Mohd. Kashif v. Bilal Hasan), under Section

1. Heard Sri Jagdish Prasad Mishra, learned counsel for the applicant as well as Sri Indrajeet Singh Yadav, learned AGA for the State/opposite party no.1.

2. This application under Section 482 of the Cr.P.C. has been filed by the applicant to quash the entire proceedings of Complaint Case No.9380 of 2024 (Mohd. Kashif Vs. Bilal Hasan), under Section 138 of the N.I. Act, Police Station-Civil Line, District Muzaffarnagar, pending before the Additional Court, N.I. Act Muzaffarnagar and also quash the summoning order dated 11.11.2024.

3. Learned counsel for the applicant has submitted that a complaint has been lodged by the opposite party no.2 on 7.5.2024 against while making Mark Engineer through its proprietor Bilal Hasan (applicant) as an accused party with an allegation that two cheques bearing no.172956 dated 12.3.2024 of Rs.16,24,000/- and the second cheque bearing no.172957 dated 12.3.2024 of Rs.6,01,800/- were drawn for Mark Engineers signed by authorised signatory and the said cheques were presented in the bank for three occasions and lastly on 22.3.2024 which came to be dishonoured on 25.3.2024, a statutory demand notice was issued on 8.4.2024 which is served upon the applicant on 12.4.2024 and thereafter a reply to the same was submitted on 22.4.2024 and the complaint was preferred on 7.5.2024. By virtue of the order dated 11.11.2024 has been summoned under Section 138 of the N.I. Act.

4. Questioning the summoning order the applicant has preferred the present application.

5. Learned counsel for the applicant has submitted that the summoning order cannot be sustained for more than one reason. Firstly, the subject cheques which are two in number had been drawn for Mark Engineers under the signature of authorised signatories and the accused was also impleaded as Mark Engineers through proprietor Bilal Hasan (applicant) but the order dated 11.11.2024 infacts summons Bilal Hasan (applicant) Proprietor of Mark Engineering. Submission is that in view of the provisions contained under Section 141 of the N.I. Act, the firm / company ought to have been summoned and once it has not been summoned, then the entire proceedings are bound to fall. Secondly, it has been argued that the cheques were issued as an advance and with regard to the misutilisation of the said cheque and playing fraud, the firm, M/s Mark Engineers had lodged a complaint for registration of an FIR lodged a complaint before the Court of Chief Judicial Magistrate, Dehradun, under Sections 409, 467, 468, 471 IPC against the opposite party no.2. It is thus submitted that no legally enforceable debt or liability stands accrued so as to make applicable the provisions of Section 138 of the N.I. Act. Thus it is submitted that the summoning order be quashed.

6. Learned AGA, on the other hand, submits that the issue as to whether the cheque was drawn or not is a matter of trial in the background of the provisions contained under Section 139 of the N.I. Act and further as per the description given in the complaint and in the present application, the firm in question is a sole proprietorship firm, thus there is no question of summoning the firm in that regard.

7. I have heard these submissions made across the bar and perused the record carefully. Apparently, two cheques dated 12.03.2024 for an amount of Rs. 16,24,000/- and Rs. 6,01,800 stood drawn by the applicant which lastly on presentation in the Bank on 22.03.2024 stood disordered on 25.03.2024, which was followed by a statutory demand notice on 8.04.2024, which is stated to have been served upon the applicant on 12.04.2024 and a reply whereof was submitted by the applicant to the said statutory demand notice on 22.04.2024 and the complaint was lodged on 7.05.2024. Thus, it becomes evidently clear that there has been procedured compliance of the provisions contained under Section 138 read with Section 142 of the N.I. Act.

8. Now, so far as the argument so sought to be raised by the applicant that the firm has not been summoned, thus the proceedings are bound to fail is concerned, the same is not convincible, particularly in view of the fact that the firm M/s Mark Engineering as per the description given in the complaint and the present complaint is a proprietorship firm. There is a vast difference between proprietorship and partnership, a partnership is an association of more than one person, however, sole proprietorship comprises only one person.

