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2025 Supreme(HP) 250
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
RAKESH KAINTHLA, J.
Nand Lal - Appellant
Versus
Dhian Singh & another - Respondents
Cr. Appeal No. 117 of 2011
Decided on : 07-05-2025
Advocate Appeared:
For the Appellant :Mr. G.R. Palsra, Advocate.
For the Respondents:Mr. Raj Thakur, Advocate, vice Ms. Gurmeet Bhardwaj, Advocate, Mr. Ajit Sharma
An agent cannot enforce contracts made on behalf of a disclosed principal under Section 138 of the Negotiable Instruments Act, as liability lies with the principal.
Headnote:
(A) Negotiable Instruments Act, 1881 - Section 138 - Appeal against acquittal - The complainant, acting as an agent, advanced Rs.1,00,000/- to the accused for fruit supply, which was not fulfilled. The cheque issued was dishonoured. The Trial Court convicted the accused, but the Appellate Court set aside the conviction, ruling the complainant lacked standing to sue as he was merely an agent of a disclosed principal. (Paras 2, 11, 22, 26)
(B) Agency Law - An agent cannot enforce contracts made on behalf of a disclosed principal unless a contrary agreement exists. The Appellate Court correctly applied Section 230 of the Indian Contract Act, establishing that the complainant could not sue the accused. (Paras 22, 24)
Facts of the case:
The complainant, an agent for M/s A.M. Fruit Commission Agent, advanced Rs.1,00,000/- to the accused for fruit supply, which was not delivered. The cheque issued was dishonoured due to insufficient funds. (Paras 2, 6)
Findings of Court:
The Appellate Court found the complainant had no standing to sue as he was acting on behalf of a disclosed principal, and thus the accused owed no liability to him. (Paras 11, 12)
Issues: Whether the complainant, as an agent, could file a complaint under Section 138 of the NI Act against the accused for dishonouring the cheque. (Paras 11, 12)
Ratio Decidendi: The court held that an agent cannot enforce contracts made on behalf of a disclosed principal, reaffirming the principle that the liability lies with the principal, not the agent. (Paras 22, 24)
Result: Appeal dismissed.
JUDGMENT :
Rakesh Kainthla, J.
The present appeal is directed against the judgment dated 22.11.2010, passed by learned Sessions Judge, Kullu, District Kullu, H.P. (learned Appellate Court), vide which the judgment of conviction and order of sentence dated 30.03.2009 passed by learned Judicial Magistrate, First Class, Manali (learned Trial Court) were set aside. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience)
2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that the complainant is an agent of M/s A.M. Fruit Commission Agent, Delhi. He used to pay advance money to the fruit growers who used to send the fruits to M/s A.M. Fruit Commission Agent for sale. The accused is a fruit grower and has an orchard under the name and style of Shringi Orchard. The accused approached the complainant and demanded Rs.1,00,000/- as an advance, consisting of Rs.60,000/- in cash and packing material worth Rs.40,000/-. The accused assured the complainant that he would send the fruits to M/s A.M. Fruit Commission Agent, Delhi. The complainant paid Rs.60,000/- in cash and supplied the packing material worth Rs.40,000/- to the accused. The accused failed to send the fruits from his orchard to M/s A.M. Fruit Commission Agent, Delhi. The complainant subsequently demanded Rs.1,00,000/- from the accused. The accused handed over a cheque for Rs.1,00,000/- to the complainant to return the amount. The complainant presented the cheque before the Kangra Cooperative Bank, Banjar, for encashment; however, the cheque was dishonoured with an endorsement of ‘insufficient funds’. The complainant sent a legal notice to the accused, requesting him to pay the amount within 15 days of receipt of the notice. The accused failed to make the payment despite receiving the notice. Hence, the complaint was filed against the accused.
3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW-1), Jai Chand Thakur (CW-1 wrongly mentioned), and Harish Thakur (CW-2).
5. The accused in his statement recorded under Section 313 of Cr.P.C. admitted that he had taken the advance of Rs.60,000/- in cash and packing material worth Rs.40,000/- from the complainant. He stated that he had sent the fruit from his orchard to the fruit company as per the agreement. He admitted that he had handed over a cheque to the complainant, which was dishonoured. He admitted that a notice was issued to him. He examined Jeet Ram (DW-1), Bali Ram (DW-2) and himself (DW-3) in his defence.
6. Learned Trial Court held that the accused had admitted the case of the complainant in his statement recorded under Section 313 of Cr.PC. It was proved that the accused had taken the advance from the complainant and issued a cheque in his favour. The cheque was dishonoured due to ‘insufficient funds’, and the accused had failed to pay money despite receipt of a valid legal notice of the demand. The plea of the accused that he had sent the fruit to M/s A.M. Fruit Commission Agent, Delhi, was not established by his testimony. Therefore, the accused was convicted of the commission of an offence punishable under Section 138 of the NI Act, and he was sentenced to undergo simple imprisonment for one year and pay a compensation of Rs.1,40,000/- for the commission of the aforesaid offence.
7. Being aggrieved by the judgment and order passed by the learned Trial Court, the accused filed an appeal, which was decided by the learned Appellate Court on 05.06.2008., Learned Appellate Court noti
