2022 (6) TMI 855 - HC - Indian Laws

Appeal Dismissed: Conviction Upheld under Section 138 of Negotiable Instruments Act

A. Francis Versus Future Money

The court upheld the lower courts' judgments of conviction under Section 138 of the Negotiable Instruments Act, dismissing the appeal and confirming the ... Dishonor of Cheque - Existence of erstwhile company and liability of resultant of company after merger - insufficiency of funds - rebuttal of presumption - argument of the learned counsel for the petitioner was that the complaint has been filed by an unauthorised person since the General Power of Attorney marked at Ex. P-1 was subsequent in its date from the date of filing of the complaint - HELD THAT:- No doubt, the General Power of Attorney executed in favour of PW-1, which is produced at Ex. P-1, is subsequent in its date than that of the lodging of the complaint, however, along with the complaint also, the very same PW-1, who has filed the said complaint, has produced one more copy of the General Power of Attorney, however, shown to have been executed by one Future Capital Holdings Ltd., in his favour. The said Power of Attorney authorises PW-1 to lodge the complaint and to proceed in the criminal prosecution When under a judicial order, merger of the Companies has taken place, the earlier Company cease to be in existence after its merger with another Company and the Company which emerges after merger would be entitled to all the rights and liabilities of the merged Company and subject to the terms of the merger. Thus, when the previous Company which had granted loan to the accused is shown to have been merged, it cannot be said that the present complainant-Company does not have locus standi to file the complaint, so also, its Power of Attorney Sri. V. Jansi Rao. Therefore, the argument of learned counsel for the petitioner on the said point is not acceptable. The last point of argument of learned counsel for the petitioner that the notice issued after dishonour of the cheques since being addressed to the accused in his personal name, but, not to the proprietorship concern, is an invalid notice, is also not acceptable, for the reason that, admittedly the accused is the Proprietor of his concern M/s. Vertical Network Communications - A proprietorship concern since being not an independent legal entity, it can be sued in the name of the Proprietor. Since both the trial Court and the Session Judge's Court after appreciating the materials placed before them, including oral and documentary evidence, have rightly concluded holding the accused guilty of the offence punishable under Section 138 of N.I. Act and sentenced him proportionately to the gravity of the proven guilt, there are no perversity, illegality or error warranting any interference at the hands of this Court. The Criminal Revision Petition is dismissed as devoid of merits. Issues Involved:Accused convicted under Section 138 of Negotiable Instruments Act, 1881; Appeal against conviction dismissed by Sessions Judge's Court; Challenge to judgments for perversity, illegality, and impropriety.Analysis:1. Conviction under Section 138 of N.I. Act:The accused was convicted for issuing two cheques that bounced due to insufficient funds, leading to a legal case under Section 138 of the Negotiable Instruments Act. The complainant, a registered company, proved the loan transaction, dishonored cheques, and legal notice demanding payment. The accused denied personal liability, claiming the loan was to his proprietorship concern. However, documents and witness testimony established the accused's personal involvement in the loan and cheque issuance, rejecting the defense of loan to the concern only.2. Validity of Complaint and Power of Attorney:The defense challenged the complaint's validity, citing the General Power of Attorney's post-complaint execution date. However, the Power of Attorney authorized the complainant to proceed in the prosecution. The court noted a merger of companies, validating the complainant's locus standi post-merger. The court rejected the argument against the complaint's validity due to the post-complaint Power of Attorney date.3. Notice Issuance and Proprietorship Concern:The defense contended that the notice addressed to the accused personally, not the proprietorship concern, was invalid. However, legal precedents established that a proprietorship firm is not a separate legal entity, allowing suing the proprietor directly. The notice to the accused personally was deemed valid, as the proprietor could be held liable for the firm's actions. The court dismissed this argument, upholding the validity of the notice.4. Judicial Review and Final Decision:The court reviewed all arguments, evidence, and legal precedents presented. After finding no merit in the accused's contentions, the court upheld the lower courts' judgments of conviction under Section 138 of the N.I. Act. The accused's appeal was dismissed, confirming the conviction and sentence. The court concluded that no perversity, illegality, or error warranted interference, leading to the dismissal of the Criminal Revision Petition.In conclusion, the court dismissed the appeal, confirming the conviction and sentence, emphasizing the accused's personal liability for the loan and bounced cheques. The judgment highlighted the legal validity of the complaint, Power of Attorney, and notice issuance, ensuring adherence to legal principles and precedents in deciding the case.