9. Section 141 of the N.I. Act provides for offences by the companies and explanation (a) implies company which means any body corporate and includes a firm or other association of individuals and explanation (b), director in relation to the firm means of partnership in the firm. Importantly, the firm in question is a sole proprietorship firm, thus, the concept of partnership firm and a company would not apply.

10. This court in the case of Abhishek Jain vs. State of U.P. & others, (2023) 0 Supreme (Alld.) 1581 had the occasion to consider the difference between a sole proprietorship firm and a partnership firm had opined as under:- "16. From the aforesaid observations made by the Apex Court, it is crystal clear that if the cheque is issued in the name of a firm, whether proprietorship or partnership firm, the proprietor or the partner as the case may be, becomes the holder in due course and he can sue in his own name and it is not necessary for him to sue in a trading name, though others can sue such firm in the trading name. Therefore, the instant complaint filed by the opposite party no.2, claiming himself to be a proprietor of the said firm in whose name the said cheque is issued by the applicant herein, in the considered opinion of this Court, complaint is maintainable. Even if the contention of applicant be accepted that the said Raj Rajeshwari Enterprises is a partnership and not a proprietorship firm, it will not help the applicant herein as even the partnership firm does not have a different legal identity and is not a juristic person. Therefore, a partner of the firm also becomes the holder in due course of the cheque within the meaning of Section 142 (1) of the N.I. Act. Thus, the complaint even on behalf of the partner of a firm in his own name is maintainable. Otherwise, also in the instant case, the applicant does not dispute that the cheque was issued in the name of the said Raj Rajeshwari Enterprises and the said cheque was dishonoured and demand notice was issued by the opposite party no.2, he has failed to comply with the said notice. Therefore, in view of the presumption under Section 139 of the N.I. Act and as per the law laid down by the Apex Court, this Court does not find any good ground to interfere in the instant case in exercise of jurisdiction under Section 482 Cr.P.C. "

11. As regards the submission of the learned counsel for the applicant that a contract stood executed between the National Highway Authority of India and the applicant on 8.2.2019 pursuant to execution of certain work and thereafter a sub-contract agreement also stood executed between the applicant and the opposite party no.2 on 12.2.2019 but since on 28.4.2022, the contract stood terminated by the N.H.A.I. and the cheques which were the part of the agreement dated on 12.2.2019 were misutilized and misused while submitting the same and getting it dishonour is concerned suffice to say that in the complaint itself the allegation is referable to the works executed by the complainant/opposite party no.2 on behalf of the applicant for the year 2019-20 wherein the total amount is stated to be due is Rs.30,31,344/-.

12. Apart from the same the complaint lodged by the applicant before the court of Judicial Magistrate, Dehradun on 27.5.2024 also talks about certain negotiations being made and about the two undated cheques which is alleged to have been misused.

13. The question as to whether what would be the impact of termination of the contract on 28.4.2022 by the NHAI upon the terms and the conditions and the works sole executed, if any, pursuant to the sub-contract dated 12.8.2019 cannot be adjudicated in the present proceedings as the same would be a matter of trial.

14. In so far as the reliance so placed upon the judgement in the case of M/s Indus Airways Pvt. Limited and others vs. M/s Aviation Pvt. Limited 2014 (6) SCC (Criminal) 845 is concerned there is no quarrel to the proposition of law so culled out. However, it was a case when the cheques were issued for advance payment of purchase and the purchase order was cancelled and supply not made.

15. Interestingly in the reply of the applicant dated 22.4.2024 to the statutory demand notice which is annexure-6 at page 34 of the paper book reference whereof has been made in paragraph 23, the following averments have been made:- "3. That thereafter in July-August 2023 my client entered into negotiation with you for supply and laying of thermoplastic road marking paint and for supply of delineators and during these negotiations an advance of Rs. 1,00,000/- by NEFT was made to you by my client as a token for placing order in future. On 11.10.2023, my client had placed order to you for purchasing and laying of thermoplastic road marking paint 5100 Sq Mtrs., worth Rs. (6,24.860/- (including GST 18%) and for supply of 1700 delineators worth Rs. 6,01,800)- (including GST 18%). Against this order two undated cheques bearing Cheque No. 172956 for Rs. 16,24,860/- & Cheque No. 172957 for Rs. 6,01,800/- in security of this order.

