S.138 NI Act | Himachal Pradesh High Court Upholds Acquittal In ₹5 Lakh Cheque Bounce Case | Says When No Evidence Of Proprietorship Is Led, Complainant Cannot Be Treated As Payee
Isabella Mariam
The High Court of Himachal Pradesh Single Bench of Justice Rakesh Kainthla dismissed a criminal appeal filed against the acquittal of an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the complaint had not been instituted by a duly authorised individual, as required by law. The bench concluded that there was no conclusive evidence to prove the complainant's authority or proprietorship of the firm in whose name the dishonoured cheque was issued.
In its final decision, the High Court observed that the Trial Court had taken a reasonable view based on available evidence and applicable legal principles, and thus found no ground to interfere with the acquittal. It dismissed the appeal in its entirety, also disposing of all pending applications.
The criminal appeal was filed challenging the judgment dated 07.05.2010 passed by the Judicial Magistrate, First Class, Rajgarh, District Sirmaur, which had dismissed a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 ("N.I. Act"). The complainant in the case represented Shirgul Filling Station, a fuel station located at Sanora in Tehsil Rajgarh.
The complainant alleged that he had supplied petroleum products to the accused, who was a registered government contractor with the Himachal Pradesh Public Works Department (HPPWD). According to the complainant, the accused owned several vehicles and had purchased fuel on credit, assuring that payment would be made later.
The complainant asserted that the accused owed a sum of ₹5,00,000 as of 31.03.2008. To discharge the liability, the accused issued a cheque for the said amount drawn on UCo Bank, Rajgarh Branch. The complainant presented the cheque before his bank, but it was returned unpaid with the endorsement "insufficient funds."
Following the dishonour, the complainant issued a legal notice demanding payment within 15 days. The notice was returned with the endorsement "refused," which the complainant considered as deemed service under law. A complaint was subsequently filed before the Trial Court seeking penal action under Section 138 of the N.I. Act.
The Trial Court summoned the accused and issued a notice of accusation. The accused pleaded not guilty and contested the case. In support of the complaint, the complainant examined three witnesses—Ankur Aggarwal (CW1), Dalip Biswas (CW2), and Dayanand (CW3).
The accused, in his statement recorded under Section 313 Cr.P.C., denied the allegations. He stated that he did not receive any notice and asserted that the case was false. The accused chose not to lead any evidence in defence.
The Trial Court, in its judgment, examined the authority of the complainant to file the complaint. It found that the cheque was issued in the name of Shirgul Filling Station, allegedly owned by Shivani Gupta. The complaint, however, was filed by Ankur Aggarwal based on an authority letter (Ex. PX).
The Court noted that there was no documentary evidence to prove Shivani Gupta’s proprietorship of Shirgul Filling Station. Furthermore, the authority letter relied upon was issued after the filing of the complaint and could not be treated as a valid general or special power of attorney.
The Trial Court held that the complaint was not filed by the payee or a duly authorised representative, thereby failing to meet the legal requirements under Section 138 of the N.I. Act. Consequently, the complaint was dismissed.
Aggrieved by the dismissal, the complainant filed the present criminal appeal before the High Court. The appeal argued that the Trial Court had erred in its findings and that Ankur Aggarwal had duly proved the authority letter issued by Shivani Gupta. It was further submitted that any defect in the authorisation could have been cured during the pendency of the proceedings.
The appellant also contended that there was sufficient evidence on record to show the accused had regularly purchased fuel and had an outstanding liability. Despite being given an opportunity, the accused had not produced any evidence to rebut the complainant’s version.
On the other hand, counsel for the accused submitted that the Trial Court had taken a reasonable and legally correct view. It was argued that there was no power of attorney produced and no evidence to establish Shivani Gupta’s ownership of the firm. Hence, the complainant could not be considered a payee or holder in due course, as required under the N.I. Act.
The High Court stated in its judgment: "Since in the present case no satisfactory evidence was produced to show that Shivani Gupta is the owner of Shirgul Filling Station, therefore, the learned Trial Court had rightly held that the complainant does not fall within the definition of payee and he was not entitled to file the complaint under Section 138 of N.I. Act."
The Court referred to several Supreme Court precedents on the issue, including Milind Shripad Chandurkar v. Kalim M. Khan, (2011) 4 SCC 275, which held that "a complaint can be filed by a payee or holder in due course, and when there was no evidence that the complainant was the proprietor, he was not entitled to file the complaint."
Further quoting from that case, the Court recorded: "The appellant miserably failed to prove any nexus or connection by adducing any evidence, whatsoever, worth the name with the said firm." The judgment also noted that mere affidavits were insufficient without supporting documents.
Additionally, the Court considered its own prior decisions in S.P. Saklani v. Ravinder Singh Thakur and Ram Chand v. Rafee Mohammad, reiterating that "mere assertion of proprietorship without documentary proof is insufficient to confer locus standi for instituting proceedings under Section 138."
On the broader principles of appellate review of acquittal, the High Court cited the Supreme Court’s decisions in Surendra Singh v. State of Uttarakhand (2025 SCC OnLine SC 176) and Bhupatbhai Bachubhai Chavda v. State of Gujarat (2024 SCC OnLine SC 523). The Court observed: "It is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record."
"This was a reasonable view taken by the learned Trial Court, duly supported by the judgments of the Hon’ble Supreme Court and this Court; hence, no interference is required with the same."
The High Court issued the following directive: "In view of the above, the present appeal fails and the same is dismissed, so also the pending applications, if any."
It also directed that: "Record of learned Trial Court be sent back forthwith."
Advocates Representing the Parties:
For the Appellants: Mr. Bimal Gupta, Senior Advocate, with Mr. Aman Thakur, Advocate
For the Respondents: M/s Rupinder Singh Thakur and Bhavya Sharma, Advocates
Case Title: Shirgul Filling Station v. Kamal Sharma
Neutral Citation: 2025: HHC:21725-DB
Case Number: Cr. Appeal No.262 of 2010
Bench: Justice Rakesh Kainthla
