Mother Named as Nominal Proprietor — Can She Be Held Liable for Cheques Signed Without Knowledge?

One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Meena Desai had never once stepped inside the shop her late husband Ramesh Desai ran in Nagpur's Itwari area. She was a homemaker — always had been. But when Ramesh passed away unexpectedly in late February 2025, the shop's suppliers and moneylenders began surfacing with cheques bearing her name and signature. Some she vaguely remembered signing. Many she had no recollection of at all.

Meena's son Karan, 24, had just started working at a mid-level position with a Pune-based logistics firm. He found himself fielding threats from creditors almost daily. The family had registered a small trading business under Meena's name years ago — a common tax-planning arrangement many small traders use — but Ramesh had controlled everything. He kept the cheque books, obtained Meena's signatures when needed, and sometimes issued cheques without her even being present.

Karan first approached a general civil advocate in Nagpur who drafted a few reply notices. The creditors were unimpressed. Threats escalated. The family eventually had to shift residence to a relative's home in Wardha. It was at that point that Karan reached out to Advocate Sudhir Rao. The approach shifted entirely: the legal strategy now focused on establishing Meena's status as a nominal proprietor, challenging the enforceability of the cheques, and filing a pre-emptive complaint about the harassment. Within a few weeks of this structured approach, the pressure from creditors visibly reduced and a clearer legal path emerged.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Do not ignore any legal notice: Even if a notice seems baseless, a non-response can be used against you in court. Every notice must be replied to — in writing, through your lawyer — within the stipulated time.

Preserve all documents: Collect every cheque stub, account statement, business registration document, and correspondence you can find. These will form the backbone of your defence regarding the nominal proprietorship arrangement.

File a complaint about harassment: If creditors are threatening you at home or tracing your new residence to intimidate you, that conduct may itself constitute a cognizable offence. Don't absorb the pressure silently.

And here's the thing — cases involving cheque law, nominal proprietorship, and the death of the actual controller are procedurally intricate in ways most people don't anticipate. An advocate who regularly handles Negotiable Instruments Act matters and the accompanying criminal complaint defence will know evidentiary and procedural angles that a general practitioner may simply never have encountered.

Applicable Sections of Law

This matter is mixed in nature. There's a criminal element under the Negotiable Instruments Act combined with civil liability questions that run alongside it. The following provisions are directly relevant:

• Section 138, Negotiable Instruments Act, 1881: Cheque dishonour and criminal liability of the drawer — the central provision creditors will attempt to invoke against Meena.
• Section 139, Negotiable Instruments Act, 1881: Presumption in favour of the holder — rebuttable, but the accused must lead evidence to displace it.
• Section 140, Negotiable Instruments Act, 1881: Defence that the drawer had no reason to believe the cheque would be dishonoured — relevant when signature was obtained without knowledge of transaction.
• Section 118, Indian Evidence Act, 1872 (now Section 88, Bharatiya Sakshya Adhiniyam, 2023): Presumptions as to negotiable instruments — relevant to how courts approach signed cheques.
• Section 415 and Section 318, Bharatiya Nyaya Sanhita (BNS), 2023: Cheating and fraud — applicable if creditors are using fabricated or manipulated instruments.

Punishment and Penalties

Under Section 138 of the Negotiable Instruments Act, a conviction can lead to imprisonment for a term which may extend to two years, or a fine which may extend to twice the amount of the cheque, or both. The offence is cognizable and non-bailable in terms of the complaint procedure under the NI Act. But it's compoundable — meaning the complainant and accused may reach a settlement to compound the offence with the court's permission, which is often the practical resolution in these situations. Under Section 318 BNS (cheating), punishment extends to imprisonment of up to three years with fine.

Jurisdiction — Where to File the Case

Cheque dishonour complaints under Section 138 of the Negotiable Instruments Act are filed before the Judicial Magistrate First Class (JMFC) having jurisdiction over the place where the cheque was presented for payment or where it was dishonoured, as settled in Dashrath Rupsingh Rathod v. State of Maharashtra, 2014. If creditors file a complaint, it'll be before the JMFC at the location of the payee's bank. For any harassment complaint, territorial jurisdiction of the local police station where the threat was received applies. Now, before you act, understand that choosing the right jurisdictional court at the outset directly affects how quickly interim relief can be obtained.

What if Police Refuse to File FIR?

If the police decline to register your harassment complaint, here's what you can do:

• Submit a written complaint to the Superintendent of Police (SP) under Section 173(4), BNSS, requesting registration of the FIR and directing the concerned station.
• File a private complaint directly before the Judicial Magistrate under Section 175(3), BNSS — the Magistrate can take cognizance and direct the police to investigate.
• File a writ petition before the High Court under Article 226 of the Constitution if the police continue to refuse, citing Lalita Kumari v. Government of Uttar Pradesh, 2014, which mandates registration of FIRs in cognizable matters.
• Document every refusal in writing — dates, officer names, station — as this strengthens your petition before the Magistrate or High Court.