4. That the job of supply and laying of thermoplastic road marking paint (5041 sq mts. Only) worth Rs. 16,06,062/ was done by you, however 1700 delineators were not supplied by you and in the meantime, my client had made total payment of Rs. 14,60,000/- to you against the above said order from 14.08.2023 to 08.02.2024."

16. Apparently, the question as to whether the payments which were sought to be made by virtue of the subject cheques which were dishonoured is a subject matter of the contract which was terminated or not is a question of fact which is a matter of trial, however, this Court is not required to test the said submissions while adjudicating on the same particularly at a summoning stage. What is relevant is the statutory presumption so made under Section 139 of the N.I. Act which is in the favour of the holder of the cheque. Nonetheless this Court is also not required to go into the aspect of the matter as to whether the cheque which has been dishonoured was any way linked or related to the contract or not which was terminated by the NHAI.

17. As regards the argument so sought to be raised by the applicant that two cheques by way of security is concerned suffice to say that the question as to whether the cheque was by way of security or not is a question of trial as enunciated by the Hon'ble Apex Court in the case of M/s Womb Laboratories Private Limited Vs. Vijay Ahuja & another (2022) 18 SCC 631 has observed as under:- "In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved - that such security could not be treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."

18. In Sunil Todi and others Vs. State of Gujarat, (2022) 16 SCC 762 the Hon'ble Apex Court has reiterated the aforesaid law.

19. This Court at the stage of summoning is not required to delve into the terms of the contract and also quantum of payment made or not and the impact of the cancellation of the contract as it would be at best in a defence or a matter of trial.

20. Accordingly, no case is made out. The application stands rejected. Order Date :- 7.5.2025 piyush PIYUSH KUMAR High Court of Judicature at Allahabad

1. Heard Sri Jagdish Prasad Mishra, learned counsel for the applicant as well as Sri Indrajeet Singh Yadav, learned AGA for the State/opposite party no.1.

2. This application under Section 482 of the Cr.P.C. has been filed by the applicant to quash the entire proceedings of Complaint Case No.9380 of 2024 (Mohd. Kashif Vs. Bilal Hasan), under Section 138 of the N.I. Act, Police Station-Civil Line, District Muzaffarnagar, pending before the Additional Court, N.I. Act Muzaffarnagar and also quash the summoning order dated 11.11.2024.

3. Learned counsel for the applicant has submitted that a complaint has been lodged by the opposite party no.2 on 7.5.2024 against while making Mark Engineer through its proprietor Bilal Hasan (applicant) as an accused party with an allegation that two cheques bearing no.172956 dated 12.3.2024 of Rs.16,24,000/- and the second cheque bearing no.172957 dated 12.3.2024 of Rs.6,01,800/- were drawn for Mark Engineers signed by authorised signatory and the said cheques were presented in the bank for three occasions and lastly on 22.3.2024 which came to be dishonoured on 25.3.2024, a statutory demand notice was issued on 8.4.2024 which is served upon the applicant on 12.4.2024 and thereafter a reply to the same was submitted on 22.4.2024 and the complaint was preferred on 7.5.2024. By virtue of the order dated 11.11.2024 has been summoned under Section 138 of the N.I. Act.

