1. Complaint under Section 138 NI Act for dishonour of cheque issued by company; accused challenged maintainability on grounds of non-impleadment of company through natural person. (Para 2 )
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2026 Supreme(Online)(HP) 3220
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE SANDEEP SHARMA
RAJESHWAR SABARWAL AND OTHERS – Appellant
Versus
M/S ROYAL APPLE MERCHANTS – Respondent
CRMMO/10/2022
Important Points
Directors can be prosecuted under Section 138 of the NI Act if the company is impleaded and specific averments about their day-to-day management are made. Procedural errors in impleading the company through a natural person are curable and cannot be re-litigated once the issue attains finality.
Subject
Criminal Law - Negotiable Instruments Act
Act Referred
Headnote
(A) Negotiable Instruments Act, 1881 - Sections 138, 141 and 142 - Code of Criminal Procedure, 1973 - Sections 204 and 482 - Dishonour of cheque - Impleadment of company - Omission to implead a company through a natural person is a procedural irregularity that can be rectified in the interest of justice at any stage of the judicial proceedings (Para 4) - To maintain a complaint under Section 138 of the Act against directors, it is incumbent upon the complainant to make specific averments regarding their control over the day-to-day affairs of the company (Para 9).
(B) Quashing of proceedings - Finality of judgments - Once a court has adjudicated on the maintainability of a complaint and the judgment has attained finality, the same issues cannot be re-agitated by challenging a subsequent order that was passed based on those earlier findings (Paras 10, 11 and 12).
(C) Premature filing of complaint - Whether a complaint was filed before the expiry of the statutory period following the issuance of a legal notice is a question of fact to be determined by the trial court through a totality of evidence (Para 16).
Facts of the case:
A complaint under Section 138 of the Negotiable Instruments Act was filed against a company and its directors for the dishonour of a cheque issued as part payment for a commercial transaction. The accused previously challenged the summoning order, which was dismissed. Subsequently, they approached the court to quash the complaint and the order framing the notice of accusation, arguing that the company was not impleaded through a natural person and that the complaint lacked specific averments regarding the directors' role in the day-to-day management of the company's affairs.
Findings of Court:
The court found that the issues regarding the mode of impleadment of the company and the liability of the directors had already been decided in prior proceedings and had attained finality. Furthermore, the court observed that the complaint and the preliminary evidence provided via affidavit contained specific averments stating that the directors were responsible for the day-to-day affairs and were actively participating in the business.
Issues: Whether the complaint and the notice of accusation could be quashed on the grounds of improper impleadment of the company and the alleged absence of specific averments concerning the directors' roles in the company's management.
Ratio Decidendi: A procedural defect in failing to implead a company through a natural person is curable. Where a competent court has already ruled on the maintainability of the complaint and such decision remains unchallenged, the issue is final and cannot be reopened. Specific averments in the complaint and preliminary evidence regarding the directors' active participation in business are sufficient to establish vicarious liability for the purpose of issuing process.
Result: Petitions dismissed.
(B) Quashing of proceedings - Finality of judgments - Once a court has adjudicated on the maintainability of a complaint and the judgment has attained finality, the same issues cannot be re-agitated by challenging a subsequent order that was passed based on those earlier findings (Paras 10, 11 and 12).
(C) Premature filing of complaint - Whether a complaint was filed before the expiry of the statutory period following the issuance of a legal notice is a question of fact to be determined by the trial court through a totality of evidence (Para 16).
Facts of the case:
A complaint under Section 138 of the Negotiable Instruments Act was filed against a company and its directors for the dishonour of a cheque issued as part payment for a commercial transaction. The accused previously challenged the summoning order, which was dismissed. Subsequently, they approached the court to quash the complaint and the order framing the notice of accusation, arguing that the company was not impleaded through a natural person and that the complaint lacked specific averments regarding the directors' role in the day-to-day management of the company's affairs.
Findings of Court:
The court found that the issues regarding the mode of impleadment of the company and the liability of the directors had already been decided in prior proceedings and had attained finality. Furthermore, the court observed that the complaint and the preliminary evidence provided via affidavit contained specific averments stating that the directors were responsible for the day-to-day affairs and were actively participating in the business.
Issues: Whether the complaint and the notice of accusation could be quashed on the grounds of improper impleadment of the company and the alleged absence of specific averments concerning the directors' roles in the company's management.
Ratio Decidendi: A procedural defect in failing to implead a company through a natural person is curable. Where a competent court has already ruled on the maintainability of the complaint and such decision remains unchallenged, the issue is final and cannot be reopened. Specific averments in the complaint and preliminary evidence regarding the directors' active participation in business are sufficient to establish vicarious liability for the purpose of issuing process.
Result: Petitions dismissed.
Legal Category Hierarchy
- crime and sentencing
- practice and procedure
- commercial law
Petitioner Advocates:Jeevesh Sharma Jeevesh Sharma Ajay Kumar Sharma ,Respondent Advocate: Nipun Thakur Peeyush Verma NEMO Parmod Singh Thakur
Table of Contents
2. Petitioners argued complaint not maintainable due to non-impleadment of company through natural person; respondents argued issues already decided and petition barred by res judicata. (Para 6 , 7 , 8 )
3. Petitions dismissed; interim order vacated; parties directed to appear before trial court on 20.06.2026. (Para 17 , 18 )
4. Whether the issue of non-impleadment of a company through a natural person can be re-agitated after being decided in a prior petition?
