2022 (7) TMI 39 - HC - Indian Laws

Legal analysis: Court upholds conviction under Section 138 NI Act, emphasizes burden of proof

M/s. Panchasheel Alloys Construction Pvt Ltd., Mr. M. Jaswant Singh Rawat Versus M/s. Chitrakoot Steel and Power Private Ltd.

The court upheld the findings of conviction under Section 138 of the Negotiable Instruments Act. It ruled that delayed production of authorization letter ... Dishonor of Cheque - no letter of authorization from the respondent/complainant, at the time of filing of the complaint - It is contended that subsequently, during the cross-examination, the letter of authority was marked and therefore, the complaint as such was filed without any authority - merger of the company - whether complaint is construed as the one filed by a non-existing person and therefore, it is not maintainable? - HELD THAT:- As far as the contention of the petitioner that there was no authorization issued to the complainant to file the complaint is concerned, it is seen that the same is technical in nature and when the technical flaw has been subsequently cured by producing authorization letter under Ex.P18, it would be no longer open for the petitioners to make such a hyper technical contention. In any event, the non production of authorization letter along with the complaint and producing it belatedly is not a ground for acquittal - As far as the contention relating to take over is concerned, there is difference between the take over of the management and merger of the company. It is the case of the accused that the company has merged and the same being a public document it was very much open for the petitioners, to apply for certified copies from the Registrar of Companies and produce the same before this Court. A complete reading of cross-examination would make it clear that in the first sentence P.W.1 admitted the company has been taken over and in the next sentence he denied the same and stated that it was not taken over on the date of complaint and further, he answered that the complainant company is still in existence and therefore, it is entitled to continue the complaint. Therefore, the admission of P.W.1 does not lead to acquittal of the accused. As rightly pointed out by the Trial Court it is the defence of the accused and therefore, they are duty bound to produce clinching evidence in respect of the same and when they have not done so, the Trial Court has rightly rejected the said defence. Final contention of the learned counsel for the petitioners is that there was no pleading as to the prejudice or loss for grant of compensation. It is not a case, where any offence like bodily injury is committed, where the complainant has to show some proof that they sustained loss for the purpose of determining compensation. It is an offence under Section 138 of the Negotiable Instruments Act and it is statutory mandate to order compensation of the cheque amount including twice the cheque amount. Therefore, considering the nature of the offence under Section 138 of the Negotiable Instruments Act, the argument of the learned counsel based upon the Section 357 of Cr.P.C., is without any merits. Therefore, the learned counsel is unable to establish any point so as to upturn the findings of conviction and sentence imposed by the Courts below. This Criminal Revision Case is dismissed. Issues:Conviction under Section 138 of the Negotiable Instruments Act, 1881, authorization to file complaint, merger of companies affecting complaint validity, burden of proof on complainant, adequacy of evidence, order of compensation under Section 138, compliance with Section 357 of Cr.P.C.Analysis:1. Authorization to File Complaint:The petitioners argued that the complaint lacked authorization from the corporate entity complainant. However, the subsequent production of the authorization letter cured this technical flaw. The court held that the delayed production of the authorization letter does not warrant acquittal.2. Merger of Companies and Complaint Validity:The petitioners contended that the complainant company had merged with another entity, rendering the complaint by the original company invalid. The court differentiated between management takeover and company merger, emphasizing that the complainant company's legal entity remained unchanged. The petitioners failed to provide conclusive evidence to support their claim.3. Burden of Proof on Complainant:The petitioners challenged the complainant's failure to prove the transaction and liability through relevant documents. However, the court invoked the presumption under Section 139 of the Negotiable Instruments Act, placing the burden on the petitioners to disprove the liability. The admission of liability by a witness further strengthened the complainant's case.4. Adequacy of Evidence:The petitioners argued that the complainant did not establish the loss suffered, questioning the order of compensation. The court clarified that for offenses under Section 138, compensation is mandated by law, irrespective of specific proof of loss. The complainant's prayer for compensation was deemed valid.5. Compliance with Section 357 of Cr.P.C:The petitioners raised concerns regarding the lack of pleadings on loss for granting compensation, citing Section 357 of the Criminal Procedure Code. The court rejected this argument, emphasizing the statutory requirement to order compensation under Section 138 of the Negotiable Instruments Act. The court upheld the findings of conviction and sentence imposed by the lower courts.6. Final Decision:The court dismissed the Criminal Revision Case, granting two weeks for the second petitioner to pay the balance amount. Failure to comply would result in the complainant seeking execution of the default sentence. The amount previously deposited was ordered to be paid to the respondent/complainant, concluding the legal proceedings.