Orissa High Court
Mahadei Nath vs Ritu Ranjan Gupta …. Opposite Party on 23 February, 2026
Author: R.K. Pattanaik
Bench: R.K. Pattanaik
AFR IN THE HIGH COURT OF ORISSA AT CUTTACK
CRLREV No.6 of 2011
Mahadei Nath .... Petitioner
Mr. D. P. Pattanaik, Advocate
-Versus-
Ritu Ranjan Gupta .... Opposite Party
Mr. S. Harichandan, Advocate
CORAM:
JUSTICE R.K. PATTANAIK
DATE OF HEARING:14.11.2025
DATE OF JUDGMENT:23.02.2026
1.
Instant revision under Section 401 Cr.P.C is filed by the
petitioner challenging the impugned judgment in Criminal
Appeal No.8 of 2010 dated 1st December, 2010 of the learned
Additional Sessions Judge, Rourkela in dismissing the appeal
and confirming the order of conviction and sentence dated 14 th
December, 2009 directed by the learned J.M.F.C., Panposh,
while disposing the complaint in 1.C.C. Case No.275 of 2007
for an offence under Section 138 of the NI Act on the grounds
inter alia that such decision suffers from infirmity and hence,
therefore, the same is liable to be set aside.
2. The opposite party as complainant filed the complaint in
1.C.C. Case No.275 of 2007 for commission of an offence
punishable under Section 138 of the NI Act in the court of
learned J.M.F.C., Panposh at Rourkela by the petitioner
alleging therein that he had given a friendly loan of Rs.6 lac to
the latter for developing his business in the name and style of
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M/s Laxmi Traders dealing with Cement Agency etc. and when
the same was not refunded in time, instead, a cheque was
issued and on its presentation before the Bank failed to be
honoured for insufficient fund, legal notice was issued
demanding its repayment, but it was not served and returned
back with a postal endorsement of refusal. Under the above
circumstances, when the complaint was filed, the learned
J.M.F.C, found the petitioner guilty of the alleged offence and
convicted him thereunder with a sentence of SI for one year
and to pay compensation of Rs.7 lac to opposite party with a
default sentence of SI for a period of three months. The
aforesaid decision was challenged and according to the
petitioner, the appeal preferred by him was dismissed by the
learned court below thereby confirming the order of conviction
and sentence. It is contended by the petitioner that the notice
was not proved to have been refused with the examination of
the postal staff and that apart, it was not correctly addressed to
him and therefore, not right and justified on the part of the
learned courts below to hold that an offence under Section 138
of NI Act is proved and therefore, the order of conviction and
sentence is bad in law and thus, liable to be interfered with in
the interest of justice.
3. Heard Mr. Pattanaik, learned counsel for the petitioner and
Mr. Harichandan, learned counsel for the opposite party.
4. According to Mr. Pattanaik, learned counsel for the
petitioner, the impugned judgment confirming the order of
conviction by the learned court below suffers from serious
infirmity on the ground that such demand notice was not and
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never sent in the correct address of the petitioner and therefore,
cannot be treated as a valid service in the eye of law and as
such, no presumption would be attached vis-à-vis service and
furthermore, there has been an endorsement as refusal, but
then, the postal staff was not examined from the side of the
opposite party and therefore, the initial burden of proof has not
been discharged and hence, the order of conviction cannot be
sustained in law. The further contention of Mr. Pattanaik,
learned counsel is that a blank cheque was handed over to the
opposite party as a means of security and not in respect of any
legally enforceable debt or liability under Section 138 of the NI
Act, the fact which was completely lost sight of by the learned
courts below. It is alleged that the opposite party misused the
blank cheque issued by the petitioner. The further contention is
that the cheque was issued by and in the name of M/s Laxmi
Traders, which has not been made a party to the complaint. In
absence of valid service of notice and such notice having not
been issued in the correct address of the petitioner and when
the cheque was drawn in the name of M/s Laxmi Traders,
which has not been impleaded along with the opposite party,
no case under Section 138 of the NI Act would lie and
therefore, the impugned judgment of the learned court below
cannot stand and therefore, on such grounds, it shall have to be
set aside. Lastly, it is contended that the cheque was issued by
the proprietor of M/s Laxmi Traders with which the account is
maintained, but it has not been arrayed as an accused and there
is nothing on record to suggest that the petitioner was in charge
of its affairs, hence, she could not have been held guilty for the
alleged offence. Referring to a decision Jugesh Sehgal Vrs.