No, the issue is barred by res judicata; a prior judgment on the same issue between the same parties that attained finality cannot be re-opened. (Para 9 , 10 , 11 , 12 , 13 )
5. Is the omission to implead a company through a natural person in a complaint under Section 138 NI Act a fatal defect?
No, it is a curable procedural irregularity that can be rectified at any stage of the trial. (Para 4 , 11 , 14 )
6. Are specific averments regarding the directors' role in day-to-day affairs necessary to maintain a complaint under Section 141 NI Act?
Yes, specific averments are necessary, but the complaint in this case contained such averments, negating the ground for quashing. (Para 14 , 15 )
7. Can a complaint under Section 138 NI Act be quashed on the ground of premature filing when the issue was not specifically raised earlier?
No, the plea of premature filing must be specifically raised and supported by evidence; otherwise it cannot be entertained at a later stage. (Para 16 )
1. CRMMO-10 of 2022
Rajeshwar Sabarwal & Ors.
…….Petitioners
Versus
M/s Royal Apple Merchants
…..Respondents
2. CRMMO-11 of 2022
Rajeshwar Sabarwal & Ors.
…….Petitioners
Versus
M/s Royal Apple Merchants
…..Respondents
3. CRMMO-12 of 2022
Rajeshwar Sabarwal & Ors.
…….Petitioners
Versus
M/s Royal Apple Merchants
…..Respondents
4. CRMMO-13 of 2022
Rajeshwar Sabarwal & Ors.
…….Petitioners
Versus
M/s Royal Apple Merchants
…..Respondents
Coram:
Hon’ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting?
1
Yes.
For the petitioner(s):
Mr. R.K. Bawa, Senior Advocate with Mr. Jeevesh Sharma, Advocate.
For the Respondent(s)
:Mr. Pramod Singh Thakur, Advocate, for respondent No.1, in all the petitions.
1
Whether the reporters of the local papers may be allowed to see the judgment?
::: Downloaded on - 09/06/2026 03:25:01 :::CIS
2
Mr. Ajay Kumar, Advocate, for respondents No.3 & 4, in all the petitions. .
________________________________________________P_______
Sandeep Sharma, Judge
1. Since common questions of facts are involved in all the above-captioned cases, this Court heard them together and the same are now being disposed of vide common judgfment.
2. For having bird’s eye view, facts, which are common in all the cases, are that respondent No.1-complainant (in short “complainant”) instituted complaint under Section 138 of Negotiable Instruments Act (in short “Act”) in the Court of learned Additional Chief Judicial Magistrate, Shimla, Himachal Pradesh, alleging therein that petitioner-accused and proforma respondents No.2 to 4 (hereinafter collectively referred to as the “accused”) had purchased 36952 apple boxes from him for a sum of Rs.4,90,80,459/-. However, accused paid only sum of Rs.1,68,10,000/- till 22.05.2013 and subsequently, with a view to discharge their lawful liability, accused No.2 issued a cheque dated 30.05.2013 for a sum of Rs.30,00,000/- drawn on Punjab National Bank, SDA Complex, Kasumpti, Shimla, as part payment towards the balance payment of the complainant. Since afore cheque was dishonoured by the banker of accused No.2 on account of insufficient funds in his account, coupled with the fact that despite his having received legal notice, afore amount was not paid, complainant instituted proceedings under Section 138 of the Act in the competent Court of law, which taking note of averments made in the complaint as well as preliminary evidence adduced on record by the complainant, passed order dated 18.11.2013, thereby summoning the accused.
3. Being aggrieved and dissatisfied with issuance of summoning order, accused filed a petition under Section 482 Cr.P.C i.e. Cr.MMO No.150 of 2015, titled as Rajeshwar Sabharwal son of Sh. Om Prakash Sabharwal and others Vs. M/s Royal Apple Merchants & Ors., praying therein to set aside order dated 18.11.2023 on the ground that complaint filed at the behest of the complainant was not maintainable. In afore proceedings, accused pleaded that the complainant had not prosecuted company through its duly authorized natural person and no specific pleadings had been made in the complaint with regard to role, if any, played by accused No.2 to 6 in day to day affairs of the company. However, afore pleas taken at the behest of the accused came to be negated by this Court vide judgment dated 25.02.2016 (Annexure P-4). In afore judgment, it came to be ruled that as per Section 204 Cr.P.C, at the time of issuing process, Magistrate is required to satisfy himself that there are sufficient grounds for proceeding against the accused persons. If the Magistrate is satisfied that sufficient grounds exist for proceeding, he/she shall issue summons in a summons case and warrants in a warrant case.
4. In afore proceedings, it also came to be held that Magistrate is not required to go into detailed discussion of merits and demerits of the case at the time of issuing process. In support of aforesaid findings, this Court placed reliance upon the judgment passed by the Hon’ble Apex Court in Nagawwa Vs. Veeranana Shiv