4. Questioning the summoning order the applicant has preferred the present application.

5. Learned counsel for the applicant has submitted that the summoning order cannot be sustained for more than one reason. Firstly, the subject cheques which are two in number had been drawn for Mark Engineers under the signature of authorised signatories and the accused was also impleaded as Mark Engineers through proprietor Bilal Hasan (applicant) but the order dated 11.11.2024 infacts summons Bilal Hasan (applicant) Proprietor of Mark Engineering. Submission is that in view of the provisions contained under Section 141 of the N.I. Act, the firm / company ought to have been summoned and once it has not been summoned, then the entire proceedings are bound to fall. Secondly, it has been argued that the cheques were issued as an advance and with regard to the misutilisation of the said cheque and playing fraud, the firm, M/s Mark Engineers had lodged a complaint for registration of an FIR lodged a complaint before the Court of Chief Judicial Magistrate, Dehradun, under Sections 409, 467, 468, 471 IPC against the opposite party no.2. It is thus submitted that no legally enforceable debt or liability stands accrued so as to make applicable the provisions of Section 138 of the N.I. Act. Thus it is submitted that the summoning order be quashed.

6. Learned AGA, on the other hand, submits that the issue as to whether the cheque was drawn or not is a matter of trial in the background of the provisions contained under Section 139 of the N.I. Act and further as per the description given in the complaint and in the present application, the firm in question is a sole proprietorship firm, thus there is no question of summoning the firm in that regard.

7. I have heard these submissions made across the bar and perused the record carefully. Apparently, two cheques dated 12.03.2024 for an amount of Rs. 16,24,000/- and Rs. 6,01,800 stood drawn by the applicant which lastly on presentation in the Bank on 22.03.2024 stood disordered on 25.03.2024, which was followed by a statutory demand notice on 8.04.2024, which is stated to have been served upon the applicant on 12.04.2024 and a reply whereof was submitted by the applicant to the said statutory demand notice on 22.04.2024 and the complaint was lodged on 7.05.2024. Thus, it becomes evidently clear that there has been procedured compliance of the provisions contained under Section 138 read with Section 142 of the N.I. Act.

8. Now, so far as the argument so sought to be raised by the applicant that the firm has not been summoned, thus the proceedings are bound to fail is concerned, the same is not convincible, particularly in view of the fact that the firm M/s Mark Engineering as per the description given in the complaint and the present complaint is a proprietorship firm. There is a vast difference between proprietorship and partnership, a partnership is an association of more than one person, however, sole proprietorship comprises only one person.

9. Section 141 of the N.I. Act provides for offences by the companies and explanation (a) implies company which means any body corporate and includes a firm or other association of individuals and explanation (b), director in relation to the firm means of partnership in the firm. Importantly, the firm in question is a sole proprietorship firm, thus, the concept of partnership firm and a company would not apply.

10. This court in the case of Abhishek Jain vs. State of U.P. & others, (2023) 0 Supreme (Alld.) 1581 had the occasion to consider the difference between a sole proprietorship firm and a partnership firm had opined as under:- "16. From the aforesaid observations made by the Apex Court, it is crystal clear that if the cheque is issued in the name of a firm, whether proprietorship or partnership firm, the proprietor or the partner as the case may be, becomes the holder in due course and he can sue in his own name and it is not necessary for him to sue in a trading name, though others can sue such firm in the trading name. Therefore, the instant complaint filed by the opposite party no.2, claiming himself to be a proprietor of the said firm in whose name the said cheque is issued by the applicant herein, in the considered opinion of this Court, complaint is maintainable. Even if the contention of applicant be accepted that the said Raj Rajeshwari Enterprises is a partnership and not a proprietorship firm, it will not help the applicant herein as even the partnership firm does not have a different legal identity and is not a juristic person. Therefore, a partner of the firm also becomes the holder in due course of the cheque within the meaning of Section 142 (1) of the N.I. Act. Thus, the complaint even on behalf of the partner of a firm in his own name is maintainable. Otherwise, also in the instant case, the applicant does not dispute that the cheque was issued in the name of the said Raj Rajeshwari Enterprises and the said cheque was dishonoured and demand notice was issued by the opposite party no.2, he has failed to comply with the said notice. Therefore, in view of the presumption under Section 139 of the N.I. Act and as per the law laid down by the Apex Court, this Court does not find any good ground to interfere in the instant case in exercise of jurisdiction under Section 482 Cr.P.C. "

11. As regards the submission of the learned counsel for the applicant that a contract stood executed between the National Highway Authority of India and the applicant on 8.2.2019 pursuant to execution of certain work and thereafter a sub-contract agreement also stood executed between the applicant and the opposite party no.2 on 12.2.2019 but since on 28.4.2022, the contract stood terminated by the N.H.A.I. and the cheques which were the part of the agreement dated on 12.2.2019 were misutilized and misused while submitting the same and getting it dishonour is concerned suffice to say that in the complaint itself the allegation is referable to the works executed by the complainant/opposite party no.2 on behalf of the applicant for the year 2019-20 wherein the total amount is stated to be due is Rs.30,31,344/-.