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Shamsher Singh Gogi (2009)14 SCC 683, it is contended by
Mr. Pattanaik, learned counsel that the cheque has been issued
by M/s Laxmi Traders and not the petitioner and therefore, one
of the essential ingredients of Section 138 of the NI Act is not
satisfied which is to the effect that the cheque must be drawn
on the account maintained by the accused. Finally, it is
contended that the petitioner being a woman, even though held
guilty and sentenced, the learned courts below should have
extended the benefit of the Probation of Offenders Act, 1958
but it has not been considered either and therefore, the
impugned judgments by the court of first instance and
thereafter, in appeal by the learned court below are liable to be
set at naught.
5. On the contrary, Mr. Harichandan, learned counsel for
the opposite party would submit that there is no illegality
committed by the learned courts below. It is contended that the
cheque was drawn by the petitioner as the proprietor of M/s
Laxmi Traders and it was handed over to the opposite party
and when was presented before the Bank, the same stood
dishonoured. It is also contended that after receiving the
intimation from the Bank that the account has no sufficient
fund, legal notice was issued to the petitioner, but the same was
refused and with such a postal endorsement, it was received
back and ultimately, the opposite party was left with no option
except to file the complaint under Section 138 of the NI Act
and therefore, there is absolutely no wrong or any error
committed by the learned courts below in reaching at a
conclusion that such an offence has been committed by her and
it was followed by the sentence. It is further contended that the
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learned courts below rightly did not extend the benefits of the
Probation of Offenders Act, 1958 to the petitioner and correctly
sentenced, directing her payment of compensation with a
default sentence. In such view of the matter, the contention is
that considering the evidence on record rightly appreciated by
learned J.M.F.C., Panposh, the order of conviction sentence
was passed and finally confirmed in appeal, hence, therefore,
the same need not be disturbed, rather, deserves to be upheld.
6. In course of hearing, a decision of the Apex Court in
Aneeta Hada Vrs. Godfather Travels & Tours Pvt. Ltd.
(2012) 5 SCC 661 is cited at the Bar to contend that M/s
Laxmi Traders was a necessary party and ought to have been
impleaded as an accused along with the petitioner and in its
absence, the complaint could not have been proceeded with.
Mr. Pattanaik, learned counsel for the petitioner would submit
that the cheque is signed by the petitioner but in the name of
M/s Laxmi Traders, hence, therefore, the company should have
been impleaded as an accused besides the petitioner but the
same having not been done, the complaint was not properly
constituted and such an aspect of the case was overlooked by
the learned courts below.
7. It is revealed from the record that the opposite party
examined two witnesses and proved eight documents as
exhibits, whereas, no evidence was received from the side of
the petitioner. In other words, the petitioner neither adduced
any oral nor documentary evidence in support of the defence.
The complainant, namely, opposite party examined himself as
C.W.1 with another witness (C.W.2), namely, Deepak
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Mohapatra and proved the alleged cheque as Ext.1 and
signature of the petitioner thereon as Ext.1/1 with such other
documents including the Bank’s deposit slip as Ext.2.
Considering the evidence received from the side of the
opposite party, the learned J.M.F.C, Panposh, Rourkela held
that a case under Section 138 of the NI Act is proved and
established and accordingly, directed conviction and sentence
besides payment of compensation of Rs.7 lac as against the
cheque for an amount of Rs.6 lac. As earlier discussed, the
order of conviction and sentence was confirmed in appeal by
learned Additional Sessions Judge, Rourkela.
8. Admittedly, the cheque was drawn in the name of M/s
Laxmi Traders and signed by the petitioner as its proprietor.