Rights of the Accused

If Meena or Karan is summoned or arrested, they have clear constitutional and statutory protections. These aren't technicalities — they're enforceable rights:

• Right against self-incrimination under Article 20(3) of the Constitution — neither is compelled to be a witness against themselves.
• Right to legal representation under Article 22 — an advocate must be permitted access immediately upon arrest.
• Right to be produced before a Magistrate within 24 hours of arrest under Article 22(2) and Section 57, BNSS.
• Right to receive a copy of the FIR and to be informed of the grounds of arrest — as reinforced in D.K. Basu v. State of West Bengal, 1997.
• Right to default bail under Section 479, BNSS if chargesheet is not filed within the statutory period.

Bail Provisions

Section 138 NI Act complaints are tried as summons cases. Arrest before conviction is relatively rare in cheque dishonour matters, but if it occurs, bail is generally available. Anticipatory bail under Section 482, BNSS can be sought before the Sessions Court if there's a reasonable apprehension of arrest. Regular bail, once arrested, is sought under Section 480 or Section 483, BNSS depending on whether the offence is bailable or non-bailable. In cheque matters where the accused is a housewife with no prior criminal record and no flight risk, courts routinely grant bail with standard conditions such as appearance at every hearing and surrender of passport.

Quashing of FIR / Case

Under Section 528, BNSS, the High Court retains inherent power to quash proceedings where continuation would amount to an abuse of the process of court. In Meena's situation, a quashing petition is a legitimate strategy. Frankly, the grounds here are strong. Key arguments would include: absence of any legally enforceable liability on her part given she was a nominal proprietor, signatures obtained without knowledge or consideration, and the death of the actual operator of the account making further proceedings against her oppressive. The Supreme Court's guidance in Indian Oil Corporation v. NEPC India Ltd., 2006 is instructive — courts have consistently held that mechanical prosecution without examining the factual matrix must be interdicted.

If You Are the Victim

• File a written complaint at the local police station documenting every instance of threat, intimidation, and attempts to trace your residence — preserve dates and names of callers.
• Send a formal legal notice through your advocate disputing liability on each cheque and setting out the nominal proprietorship defence clearly.
• Gather evidence of your mother's non-involvement in business operations — witness statements from neighbours, absence of GST filings in her name, absence of bank account operation by her.
• If summons arrives in a Section 138 complaint, appear through counsel and file a detailed reply affidavit explaining the circumstances of signing.
• Do not change your phone number or disappear — courts and police interpret avoidance negatively. Respond through proper channels only.

Documents You Must Keep Ready

• Aadhaar Card and PAN Card of both mother and son
• Death certificate of the deceased father
• Business registration certificate showing the mother as nominal proprietor
• Bank account statements showing who actually operated the account — signatures, IP logins if net banking was used
• Copies of all disputed cheques and dishonour memos (if available)
• Any agreements or documents where signatures were allegedly obtained without knowledge
• Witness affidavits from persons aware of the father's actual control over the business
• All legal notices received and replies sent

What Evidence Is Required?

• Primary evidence: Original cheques, dishonour memos from the bank, bank account statement of the drawer's account showing the father's operational control
• Secondary evidence: Copies of agreements, correspondence, and SMSes between the father and the creditors (not involving the mother)
• Affidavit from the mother explaining her position as a nominal signatory and her lack of knowledge of the transactions
• Evidence that the father physically held the cheque book and issued cheques — testimony from family members, domestic staff, or business associates
• Absence of any direct financial benefit received by the mother from the transactions
• Expert handwriting analysis, if signatures on disputed documents appear inconsistent
• Business GST returns, income tax records showing who filed returns and who conducted actual transactions

How the Police Behave in Such Cases

In cheque dishonour matters, police involvement is limited because Section 138 complaints are filed directly before the Magistrate, not through the police station. But if harassment and intimidation are reported separately, the police tend to treat such matters as civil disputes initially and may be reluctant to register FIRs. Make no mistake — sustained, documented pressure from your side changes this attitude. Officers at the station level often respond faster when they see the complaint is backed by a formal legal notice, supporting documents, and a clear paper trail. A well-drafted complaint citing specific dates and incidents leaves far less room for inaction.

Timeline of Legal Process

• Week 1-2: Receive legal notice from creditors or summons in Section 138 complaint; consult advocate immediately
• Week 2-4: File reply to legal notice disputing liability; if summons received, file vakalatnama and appearance through counsel
• Month 1-3: Written reply affidavit filed in Magistrate court; evidence stage begins; examination of complainant's witnesses (typically 6-12 months in practice)
• Month 3-6: Application for quashing filed before High Court if prima facie case for quashing exists; interim stay of proceedings possible
• Month 6-18: Trial proceedings before Magistrate (examination, cross-examination, defence evidence)
• Month 18-30: Final arguments and judgment at Magistrate level
• Post-judgment: Appeal before Sessions Court if required — adds 12-24 months
• Settlement or compounding at any stage can drastically shorten this timeline

Understanding the Costs

The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.

A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.

Advocate Sudhir Rao, Supreme Court of India

Facing a similar matter? Speak to a Delhi criminal defence lawyer — Advocate Sudhir Rao appears in bail, trial and appellate matters before the Delhi District Courts, the Delhi High Court and the Supreme Court of India.