2022 (6) TMI 607 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - rebuttal of Statutory presumptions under Sections 118 and 139 of NI Act - acquittal of the accused - HELD THAT - It is settled position of law that a proprietary concern is not an independent juridical entity, apart from its proprietor. On perusal of the record including the evidence led by the parties, it is seen that the complainant, in the body of the complaint as also in the evidence, had categorically stated that he was the sole proprietor of M/s Zenith Constructions, which averments were not denied by the accused in the cross examination nor had he replied to the statutory notice issued by the complainant. However, it is also seen that absolutely no documentary evidence has been placed on record by the complainant to establish that he is the sole proprietor of Zenith Constructions which was a proprietary concern. The title M/s used in the complaint, affidavit-in-evidence, agreement dated 04.09.2010 and in the statutory notice, before the words Zenith Constructions , may also lead to an inference, that it was actually a partnership firm. In such circumstances, if it was not actually a partnership, but an individual proprietary concern, the burden to prove the same lay squarely on the complainant. On the other hand, the claim of the complainant that he was the sole proprietor of Zenith Constructions was also not denied by the accused. In view of this, it would only be appropriate to remit the matter to the Trial Court to clearly reach a definite finding whether the complainant is the sole proprietor of Zenith Constructions or not. An opportunity shall be given to the complainant to establish the fact that he is the sole proprietor of Zenith Constructions which is shown as payee in the cheque in question. The accused would also be questioned under Section 313 of the Cr.P.C. in the light of the evidence that may be adduced by the complainant in this regard and if so desired, to adduce evidence in rebuttal. After obtaining such further evidence, as may be adduced by the party/parties, the case shall be decided afresh in accordance with law, within three months from the date of appearance of the parties - The parties shall appear before the learned Trial Court on 20.06.2022.

Summary

Issues Involved:
1. Dismissal of complaint and acquittal under Section 138 of the Negotiable Instruments Act.
2. Competency of the complainant to file the prosecution as per Section 142 of the Act.
3. Requirement of the complainant to establish being the sole proprietor of Zenith Constructions.

Issue 1: Dismissal of complaint and acquittal under Section 138 of the Negotiable Instruments Act:
The appellant, the original complainant, alleged that the respondent-accused induced them to purchase land and issued a cheque that was dishonored. The accused admitted misrepresentation and cheating. The Trial Court found the evidence sufficient but acquitted the accused due to the cheque being in the name of "Zenith Constructions," not the individual complainant. The appellant argued that the accused's failure to deny the complainant's claim of being the sole proprietor of Zenith Constructions was significant. The High Court set aside the judgment, remitting the matter to the Trial Court to determine the complainant's proprietorship status.

Issue 2: Competency of the complainant to file the prosecution as per Section 142 of the Act:
The accused contended that the complainant, not being the payee or holder in due course of the cheque issued to Zenith Constructions, lacked standing to file the complaint. The Trial Court agreed, emphasizing that the complaint was filed in the complainant's personal capacity, not as the proprietor of Zenith Constructions. The High Court noted discrepancies in the complaint but highlighted the complainant's consistent claim of sole proprietorship in various documents. The Court directed the Trial Court to allow the complainant to prove proprietorship status.

Issue 3: Requirement of the complainant to establish being the sole proprietor of Zenith Constructions:
The Trial Court found the complaint not maintainable as the cheque was in the name of Zenith Constructions, not the complainant individually. The High Court analyzed the evidence, noting the complainant's assertions of sole proprietorship in documents and lack of denial by the accused. The Court emphasized the need for the complainant to conclusively establish proprietorship and directed the Trial Court to reexamine the matter. The judgment was set aside for further proceedings to determine the complainant's status vis-a-vis Zenith Constructions.

In conclusion, the High Court's judgment addressed the dismissal of the complaint and acquittal under the Negotiable Instruments Act, the complainant's competency to file the prosecution, and the requirement to establish proprietorship of Zenith Constructions. The matter was remitted to the Trial Court for a fresh decision after allowing the complainant to prove proprietorship, emphasizing the need for conclusive evidence in this regard.