The cheque was drawn by the petitioner and was received by
the opposite party and it was for an amount of Rs.6 lac. In fact,
the petitioner issued a post-dated cheque for the said amount
drawn on ICICI Bank Limited, Rourkela Branch on 17 th
January, 2007 in favour of the opposite party. In order to
encash the amount, the opposite party presented the cheque on
14th March, 2007, but the same was dishonoured and returned
back with a memo of intimation dated 28th March, 2007 by the
Bank with an endorsement as ‘insufficient fund’. On receipt of
such intimation from the Bank, the opposite party issued a
legal notice to the petitioner on 16th April, 2007 sent by
Registered Post with AD intimating the fact about the cheque
having been dishonoured and calling upon him to pay the
amount within fifteen days of receipt of the notice. But such
notice returned back with a postal endorsement that the
opposite party refused receipt of the same on 17th April, 2007,
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consequent upon which, on a presumption that the notice was
delivered and has become valid, the complaint was filed. The
learned J.M.F.C., Panposh, Rourkela considered the complaint
and received evidence and ultimately, concluded that the
petitioner being the drawer of the cheque for and on behalf of
M/s Laxmi Traders and for the non-payment or refund of the
cheque amount within the stipulated period of fifteen days after
refusal of notice, an offence under Section 138 of the NI Act is
proved and established and it has been confirmed by the
learned Additional Sessions Judge, Rourkela, while disposing
of the appeal.
9. The alleged cheque is marked as Ext.1. In support of
receiving the cheque, the opposite party examining himself as
C.W.1. It has been alleged by C.W.1 that the petitioner was the
proprietor of M/s Laxmi Traders and she was in charge of it
and responsible in its regular business. Apart from the above,
the opposite party examined the Manager of the ICICI Bank as
C.W.2 proving the extract of the account of the petitioner and
proved that such account i.e. Ext.7 stands in the name of M/s
Laxmi Traders with an address statement of the petitioner. First
and foremost, the plea of the petitioner is that the demand
notice was never sent to the correct address. It has been the
consistent plea of the petitioner that the address was different
than the one, in which, he resided at the relevant point of time
and therefore, any such refusal of notice cannot be deemed as a
valid service in the eye of law and therefore, the presumption is
not attached to the same, rather, the inference would be that it
has been incorrectly addressed to him. The said aspect has been
dealt with by the learned court below, while dealing with the
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appeal, wherein, it has been discussed that in the same address
in which the account of M/s Laxmi Traders stands, the
petitioner has received notice in the complaint and it has been
responded to with the appearance. The demand notice was sent
with an address ‘near Quarter No.C/174, Sector-6, Rourkela’ is
no different than the one which is claimed by the petitioner ‘as
Quarter No.C/174, Sector-6, Rourkela’ and according to the
Court, the learned court below did not attach too much
importance to the above plea and rightly so. When notice in the
complaint was received by the petitioner in the same address,
but claiming to the contrary, it has to be held that such a plea is
only to avoid the liability and nothing else. It is, according to
the Court, entirely a false claim is put forth by the petitioner to
deny the liability when the demand notice was rightly
addressed and in the same address, he received the notice for
the complaint. Having said that, the Court is of the conclusion
that the learned court below and also the learned J.M.F.C,
Panposh, Rourkela did not commit any wrong in rejecting the
plea of the petitioner on any such ground.
10. With regard to refusal of the notice with an endorsement by
the postal staff, it has been challenged by the petitioner and
Mr. Pattanaik, learned counsel appearing for him would submit
that there is no evidence on record to show that the notice was
refused. Again, in the considered view of the Court, no
significance should be attached to the plea on the premise that
the postal staff was not examined by the opposite party. An
endorsement in the postal document with ‘refusal’ is presumed
to be correct with a conclusion that upon such service, the
same has been refused by the person, to whom, it was
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addressed. In regular course of business, any such postal
endorsement received by the Court is considered sufficient to
hold that there is a valid service. In other words, a presumption
of service shall have to be inferred. For non-examination of the
postal staff, again the plea of the petitioner that initial burden
of proof has not been discharged by the opposite party, hence,
the proceeding stands vitiated in view of Section 142 of the NI
Act, is wholly misconceived. Even after receipt of notice in the
complaint, the cheque amount was not paid back to the
opposite party, which is a fact that prevailed upon the learned
court below to disbelieve the plea of the petitioner. Added to
the above and the fact that the notice was addressed correctly,
such refusal has been accepted by the learned courts below as
valid service. Unless a correct address was furnished, as it is
rightly concluded by learned court below, there could not have
been a refusal of receiving the notice by the petitioner. In other
words, it has to be held that not only the address was correct
but also the postal endorsement with such notice received back
with a refusal. The Court is not inclined to differ from the view
expressed by the learned court below on such service of notice
held to have been valid against the petitioner.
