Case Note & Summary
The appellant, Bhupesh Rathod, filed a complaint against respondent no.1, Dayashankar Prasad Chaurasia, alleging an offence under Section 138 of the Negotiable Instruments Act, 1881. The accused had issued eight cheques in favour of M/s. Bell Marshall Tele System Limited, a company. The cheques were presented on 10th May 2006 and were dishonoured. Despite a demand notice, the amount was not paid, leading to the complaint. The Special Metropolitan Magistrate, Mumbai, acquitted the accused. The appellant, being the original complainant, appealed after obtaining special leave. The High Court heard arguments from both sides. The court noted that the cheques were drawn in favour of the company, which is a separate juristic entity. The complaint was filed by the appellant in his own name, not by the company. Under Section 142(a) of the NI Act, cognizance of an offence under Section 138 can only be taken upon a complaint by the payee or holder in due course. Since the payee was the company, the appellant, as an individual, was not the payee or holder in due course. The court held that the prosecution was bad from the outset, and the appeal was dismissed, affirming the acquittal.
Headnote
A) Negotiable Instruments Act - Section 138 - Dishonour of Cheque - Complaint by Payee - The complaint under Section 138 must be made by the payee or holder in due course of the cheque. Where the payee is a company, the complaint must be filed by the company, not by an individual director in his personal capacity, unless the company authorizes him. The court held that the complaint filed by the appellant, who was not the payee, was not maintainable, and the prosecution was bad. (Paras 5-7)
Issue of Consideration
Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 can be filed by an individual who is not the payee or holder in due course of the cheque, when the payee is a company.
Final Decision
The appeal is dismissed. The order of acquittal passed by the Special Metropolitan Magistrate, Mumbai, is confirmed.
Law Points
- Complaint under Section 138 NI Act must be filed by payee or holder in due course
- Company as payee has separate legal identity
- Individual director cannot file complaint in personal capacity unless authorized
Case Details
2015 LawText (BOM) (08) 75
Criminal Appeal No.805 of 2009
Mrs. Kavita Pawar for Appellant, Mr. Amar Bhatt i/b Rakesh Tripathi for Respondent No.1, Mr. Deepak Thakre, APP for Respondent State
Dayashankar Prasad Chaurasia & Anr.
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Nature of Litigation
Appeal against acquittal in a complaint under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
The appellant sought to set aside the order of acquittal and convict respondent no.1.
Filing Reason
The appellant filed a complaint alleging dishonour of eight cheques issued by respondent no.1 in favour of M/s. Bell Marshall Tele System Limited.
Previous Decisions
The Special Metropolitan Magistrate, Mumbai, acquitted respondent no.1.
Issues
Whether the complaint under Section 138 NI Act was maintainable when filed by an individual who was not the payee or holder in due course of the cheques.
Submissions/Arguments
The appellant argued that the reasoning of the Magistrate leading to acquittal was incorrect.
The court observed that the prosecution itself was bad because the complaint was not filed by the payee company or its authorized representative.
Ratio Decidendi
Under Section 142(a) of the Negotiable Instruments Act, 1881, cognizance of an offence under Section 138 can only be taken upon a complaint made by the payee or the holder in due course of the cheque. Where the payee is a company, the complaint must be filed by the company, not by an individual director in his personal capacity, unless the company authorizes him. The complaint filed by the appellant, who was not the payee, was not maintainable, and the prosecution was bad.
Judgment Excerpts
In view of Clause (a) of Section 142 of the N.I.Act, the cognizance of an offence punishable under Section 138 of the N.I.Act can be taken only upon a complaint made by the payee, or the holder in due course of the cheque/s.
The payee was the company. If the complaint, as filed, is seen, it does not appear to have been filed by the Company.
Procedural History
The appellant filed a complaint under Section 138 NI Act against respondent no.1. The Special Metropolitan Magistrate, Mumbai, acquitted the accused. The appellant obtained special leave and filed the present appeal before the High Court.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 142(a)
