Court Rules Lack of Locus Standi in Filing Complaint Under Negotiable Instruments Act
In a significant ruling, the Allahabad High Court has quashed the summoning order issued against Rajesh Kukreja in a cheque bounce case, highlighting the necessity of locus standi for filing complaints under Section 138 of the Negotiable Instruments Act, 1881. The judgment was delivered by Justice Samit Gopal in the Criminal Revision No. 2776 of 2013, dated January 28, 2026.
The case originated from a complaint filed by M/s Krishna Hotels and Developers, through its partner Smt. Saroj Dubey, against Rajesh Kukreja, alleging the dishonor of cheques drawn in favor of Hotel Paradise by Mangalam Restaurant & Hotels Pvt. Ltd. The complaint also invoked Sections 406 and 420 of the Indian Penal Code. However, the High Court observed that the complaint was improperly filed by a party with no legal title to the cheques in question.
Justice Gopal emphasized the statutory requirements under the Negotiable Instruments Act, which mandates that only the payee or holder in due course can initiate proceedings under Section 138 for cheque dishonor. The court noted that M/s Krishna Hotels and Developers lacked the legal standing to file the complaint as they were neither the payee nor the holder in due course of the cheques.
The ruling was influenced by the trial court's initial observations questioning the locus standi of the complainant, which were subsequently overlooked in the summoning order. The High Court clarified that a complaint can only be maintained if filed by the entity entitled to the cheque, or by an authorized representative acting on behalf of such entity, but not in their personal capacity.
The judgment further distinguished the present case from the precedent set in M/s Naresh Potteries v. M/s Aarti Industries, where the complainant was appropriately the holder in due course. The High Court reiterated the need for strict adherence to statutory provisions, dismissing the arguments presented by the opposite party.
The decision to quash the summoning order underscores the importance of procedural compliance in legal actions pertaining to negotiable instruments. It serves as a reminder of the necessity for complainants to establish clear legal title to the instrument involved, ensuring that justice is pursued by those duly authorized.
Bottom Line:
A complaint under Section 138 of the Negotiable Instruments Act, 1881, must be filed by the payee or the holder in due course of the cheque. A third party or stranger with no legal title to the cheque cannot institute such a complaint.
Statutory provision(s): Sections 138, 142, 7, 9 of the Negotiable Instruments Act, 1881; Sections 406, 420 of the Indian Penal Code; Sections 397, 401, 200, 202 of the Code of Criminal Procedure, 1973.
Rajesh Kukreja v. State of U.P., (Allahabad) : Law Finder Doc id # 2844919