11. In so far as, an offence under Section 138 of the Act is
concerned any such plea that the cheque was issued as a
security deposit shall have to be proved by evidence. But the
petitioner did not lead any such evidence in support of the
above plea. A cheque was drawn and issued by a person shall
have to adduce evidence to prove that it was not issued in
connection with any liability. The moment, the cheque is in the
hand of the complainant, a presumption would arise that it was
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drawn and issued by the accused in furtherance of a debt or
liability. In a case under Section 138 of the NI Act, a reverse
presumption would apply. In other words, when a cheque is
received and it has been presented before the Bank and could
not be encashed, it shall have to be presumed that the same was
issued by the drawer in discharge of legally enforceable debt or
liability unless and until, contrary is proved. In the case at
hand, the dishonoured cheque was signed by the petitioner on
behalf of M/s Laxmi Traders. The signature of the petitioner on
Ext.1 is not in dispute. When the signature is not disputed and
plea of having handed over the alleged cheque as a security
deposit could not be established, the only presumption would
be that it was drawn for discharging a debt. It has to be held
that such presumption is in favour of the opposite party and it
was needed to be rebutted. But no rebuttal evidence has been
led from the side of the petitioner. A bald claim that the cheque
was issued for and as security deposit without proof of the
same with any such evidence on record, the inference would be
that the same was received by the opposite party towards
discharge of debt or liability incurred by the petitioner. The
said aspect has also been elaborately dealt with by the learned
courts below and the conclusion is, therefore, that the
presumption in favour of the opposite party could not be
dismantled by the petitioner with any evidence in defence.
12. In so far as, the judgment in Aneeta Hada (supra) is
concerned, it was in relation to a company and while dealing
with a complaint under the NI Act alleging an offence under
Section 138 thereof having been committed and therein with
reference to Section 141 thereof, it was held and observed that
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a complaint is not properly constituted unless and until the
company is impleaded as an accused. But with due respect, the
Court is of the view that the decision (supra) is inapplicable to
the case at hand. When a company has issued a cheque with
the liability alleged against it and also the officials managing
its affairs, in view of Section 142 of the NI Act, it shall have to
be impleaded as an accused. A company is a juridical person
and a legal entity and therefore, according to Section 141(2) of
the Act, it has to be made and impleaded as an accused. In such
view of the matter, the Apex Court in the above decision held
that company shall have to be arraigned as an accused and the
same is imperative. But, in the case of the petitioner, she is a
proprietor and M/s Laxmi Traders is proprietary concern and
not a company and therefore, the decision in Aneeta Hada
(supra) does not apply.
13. According to the Court, a sole proprietorship does not
require to be made as an accused in a case under Section 138
of the NI Act because it is not a separate legal entity. Rather, it
is legally considered synonymous with the proprietor, thus,
thereby, impleading a proprietor alone as an accused would be
sufficient. The key legal principles which are to be borne in
mind is that a proprietary concern has no legal standing
independent of its owner. It is merely a trade name used by the
proprietor. The liability under the NI Act and for an offence
under Section 138 thereof lies personally with the proprietor,
who is the drawer of the cheque making it necessary to array
the business name and as a matter of fact, Section 141 of the
NI Act is not to apply, which needs compliance in respect of a
company or a firm. In other words, such compliance under
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Section 141 of the NI Act does not relate to a proprietorship.
The Court is also of the conclusion that while it is often safe
practice to mention the name of the business concern in the
complaint but failing to do so does not invalidate the same as it
has been filed against the proprietor. Furthermore, as earlier
stated, a proprietary concern is not a legal entity, hence, a
complaint shall not lie and would be sufficient enough, if the
proprietor represents it.
14. Section 141 of the NI Act deals with offences by the
companies and in explanation, it is mentioned that company
means anybody corporate and includes a firm or other
association of individuals and Director in relation to a firm
means a partner in the firm. A proprietary concern is not a firm
or company and hence, it is to be held that Section 141 of the
NI Act is not applicable. The proprietor is a person, who does
the business but for trading convenience, it is done in the name
of proprietary concern. A proprietorship is not an independent
and juristic entity having legal recognition and therefore, it can
neither initiate proceedings nor proceedings be initiated against
it. In case of proprietary concern, the proprietor is always an
affected person, who can either indict or be indicted. It is
profitable to refer to the following decision, such as, Raman
Vrs. Arikant Metal Corporation 1992 LW(Crl.) 347,
wherein, the proprietor represented the proprietary concern for
an offence under Section 138 of the NI Act and therein, it has
been held that both are the same person and as such, the
proceeding is maintainable even without the latter arrayed as
an accused. Furthermore, when the proprietary concern is not a
legal entity, the proprietor is the drawer of the cheque on its
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behalf and therefore, the law is well settled that a complaint is
maintainable, even though, it is not impleaded as an accused.
