TaxTMI 
TaxTMI 
2024 (4) TMI 556
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.... No. 1 - Company. This judgment of acquittal is challenged by the complainant. 2. Leave was granted and the Appeal was admitted on 2nd December 2019. Issues involved in this appeal are :-- a. whether the statutory notice was issued to proper person ? b. whether the trial court erred in acquitting the respondent No. 2 ? c. whether 'not giving findings by the trial court' will affect the outcome of the case ? Prima facie view of this Court. 3. There is a reason to believe that there is some misunderstanding in the mind of the learned Judge about the provisions of the Companies Act. Though learned Judge was aware that the Company is managed by the Directors, in the first paragraph of the judgment and the operative order, he has made certain references which indicates the learned Judge was dealing with only against Accused No. 2 (as a director)and has not dealt with Accused No. 1 - Company. It is a settled law that any company is an artificial entity in the eyes of law and its business is managed and run by natural persons. Even as per Explanation (a) to Section 141 of the Negotiable Instruments Act, 1881, the meaning of the word "Company" is given a....
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....in by pledging gold ornaments with the Federal Bank. 7. Two receipts were issued by the Federal Bank. They were produced before the trial Court on pages 31 and 32 mentioned about financing Rs. 45,000/- and Rs. 4,11,000/- to the complainant. Issuance of cheques 8. It is her further case that towards discharge of that liability accused issued the following 5 cheques. They were drawn on Bassein Catholic Co-operative Bank Ltd. Their details are as follows:- Sr. No. Cheque No. Date Amount 1. 386228 6th October 2014 1,00,000/- 2. 386229 8th October 2014 1,00,000/- 3. 386230 10th October 2014 1,00,000/- 4. 386231 13th October 2014 1,00,000/- 5. 386232 16th October 2014 1,00,000/- Dishonour 9. All these cheques were deposited by the complainant in the joint account standing in her name and in the name of her husband Shiva Perumal in Federal Bank Ltd., Goregaon Branch. Witness No. 2 - Mayur Satyanarayan Dusaj, Manager of the Federal Bank has also given evidence to that effect (page 84). It shows that there was a joint account in the name of complainant and her husband. As such, she was justified in deposi....
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....been impleaded. b. amount was alleged to be given to Accused No. 2 in his personal capacity and disputed cheques were issued on an account maintained in the name of Accused No. 1. c. existence of legally enforceable debt against Accused No. 2 is not proved. Submission 13. According to learned Advocate Shri Khanchandani, these findings are perverse and against the provisions of Section 138 of the Negotiable Instruments Act. He also relied upon few judgments. I will deal with them subsequently. Receipt of Notice 14. The complainant also gave evidence about the receipt of notice, Postal receipt at page 47 and the tracking report is on page 48. The postal receipt was marked as Exhibit whereas tracking report was marked as article. It was pointed out to me by Mr. Khanchandani that there is no finding on the issue of receipt of notice. He is right. 15. It is true that the trial Court is bound to give findings on compliance of the mandatory procedure. The complainant was cross- examined on this aspect. The relevant answers find place in paragraph No. 2. The question was put to her:- "why you have not issued demand notice to Accused No. 1 ....
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.... returns for the financial year 2013-2014 and 2014-2015 were filed. My attention is invited to Income-Tax returns for the Assessment Year 2014-2015 and 2016-2017 on page 85 to 87. They were not filed initially. But they were filed in pursuance to the questions put to the complainant in cross-examination (para 4/page 80). The Respondents contention is the returns are not for the period when the money is alleged to be advanced. Whereas on the point of existence of legally enforceable debt the trial Court observed in paragraph 10 that "cheques were not issued in discharge of legally enforceable debt against Accused No. 2". 22. It is true presumption can be drawn under Section 139 of the Negotiable Instruments Act. The presumption relates to receipt of cheques by the holder and it is for discharge of debt or other liability. This presumption can be rebutted by proving contrary. It is contended on behalf of the accused that the account was closed in the year 2007 whereas, cheques were of the year 2014. There is one more contention raised on the point of issuance of a blank cheque and there is difference in signature of the ink and contents of the cheque. The signature of the accused ....
