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Introducing the “In Favour Of” filter in Case Laws.
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of <h1>Proof of cheque execution: authorised company representatives must have direct or eyewitness knowledge, otherwise conviction for cheque dishonour cannot stand.</h1> A juristic person may initiate proceedings for cheque dishonour through an authorised representative, but execution and issuance of the cheque must be ... Proof of execution and issuance of cheque - Juristic person acting through agent - Presumptions u/s 118 and 139 of the Negotiable Instruments Act - Competence of a company to initiate proceedings through an authorised representative - Evidence by a power of attorney holder must be direct or eyewitness - Conviction u/s 138 - Whether the prosecution proved the execution and issuance of the cheque so as to attract the statutory presumptions under the Negotiable Instruments Act and sustain conviction u/s 138. - HELD THAT:- The company, being a juristic person, cannot act on its own and it must necessarily function through a human agency. A company is competent to initiate proceedings under Section 138 of NI Act and it can do so, through an authorised person. Even though, a power of attorney holder, being an authorised representative of the company, can file a complaint and give evidence, he must have either witnessed the transaction or must possess direct knowledge of the transaction. A person, who only became associated with the company after the transaction and who relies purely on records, cannot prove the execution of the cheque or the transaction. It is to be kept in mind that merely because the complainant is a juristic entity, it will not dilute the rigour of proof required for proving the execution of the cheque and the execution cannot be presumed merely on the production of a cheque. The presumptions under Sections 118 and 139 of the NI Act will arise only after the execution of the cheque is proved and if the complainant's witness has no direct knowledge or did not witness the execution, the prosecution will fail at the threshold itself and there will be no burden upon the accused to rebut anything. In the instant case, it can be seen that there is no substantive evidence at all to prove the issuance and execution of the cheque by the accused to the complainant. This in turn means that the complainant has even failed to discharge the initial burden cast upon it to prove the execution and issuance of the cheque. Both the trial court and the appellate court have erred in appreciating the materials and evidence on record in a proper perspective and has missed these relevant points, while arriving at a wrong conclusion of guilt against the revision petitioners. Hence, this revision petition is only liable to be allowed, thereby setting aside the conviction and sentence passed against the revision petitioners. In the result, this Criminal Revision Petition is allowed. Issues: (i) Whether conviction under Section 138 of the Negotiable Instruments Act can be sustained where the complainant's witnesses and authorised representative lack direct knowledge of the issuance and execution of the cheque.Analysis: The prosecution must prove execution and issuance of the cheque as a threshold requirement before statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act arise. A company may prosecute through an authorised representative, but that representative must have direct knowledge or must have witnessed the transaction; proof based solely on records or on an agent who became associated with the company after the transaction is insufficient. Where the complainant's witnesses (including the power of attorney holder and accounting personnel) testify only from documents and do not identify or witness execution, the initial burden to prove execution is not discharged and the presumptions under Sections 118 and 139 do not operate.Conclusion: The conviction under Section 138 of the Negotiable Instruments Act is not sustainable and is set aside; decision is in favour of the Appellant.Ratio Decidendi: The statutory presumption of due execution under Section 139 of the Negotiable Instruments Act arises only after the prosecution proves execution and issuance of the cheque by competent evidence; an authorised company representative relying solely on records without direct knowledge cannot establish execution.
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