A complaint under Section 138 of the Negotiable Instruments Act, 1881 is not maintainable at the instance of a third party unless such party qualifies as a holder in due course or acts solely as an authorised representative of the payee or the holder of the cheque, the Allahabad High Court has held. Allowing a criminal revision against a summoning order passed by a Metropolitan Magistrate, the Court clarified that a third party with no legal title over the cheque does not possess the locus standi to institute proceedings under the Act.
The dispute arose from the dishonour of eleven cheques, each worth Rs. 2 lakhs, issued by Mangalam Restaurant & Hotels Pvt. Ltd., of which the petitioner was a director, in favour of Hotel Paradise. Following the dishonour, a complaint under Section 138 was filed by M/s Krishna Hotels and Developers through its partner, who was the owner of Hotel Paradise. The Metropolitan Magistrate, Kanpur Nagar, took cognisance of the complaint and summoned the petitioner.
Challenging the summoning order, the petitioner approached the Allahabad High Court, contending that since the cheques were drawn in favour of Hotel Paradise, the complaint filed by M/s Krishna Hotels and Developers lacked legal standing.
Accepting the contention, JusticeSamit Gopal observed that proceedings through a third party, such as an attorney holder or manager, are maintainable only when such person is duly authorised and the complaint continues to be instituted in the name of the payee or holder in due course. The Court further noted that while an authorised representative may initiate proceedings, the complaint cannot be filed in the representative’s personal capacity.
Accordingly, the High Court held that M/s Krishna Hotels and Developers did not possess the requisite locus standi to file the complaint and set aside the summoning order.
Appearances:
For Revisionist: L.M. Singh, Adv.
For Opposite Party(s): Alok Kumar Yadav, Govt. Adv.
