The legal entitlement of the payee or holder in due course is essential to maintain a complaint under Section 138 of the Negotiable Instrument Act.

Appeal under Section 378(4) of Cr.P.C challenging the acquittal of the accused by the court below. The accused was prosecuted in a calendar case filed before the court below alleging an offence punishable under Section 138 of Negotiable Instrument Act.

2. Brief allegations in the complaint are as follows.

Complainant/Appellant is a Chemical Engineer. He is engaged in a business of chemicals and solvents at Nettoor by name Southern Chemicals and Solvents. The first accused is a Private Limited Company. The second and third accused are its Managing Director and Director respectively. The accused Company was allotted forty cents of land in an Industrial Estate at Edayar by the District Industrial Centre, Ernakulam. The accused approached the complainant for help due to lack of finance and technical knowhow. Therefore, they entered into an agreement to set up an industry in the above mentioned land. It is alleged in the complaint that the complainant had paid a sum of Rs.1 lakh to the accused and in return the accused executed an irrevocable Power of Attorney in favour of the complainant.

He was authorized to develop the land and to deal with the various Government departments. It is alleged that the complainant incurred a sum of Rs.1,70,000/- for the acts done as per the Power of Attorney. Ultimately, the complainant and accused fell apart. Thereafter, the complainant caused to issue a notice to the accused. The cheque Ext.P1 was issued for a sum of Rs.4,25,000/- in settlement of the entire claims. When Ext.P1 was presented for collection, it was dishonored due to insufficiency of funds. After issuing a statutory notice, the complaint was filed. The learned Magistrate dismissed the complaint for the reason that there is no evidence to hold that the accused was liable to pay money to the complainant.

3. Heard the learned counsel for the complainant and the accused.

4. The learned counsel for the complainant contended that in the complaint itself specific averments are made that he is engaged in a business of chemicals and solvents by name Southern Chemicals and Solvents. According to the learned counsel for the complainant, this should be read as indicating that he is the Proprietor of the Company. It is an indisputable fact that the cheque was issued in the name of Southern Chemicals and Solvents. In other words, no where in the cheque, the name of the complainant was mentioned. Fact that the cheque was dishonoured for insufficiency of funds in the account of the accused remains undisputed. However, the legal question arises for consideration is whether the complainant can claim that he legally entitled to represent the payee shown in Ext.P1.

5. In order to attract the offence under Section 138 of NI Act, the essential condition required is that the amount involved in the cheque must be demanded either by Payee or the holder in-due-course of the cheque. This is evident from Section 138(b) of N.I Act. In a similar case, the Apex Court in Milind Shripad Chandurkar v. Kalim M Khan [2011(2) KLT 271] found that only such a person can maintain a complaint under Section 138 of N.I Act. Marshalling the facts of the case, the Supreme Court in Para23 found that there is no evidence in that case to find that the complainant either payee or holder in-due-course. Therefore, the complaint was dismissed. The facts are similar in this case too. There is no mention in the statutory notice or in the complaint that the complainant is the Proprietor of the business concern in whose name the disputed cheque was issued. No document is produced to show that the business concern is his proprietary concern. Stated differently, there is no reliable evidence to hold that the complainant is legally entitled to the amount involved in the cheque issued in favour of Southern Chemicals and Solvents.

Therefore, I am of the view that the learned Magistrate rightly dismissed the complaint for the aforementioned reasons. Appeal is bereft if any merit. In the res