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2026 Supreme(Online)(HP) 3672
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J
Baldev Singh – Appellant
Versus
Rahul Bhardwaj – Respondent
Cr. Revision No. 339 of 2021
Important Points
Subject
Criminal Law - Negotiable Instruments
Act Referred
Code of Criminal Procedure: S.313, S.397, S.401, S.357(3), S.421
Indian Penal Code: S.64
General Clauses Act: S.27
Evidence Act: S.114
Headnote
(B) Negotiable Instruments Act, 1881 - Section 138 and 141 - Proprietary concern - Legal status - A sole proprietorship has no independent juristic existence; it is synonymous with its proprietor - Failure to implead the concern as an accused or failure to record notice of accusation against it does not invalidate conviction of the sole proprietor. (Paras 10, 11)
(C) Criminal Procedure Code, 1973 - Sections 397 and 401 - Revisional jurisdiction - Scope - Revisional court does not act as appellate court - Interference is warranted only in cases of patent defects, errors of jurisdiction, or perversity - Reappreciation of evidence on merits is not permitted unless findings are untenable in law. (Paras 7-9)
Facts of the case:
A complaint was filed alleging that a cheque issued for repayment of a friendly loan was dishonoured due to insufficient funds and the drawer failed to make payment despite receipt of a legal notice. Both trial and appellate courts convicted the accused, dismissing the contention that no liability existed and noting that a proprietary concern does not require separate criminal prosecution from its owner.
Findings of Court:
The Court held that issuance and signature of the cheque were admitted, triggering statutory presumptions. The appellant-accused failed to rebut these presumptions by failing to produce evidence during trial. Further, the Court clarified that a sole proprietorship is not a distinct legal entity requiring separate notice or indictment under Section 141 of the Act, 1881.
Issues: Whether a proprietary concern requires separate arraignment in criminal proceedings and whether statutory presumptions under the Act shift the burden of proof to the accused when execution of the instrument is admitted.
Ratio Decidendi: Sole proprietorships are not juristic persons separate from their owners; thus, the proprietor is fully liable. Once a cheque is proven to be signed and drawn, the law mandates a presumption of consideration, and in the absence of evidence led by the accused to rebut this at trial, conviction is proper. Revisional courts must not interfere with concurrent findings of fact unless they are legally perverse.
Result: Revision petition dismissed.
For the Appellants/Petitioners: Abhinav Mohan Goel
For the Respondents: Adarsh K. Vashista
The present revision is directed against the order dated 04.12.2021, passed by the learned Sessions Judge, Solan, District Solan, H.P. (learned Appellate Court) vide which judgment of conviction dated 26.03.2021 and order of sentence dated 07.04.2021, passed by the learned Additional Chief Judicial Magistrate, Kasauli, District Solan, 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 petition are that the complainant filed a complaint against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that parties were known to each other. The accused borrowed a sum of ₹1,00,000/- from the complainant in the year 2016 on different occasions. The accused issued a cheque of ₹1,00,000/- drawn on Punjab National Bank, Patta Mehlog, District Solan, H.P., in favour of the complainant to repay the amount. The complainant presented the cheque for collection to his bank, but it was dishonoured with an endorsement ‘funds insufficient’. The complainant sent a legal notice to the accused asking him to repay the money within 15 days of its receipt, which was duly served upon him. The accused failed to repay the money despite the receipt of the notice; hence, a complaint was filed to take action against the accused.
3. The 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 (CW-1) to prove his complaint.
5. The accused, in his statement recorded under section 313 of the Code of Criminal Procedure (CrPC), denied the complainant's case in its entirety. He claimed that he had issued the cheque as security, and the witnesses had deposed falsely against him. He did not produce any evidence despite repeated adjournments; hence, his evidence was closed by the order of the court on 16.09.2019.
6. Learned Trial Court held that the accused admitted the issuance of the cheque in favour of the complainant. A presumption would arise that the cheque was issued for consideration to discharge the debt/liability. The cheque was dishonoured with an endorsement ‘insufficient funds’. A legal notice was served upon the accused, but he failed to pay the amount. Hence, the learned Trial Court convicted the accused of the commission of an offence punishable under Section 138 of the NI Act and sentenced him to undergo simple imprisonment for three months, pay a compensation of ₹1,25,000/- and in default of payment of compensation, to undergo further imprisonment for one month.
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 Sessions Judge, Solan, District Solan, H.P. (learned Appellate Court). The Appellate Court concurred with the findings recorded by the learned Trial Court 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 cheque was dishonoured with an endorsement ‘insufficient funds’. The complainant served a legal notice upon the accused, and the accused failed to repay the amount despite the receipt of the notice; hence, the learned Trial Court had rightly convicted the accused. The sentence was not harsh or excessive, and no interference was required with the sentence imposed by the learned Trial Court; consequently, the appeal was dismissed.
8. Being aggrieved by the judgments and order passed by the learned Courts below, the accused has filed the present revision asserting that the learned Courts below erred in appreciating the material placed before them. The accused was arrayed
