The Himachal Pradesh High Court has upheld an order whereby the accused was acquitted of the offence under Section 138 of the Negotiable Instruments Act after finding that no documentary evidence was produced to show that the complainant was the owner of the proprietorship concern.

The High Court was considering an appeal challenging the judgment of the Judicial Magistrate First Class by which the respondent (accused before the Trial Court) was acquitted of the commission of an offence punishable under Section 138 of the Negotiable Instruments Act 1881 (NI Act).

The Single Judge Bench of Justice Rakesh Kainthla held, “In the present case, no documentary evidence was produced to show that the complainant is the owner of Baba Enterprises, and the learned Trial Court had rightly held that the complaint was not maintainable.”

Advocate Pankaj Sharma represented the Petitioner, while Advocate Neel Kamal Sharma represented the Respondent.

Factual Background

The complainant, proprietor of M/s Baba Enterprises at Ghumarwin, filed a complaint before the Trial Court for the commission of an offence punishable under Section 138 of the NI Act, alleging that the accused had friendly relations with the complainant. The accused came to the complainant four years before filing the complaint, demanding a family loan of ₹80,000. He promised to repay the amount within one month. The complainant asked the accused to return the amount. The accused issued a cheque of ₹80,000 drawn on H.P. State Cooperative Bank at Ghumarwin to discharge his liability. The complainant presented the cheque for encashment, but it was dishonoured with an endorsement that ‘the firm has changed the title of the account and the account had been changed’. Hence, it was prayed that an action be taken against the accused.

The Trial Court held that the cheque was issued in the name of Baba Enterprises, and there was no evidence to connect the complainant to Baba Enterprises. The complainant had no locus standi to file the complaint, and hence, the complaint was dismissed.

Reasoning

Considering that the appeal was filed against a judgment of acquittal, the Bench referred to the judgment of the Supreme Court in Surendra Singh v. State of Uttarakhand (2025) wherein it has been held that the Court can interfere with a judgment of acquittal if it is patently perverse, is based on misreading/omission to consider the material evidence and reached at a conclusion which no reasonable person could have reached.

On a perusal of the facts of the case, the Bench noted that the cheque was issued in the name of Baba Enterprises. The complainant stated that he was a proprietor of Baba Enterprises; however, he did not place any document on record to prove this fact. The Bench referred to the judgment in Milind Shripad Chandurkar v. Kalim M. Khan, (2011)wherein it was held that where no evidence was led to prove that the complainant was the owner of a proprietorship concern, he cannot be called to be a payee or holder in due Course.

Finding that the Trial Court had taken a reasonable view and no interference was required with it, the Bench dismissed the appeal.

Cause Title: Ashwani Kumar v. Raj Kumar (Neutral Citation: 2025:HHC:43252)

Click here to read/download Order


Himachal Pradesh High CourtJustice Rakesh Kainthla

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.