The High Court of Himachal Pradesh has upheld the acquittal of an accused in a cheque dishonour case, ruling that a complainant cannot maintain a prosecution under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) if they fail to provide documentary evidence proving they are the proprietor of the firm named as the payee on the cheque. Furthermore, the Court observed that a cheque issued for a time-barred debt does not constitute a legally enforceable debt.
Justice Rakesh Kainthla dismissed the appeal filed by the complainant, Ashwani Kumar, against the acquittal of the respondent, Raj Kumar, by the Judicial Magistrate First Class, Court No. 2, Ghumarwin.
Background of the Case
The complainant, claiming to be the proprietor of ‘M/s Baba Enterprises’ in Ghumarwin, filed a complaint alleging that the accused, with whom he had friendly relations, had approached him four years prior to filing the complaint for a loan of ₹80,000. The accused allegedly promised to repay the amount within one month.
To discharge this liability, the accused issued a cheque of ₹80,000 drawn on H.P. State Cooperative Bank, Ghumarwin. When presented for encashment, the cheque was dishonoured with the endorsement: “the firm has changed the title of the account and the account had been changed.”
The Trial Court dismissed the complaint on October 16, 2012, holding that the cheque was issued in the name of ‘Baba Enterprises’ and there was no evidence to connect the complainant to the said firm. Consequently, the Trial Court ruled that the complainant had no locus standi to file the complaint. Aggrieved by this decision, the complainant approached the High Court.
Arguments
The Appellant (Complainant): Mr. Pankaj Sharma, counsel for the appellant, argued that the complainant had specifically claimed ownership of Baba Enterprises in his proof affidavit. He contended that this assertion was not challenged in cross-examination and that the Trial Court had ignored the presumption attached to the cheque.
The Respondent (Accused): Mr. Neel Kamal Sharma, counsel for the respondent, submitted that the complainant failed to prove his connection to Baba Enterprises. He argued that the Trial Court’s view that the complainant lacked locus standi was reasonable and should not be interfered with, even if another view was possible.
Court’s Analysis
The High Court examined the records and addressed two primary legal issues: the enforceability of the debt and the locus standi of the complainant.
1. Time-Barred Debt The Court noted the complainant’s admission in his affidavit that the loan was obtained “four years before filing the complaint.” Justice Kainthla observed that the limitation period for the recovery of a loan is three years.
Citing the precedent set by the Court in Social Leasing (India) Ltd. v. Rajan Kumar Kanthwal, 2025 SCC OnLine HP 3131, the Bench held:
“A cheque issued towards a time-barred debt does not constitute a legally enforceable debt. Therefore, the complaint was not maintainable as there was no legally enforceable debt subsisting on the date of the presentation of the cheque.”
2. Proof of Proprietorship The Court scrutinized the complainant’s claim of being the proprietor of ‘Baba Enterprises,’ the payee named on the cheque. The Court observed that while the complainant asserted this status in the complaint and affidavit, “he did not place any document on record to prove this fact.”
The Court relied on the Supreme Court judgment in Milind Shripad Chandurkar v. Kalim M. Khan, (2011) 4 SCC 275, which established that a mere statement in an affidavit is insufficient to prove proprietorship without documentary evidence. The Court quoted the Supreme Court’s observation:
“The appellant cannot claim to be the payee of the cheque, nor can he be the holder in due course, unless he establishes that the cheques had been issued to him or in his favour or that he is the sole proprietor of the concern… A mere statement in the affidavit in this regard is not sufficient to meet the requirements of law.”
The Bench also referred to previous judgments of the Himachal Pradesh High Court, including S.P. Saklani v. Ravinder Singh Thakur, 2012 SCC OnLine HP 771 and Ram Chand v. Rafee Mohammad, 2018 SCC OnLine HP 3334, which reiterated that failure to prove a nexus between the complainant and the payee firm renders the evidence “wholly deficient.”
Decision
The High Court concluded that the Trial Court had taken a reasonable view in acquitting the accused. Justice Kainthla held:
“In the present case, no documentary evidence was produced to show that the complainant is the owner of Baba Enterprises, and the learned Trial Court had rightly held that the complaint was not maintainable.”
The appeal was dismissed.
In compliance with Section 437-A of the Code of Criminal Procedure (Section 481 of the Bhartiya Nagarik Suraksha Sanhita, 2023), the respondent was directed to furnish bail bonds of ₹50,000 to ensure appearance before the Supreme Court if an appeal is preferred.
Case Details:
- Case Title: Ashwani Kumar v. Raj Kumar
- Case Number: Cr. Appeal No. 87 of 2013
- Citation: 2025:HHC:43252
- Coram: Justice Rakesh Kainthla
- Counsel for Appellant: Mr. Pankaj Sharma, Advocate
- Counsel for Respondent: Mr. Neel Kamal Sharma, Advocate