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....e not gone into the factual aspects from the judgments relied upon by both the sides on the point of drawing of presumption and its rebuttal. 27. One inference can very well be drawn and it is the accused has not entered into witness box. Though the accused attempted to put up a case of issuing blank cheque to the husband of the complainant towards execution of a contract and its misuse by the complainant, the complainant has not given any favourable answers to the accused to support that plea. On this background, if the accused was desirous of persuading the Court to believe that the cheques were not issued towards discharge of liability he ought to have examined any witness. He has not done that. Merely because there is a difference in ink of the signature and contents, it will not help the accused. The signature is admitted, issuance is admitted, so presumption has to be drawn. The accused has failed to rebut that presumption also. Raising of Finance 28. For proving the liability whether it is really required for the complainant to show how the money is raised, I do not think that it is required. There were two materials relied upon by the complainant. One is the rec....
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....liability once execution is admitted by the accused. Fundamental facts for drawing presumption have to be considered. So I conclude that the complainant has proved the liability incurred towards her by the Accused. Reasons for dishonour 31. Five cheque return memos and the evidence of witness from Federal Bank are sufficient to infer that cheques were dishonoured for closing of account even though the complainant has stated that there was a dishonest intention on the part of the accused to issue such cheques, the trial is conducted only for offence under Section 138 of the NI Act. These materials are sufficient to conclude that closure of account is a reason for dishonour. Issuance of notice and its receipt 32. As stated above, accused has not come with the defense that the address is wrong. No doubt, tracking report is not exhibited but there is a receipt showing that notice is posted. Presumption under General Clauses Act comes into picture. What is important is issuance of notice. The complainant has fulfilled that responsibility. Improvements in the case 33. The complainant was cross-examined at length in respect of the improvements to show the facts stated in....
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.... Accused No. 2 himself. 37. Whereas, there is strong reliance on not referring about Company - Accused No. 1 in the statutory notice and in fact, cheques were issued on behalf of the Company by Accused No. 2. Learned Advocate Shri Muruga Perumal has also invited my attention to the process issued order (on page 66) dated 10th April 2015. It is submitted that there is only reference of Section 138 of the Negotiable Instruments Act and no reference of Section 141 of the Negotiable Instruments Act. He is right but in the title clause of complaint (on the page 49), there is a reference of both sections. 38. It is not required to join all the Directors of Respondent No. 1 - Company because the complainant can only join those representatives of the Company which fall within the purview of Section 141(1) and 142(2) of the Negotiable Instruments Act. The learned Advocate Shri Khanchandani invited my attention to the following provisions of NI Act:- (a) Meaning of "drawer" given in Section 7 of the NI Act is "the maker of a bill of exchange or cheque is called drawer". (b) The initial wording of Section 138 of NI Act and one of the requirement is "drawing of a cheque....
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....on. If we read conclusion drawn in Aneeta Hada's Case, in fact it is otherwise. 41. There is a discussion in Anneta Hada's case about interpretation of the provisions of Section 141 of NI Act. What is the meaning of word "deemed" is also discussed in paragraph 32. Section 141 lays down the principle of vicarious liabilities in case the cheque is issued by an artificial entity like Company The principle is "artificial entity works through natural persons. So for issuance of a cheque there has to be some natural person but such person issues a cheque not in his individual capacity but on behalf of the Company. It may also happen that "such person may issue a cheque in his individual capacity on account maintained by him for discharging the liabilities of Company". In that eventuality, it is the "person who has issued a cheque will be responsible and not the Company which owns that amount". 42. When the question of issuing a cheque on behalf of the Company arises, such cheques can be issued only when there is Bank Account in the name of the Company. The person who is signing the cheque on behalf of the Company is not expected to have a Bank account even though as per Section 7 a....