Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(HP) 1932

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J
Manoj Kumar – Appellant
Versus
Shankar Dass – Respondent
Cr. Revision No. 385 of 2015

Advocates:
For the Appellants/Petitioners: Surya Chauhan
For the Respondents: H S Rangra, Lokender Kutlehria

A sole proprietorship lacks separate legal identity, allowing the proprietor to file a complaint. A cheque issued as security creates a legally enforceable liability under the Act. Once execution is admitted, statutory presumptions arise, and the Revisional Court shall not reappreciate evidence absent perversity.

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138, 142(2), 142-A, and 141 - Prosecution for dishonor of cheque - Territorial jurisdiction - Amendment in Act regarding jurisdiction - Proprietary concern not a distinct legal entity - Complainant being sole proprietor entitled to file complaint in personal name - Cheque issued as security creates enforceable liability - Presumption under Sections 118 and 139 of the Act - (Paras 20, 23, 26, 28, 32, 36, 44)

(B) Revisional Jurisdiction - Scope - Limited to correcting patent defects, errors of jurisdiction, or impropriety - Revisional court not to act as appellate court by reappreciating evidence - Concurrent findings of lower courts should be maintained unless perverse. (Paras 14, 15, 16)

Facts of the case:
A complaint under Section 138 of the Act was filed against the accused for a dishonoured cheque issued in discharge of a debt. The accused contested the maintainability of the complaint, the jurisdiction of the Court, and argued that the cheque was a security instrument rather than for discharge of a specific debt. Both the Trial Court and the Appellate Court convicted the accused, leading to this revision petition.

Findings of Court:
The court held that a proprietary concern is not a separate legal entity, making the complaint filed by the proprietor maintainable. Territorial jurisdiction was upheld based on the location of the bank where the cheque was presented. The presumption under Sections 118 and 139 of the Act was deemed not rebutted as the accused failed to lead evidence, and a cheque issued as security is sufficient for triggering penal consequences under the Act upon dishonour.

Issues: Whether the complaint filed by a sole proprietor is maintainable, whether the court had territorial jurisdiction for the offence, and whether a blank cheque issued as security creates a legally enforceable debt under the Act.

Ratio Decidendi: A proprietary concern and its proprietor are one and the same entity; therefore, a complaint can be filed by the sole proprietor. Under amended provisions of the Act, the court where the cheque was submitted for collection exercises jurisdiction. A cheque issued as security constitutes a legally enforceable liability, and the initial presumption of consideration under the Act is mandatory and shifts the burden to the accused to provide evidence to rebut said presumption.

Result: Revision petition dismissed.

Table of Content
1. summary of facts leading to conviction for dishonour of cheque. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. summary of contentions by the parties during revision proceedings. (Para 9 , 10 , 11 , 12)
3. scope of the high court's limited revisional jurisdiction under section 397/401 crpc. (Para 13 , 14 , 15 , 16 , 17 , 18)
4. proprietorship concern standing for criminal complaint filing under ni act. (Para 19 , 20 , 21 , 22)
5. establishing territorial jurisdiction for section 138 offences post-amendment. (Para 23 , 24 , 25)
6. legal personality of proprietorship concerns in criminal liability proceedings. (Para 26 , 27)
7. presumptions under sections 118 and 139 of the ni act. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35)
8. liability arising from cheques issued as security in financial transactions. (Para 36 , 37 , 38 , 39 , 40 , 41)
9. proof of dishonour and service of notice in section 138 cases. (Para 42 , 43 , 44 , 45 , 46)
10. principles regarding quantum of sentence and compensatory fines. (Para 47 , 48 , 49 , 50 , 51 , 52 , 53)

Rakesh Kainthla, Judge

The present revision is directed against the judgment dated 21.09.2015 passed by the learned Sessions Judge, Mandi, District Mandi, H.P. (learned Appellate Court) vide which judgment of conviction and order of sentence dated 12.03.2015 passed by the learned Special Judicial Magistrate, Mandi, District Mandi, H.P. (learned Trial Court) were upheld. (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 revision 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, 1881 (in short, 'NI Act'). It was asserted that the complainant is a proprietor of M/s Shankar Dass and Sons, Purani Mandi, District Mandi, H.P. and is running a business of confectioneries. The accused is also running the business of confectionery and other articles under the name and style of M/s Mahalaxmi Traders at Village and post office Bajora, Tehsil and District Kullu, H.P., and he used to purchase the material from the complainant for sale. The accused had purchased the material worth ₹ 95,000 from the complainant in June 2008, and he issued a cheque dated 12/07/2008 for ₹ 50,000 drawn on the Union Bank of India branch office at Bhuntar. The complainant deposited the cheque at his bank, and it was dishonoured with an endorsement “insufficient funds'. The complainant issued a demand notice to the accused asking him to pay the amount within 15 days. Notice was served upon the accused, but he failed to pay the money. Hence, a complaint was filed before the learned Trial Court against the accused for taking action as per law.

3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a 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 (CW1) to prove his complaint.

5. The accused, in his statement recorded under section 313 Cr. P.C., admitted that the complainant is a proprietor of M/s Shanker Dass and Sons, and he was running a confectionery business at Purani Mandi. He stated that he had issued a blank security cheque to the complainant. He denied the rest of the complainant’s case. He stated that he owed no legal liability towards the complainant, and the complainant deposed falsely against him. He did not produce any evidence in defence.

6. Learned Trial Court held that the issuance of the cheque was not disputed, and a presumption arose that the cheque was issued for consideration to discharge debt/liability. The accused failed to produce any evidence to rebut the presumption. The cheque was dishonoured with endorsement “insufficient funds”, and th

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2026 Supreme(Online)(HP) 1932

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLARakesh Kainthla, JManoj Kumar – AppellantVersusShankar Dass – RespondentCr. Revision No. 385 of 2015

Cases Referred (10)

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J
Manoj Kumar – Appellant
Versus
Shankar Dass – Respondent
Cr. Revision No. 385 of 2015