15. In a decision of the Gujarat High Court in Satish
Jayantilal Shah Vrs. Pankaj Mashruwala and another 1996
Cri LJ 3099, it has been concluded that definition of a person
under Section 11 of the Indian Penal Code and as per the
provisions of the General Clauses Act does not include a
proprietor and hence, a proprietary concern is not legal entity
or juristic person and therefore, it can neither initiate any
action nor any such proceeding be initiated against it. In yet
another decision of Madras High Court in N. Vaidyanathan
Deepkika Milk Marketing Vrs. Dodia Dairy Limited 2000
(1) Crimes 291 (Mad.), it has been held by that law is well
settled and it is to the following effect that a proprietorship
concern by itself is not a legal entity apart from its proprietor;
such concern and the proprietor are one and the same person.
Having regard to the above settled legal position discussed
with reference to the case laws cited, the Court concludes that
M/s Laxmi Traders was not to be impleaded as an accused
being a non-juristic person and since, it was represented by the
petitioner, who is the drawer of the alleged cheque, she was
alone to be prosecuted. So, therefore, the plea of Mr. Pattanaik,
learned counsel for the petitioner on such a ground relying on
the decision in Aneeta Hada (supra) is misconceived, since,
such argument is based on the premise that the cheque was
issued in the name of a company.
16. Considering the evidence on record and when the
opposite party examined himself as C.W.1 and was elaborately
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cross-examined but nothing could be elicited to rebut the
presumption in view of the issuance of the cheque in favour of
the opposite party, the inescapable conclusion of the Court is
that an offence under Section 138 of the NI Act is made out
and when Section 118 of the NI Act stipulates that until
contrary is proved, a negotiable instrument shall be presumed
for consideration and acceptance of it to be in discharge of
liability and that Section 139 thereof deals with the discharge
of legally enforceable debt either in whole or in part and the
cheque having been presented and returned dishonoured with
any such intimation of insufficiency of fund etc. that an
offence thereunder shall be made out. In absence of any such
rebuttal evidence from the side of the petitioner, the Court is
left with no option except to hold that she is deemed to have
committed an offence punishable under Section 138 of the NI
Act. That apart, according to Section 139 of the NI Act, it shall
be presumed, unless and until, contrary is proved that the
holder of a cheque received the same referred to in Section 138
shall be for discharge of any debt or other liability.
Considering the aforesaid provisions and presumption in
favour of the opposite party and having no rebuttal evidence
received from the side of the petitioner, it shall have to be
presumed that an offence under Section 138 of the NI Act has
been committed by the petitioner and rightly, it has been
concluded by the learned courts below appreciating the
evidence in its entirety and therefore, the impugned judgment
of the learned court below does not suffer from any legal
infirmity for having confirmed the order of conviction.
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17. However, this Court is of the view that it would not be
proper to direct the petitioner, who is a lady, to undergo the
sentence at this distant point of time, rather, the proper course
of action would be to release her under Section 4(1) of the
Probation of Offenders Act, 1958, however, maintaining the
compensation with default sentence but payable in installments
within a reasonable period of time and hence, for the above
purpose, to appear before the court of learned J.M.F.C.,
Panposh in 1.C.C. Case No.275 of 2007 and to receive further
orders and accordingly, it is directed.
18. In the result, the revision petition stands disposed of and
dismissed, however, with the modification of the impugned
judgment in Criminal Appeal No.8 of 2010 dated 1 st
December, 2010 of the learned Additional Sessions Judge,
Rourkela subject to compliance of the direction as aforesaid.
(R.K. Pattanaik)
Judge
Rojina
Signature Not Verified
Digitally Signed
Signed by: ROJINA SAHOO
Designation: Junior Stenographer
Reason: Authentication
Location: OHC, CTC
Date: 25-Feb-2026 15:52:42
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