Numbers: CRM‑M‑40987‑2019 (O & M); Complaint NACT No.358 of 2018 dated 02.07.2018; Summoning order dated 04.07.2018.
  • Background: The petitioner managed Masani Reddy Poultry Farm, which purchased layer chicks on credit from the respondent. An outstanding amount of Rs 6,90,952 was due as of 28‑02‑2018.
  • Cheque Dispute: To discharge part of the liability, a cheque No.285832 dated 22‑03‑2018 for Rs 6,00,000 was issued to the respondent. The cheque was drawn on Canara Bank, Gadwal, and was returned unpaid for “Fund Insufficient”.
  • Petitioner’s Contention: The petitioner asserted that he neither signed nor issued the cheque; it was signed by his son and drawn from the son’s account, which he does not maintain. Consequently, he argued that Section 138 of the Negotiable Instruments Act does not apply to him.
  • Respondent’s Contention: The respondent claimed the petitioner, as in‑charge of the farm, owed the debt and personally issued the cheque. It argued that the petitioner could be liable for cheating/forgery if the cheque was indeed unauthorised and highlighted the petitioner’s prior Section 138 cases and proclaimed offender status.
  • Legal Precedents Cited:
  • Alka Khandu Avhad vs. Amar Syamprasad Mishra (2021) – clarified that all ingredients of Section 138 must be satisfied, including that the cheque be drawn on an account maintained by the drawer.
  • Jugesh Sehgal vs. Shamsher Singh Gogi (2009) – reiterated that a person not the drawer or not using his own account cannot be prosecuted under Section 138.
  • N. Vasantha vs. R. Srinivasan (2017) – held that liability under Section 138 is limited to the drawer of the cheque.
  • Court’s Reasoning: The Court examined the statutory requirements of Section 138 (drawn by the person on his own account, for discharge of debt, presented within six months, returned unpaid, notice served, and failure to pay within 15 days). It found that the cheque in question was issued from the son’s account, not the petitioner’s, and therefore the first essential ingredient was missing. Consequently, prosecution of the petitioner under Section 138 would be untenable and constitute an abuse of process.

Final Outcome

  • The petition is allowed.
  • The complaint dated 02‑07‑2018, the summoning order dated 04‑07‑2018, and all consequential proceedings are quashed.
  • The respondent may, within 60 days of receiving a copy of this order, initiate separate criminal proceedings for cheating/forgery against the petitioner or others, and any delay beyond 60 days will not be questioned.
  • Any pending applications, if any, are disposed of.

Topics: Section 138 NI Act, Cheque Dishonour, Judicial Quash