12. Apart from the same the complaint lodged by the applicant before the court of Judicial Magistrate, Dehradun on 27.5.2024 also talks about certain negotiations being made and about the two undated cheques which is alleged to have been misused.

13. The question as to whether what would be the impact of termination of the contract on 28.4.2022 by the NHAI upon the terms and the conditions and the works sole executed, if any, pursuant to the sub-contract dated 12.8.2019 cannot be adjudicated in the present proceedings as the same would be a matter of trial.

14. In so far as the reliance so placed upon the judgement in the case of M/s Indus Airways Pvt. Limited and others vs. M/s Aviation Pvt. Limited 2014 (6) SCC (Criminal) 845 is concerned there is no quarrel to the proposition of law so culled out. However, it was a case when the cheques were issued for advance payment of purchase and the purchase order was cancelled and supply not made.

15. Interestingly in the reply of the applicant dated 22.4.2024 to the statutory demand notice which is annexure-6 at page 34 of the paper book reference whereof has been made in paragraph 23, the following averments have been made:- "3. That thereafter in July-August 2023 my client entered into negotiation with you for supply and laying of thermoplastic road marking paint and for supply of delineators and during these negotiations an advance of Rs. 1,00,000/- by NEFT was made to you by my client as a token for placing order in future. On 11.10.2023, my client had placed order to you for purchasing and laying of thermoplastic road marking paint 5100 Sq Mtrs., worth Rs. (6,24.860/- (including GST 18%) and for supply of 1700 delineators worth Rs. 6,01,800)- (including GST 18%). Against this order two undated cheques bearing Cheque No. 172956 for Rs. 16,24,860/- & Cheque No. 172957 for Rs. 6,01,800/- in security of this order.

4. That the job of supply and laying of thermoplastic road marking paint (5041 sq mts. Only) worth Rs. 16,06,062/ was done by you, however 1700 delineators were not supplied by you and in the meantime, my client had made total payment of Rs. 14,60,000/- to you against the above said order from 14.08.2023 to 08.02.2024."

16. Apparently, the question as to whether the payments which were sought to be made by virtue of the subject cheques which were dishonoured is a subject matter of the contract which was terminated or not is a question of fact which is a matter of trial, however, this Court is not required to test the said submissions while adjudicating on the same particularly at a summoning stage. What is relevant is the statutory presumption so made under Section 139 of the N.I. Act which is in the favour of the holder of the cheque. Nonetheless this Court is also not required to go into the aspect of the matter as to whether the cheque which has been dishonoured was any way linked or related to the contract or not which was terminated by the NHAI.

17. As regards the argument so sought to be raised by the applicant that two cheques by way of security is concerned suffice to say that the question as to whether the cheque was by way of security or not is a question of trial as enunciated by the Hon'ble Apex Court in the case of M/s Womb Laboratories Private Limited Vs. Vijay Ahuja & another (2022) 18 SCC 631 has observed as under:- "In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved - that such security could not be treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."

18. In Sunil Todi and others Vs. State of Gujarat, (2022) 16 SCC 762 the Hon'ble Apex Court has reiterated the aforesaid law.

19. This Court at the stage of summoning is not required to delve into the terms of the contract and also quantum of payment made or not and the impact of the cancellation of the contract as it would be at best in a defence or a matter of trial.

20. Accordingly, no case is made out. The application stands rejected. Order Date :- 7.5.2025 piyush PIYUSH KUMAR High Court of Judicature at Allahabad