The court clarified that a complaint under Section 138 of the Negotiable Instruments Act is maintainable against individuals without needing to name the proprietorship, as the individual is liable for debts incurred through the business.

JUDGMENT :

Rakesh Kainthla, J.

The present appeal is directed against the judgment dated 01.12.2023 passed by learned Additional Chief Judicial Magistrate, Court No.2, Shimla, H.P. (learned Trial Court) vide which the complaint filed by the appellant/complainant before the learned Trial Court was dismissed, and the respondent/accused before the learned Trial Court was acquitted. (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, 1988 (NI Act). It was asserted that the complainant is a financial institution engaged in banking activities. The accused sought a personal loan of  Rs. 1,00,000/-, which was sanctioned to him on 17.05.2017. The loan was to be repaid in a monthly instalment of  Rs. 1800/- per month in eight years. The accused failed to repay the amount as per the terms and conditions agreed between the parties. An amount of Rs. 2,13,179/- became due. The accused issued a cheque on 15.01.2013 for  Rs. 2,09,437/- drawn on UCO Bank, Kasumpti, to return the amount. The complainant presented the cheque before the bank, but it was returned with the endorsement “funds insufficient”. A notice was sent to the accused, but it was returned with the report that the address was incorrect. Notice sent to the Shimla address was returned with the report that the house was locked. Notice was deemed to be served upon the accused. The accused failed to repay the amount within 15 days of receipt. Hence, the complaint was filed to take action against the accused as per the law.

3. 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 Ranjana Chauhan (CW1) to prove its complaint.

5. The accused, in his statement recorded under Section 313 of Cr. P.C. stated that a blank security cheque was issued by the firm Harsh Enterprises. The complainant misused the cheque. He had paid the cheque amount. He stated that he wanted to lead defence evidence, but he did not lead any evidence and closed the evidence on 27.09.2023.

6. Learned Trial Court held that the cheque was issued by Choice Fast Food. The accused signed the cheque as a proprietor. A complaint was filed only against the accused and not against the firm. The complaint could not have been filed without impleading the firm. Therefore, the complaint was dismissed.
 
7. Being aggrieved by the judgment passed by the learned Trial Court, the complainant has filed the present appeal asserting that the learned Trial Court erred in acquitting the accused. The complainant proved all the ingredients of the commission of an offence punishable under Section 138 of the NI Act. The cheque was issued by the accused to discharge his legal debt/liability. Merely because he had described himself as a proprietor cannot lead to an inference that the cheque was issued on behalf of the company or the firm. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside.

8. I have heard Mr Prashant Chauhan, learned counsel for the appellant, and Mr Amardeep Singh, learned counsel for the respondent, and have gone through the records carefully.

9. The cheque was issued by Choice Fast Food, and the accused signed it as a proprietor. The learned Trial Court concluded that the accused had signed it as a proprietor of the firm/company. However, there is no material on record to show that Choice Fast Food is a firm/company. No certificate of registration of the firm or the incorporation of the company was plac