S.138 NI Act | When No Evidence Is Led To Prove Proprietorship, Complainant Can't Be Treated As Payee: Himachal Pradesh High Court

The Himachal Pradesh High Court has held that when a complainant fails to prove proprietorship of a sole proprietorship concern, they can't be treated as the payee or holder in due course under Section 138 of the Negotiable Instruments Act. It held that a mere authority letter issued after the complaint was filed does not constitute sufficient proof of authorisation.Justice Rakesh Kainthla: “Since in the present case no satisfactory evidence was produced to show that Complainant is the owner of Shirgul Filling Station, therefore, the learned Trial Court had rightly held that the complainant does not fall within the definition of payee and he was not entitled to file the complaint under Section 138 of N.I. Act.”Background Facts: The complainant, Ankur Aggarwal is a Manager of Shirgul Filling station and the accused is a registered Government Contractor with HPPWD and owns various vehicles. The complainant supplied fuel to the accused and the accused allegedly owed him 5,00,000/- for the fuel supplied. To discharge the liability, the accused issued a cheque. However, when the complainant presented the cheque before the bank, it was dishonoured with an endorsement of insufficient funds. Thereafter, the complainant served a notice to the issued demanding payment within 15 days. The accused allegedly refused to accept the notice, which was returned with the endorsement “refused.” The complainant treated this refusal as deemed service and filed a complaint under Section 138 of the Negotiable Instruments Act.Upon Trial, it was noted that although the cheque was issued in the name of Shirgul Filling Station, the complaint was filed by, Ankur Aggarwal based only on an authority letter. The Trial Court remarked that the authority letter was issued after the issuance of legal notice and after the complaint had already been filed. The Trial Court held that the authority letter cannot be construed to be equivalent to a general/special power of attorney. There was no proof on record that Shivani Gupta was indeed the proprietor of Shirgul Filling Station. Consequently, the Trial Court dismissed the complaint, concluding that it had not been filed by the payee as required under Section 138 of Negotiable Instruments Act. Findings:The High Court noted that Ankur Aggarwal stated in his cross-examination that Shirgul Filling Station is owned by Shivani Gupta but he did not bring on record any documents to show that he was posted as a Manager or was authorised to file the complaint. The only evidence brought on record was his mere assertion that he had a special power of attorney.Thus it remarked that the only evidence on record regarding the ownership of the Shirgul Filling Station was the statement of Ankur Agarwal. The statement of account of the accused, did not mention the name of Shivani Gupta either.Thus, the High Court upheld the judgement of the Trial Court holding that no satisfactory evidence was produced to show that Shivani Gupta is the owner of Shirgul Filling Station, and therefore, the Trial Court had rightly held that the complainant does not fall within the definition of payee and was not entitled to file the complaint under Section 138 of N.I. Act.Case Name: Shirgul Filling Station V/s Kamal SharmaCase No.: Cr.Appeal No. 262 of 2010Date of Decision: 08.07.2025For the Appellant: Mr. Bimal Gupta, Sr. Advocate, with Mr. Aman Thakur, Advocate For the Respondents: M/s. Rupinder Singh Thakur & Bhavya Sharma, AdvocatesClick Here To Read/Download Order

S.138 NI Act | When No Evidence Is Led To Prove Proprietorship, Complainant Can't Be Treated As Payee: Himachal Pradesh High Court

Mehak Aggarwal

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