2018 (9) TMI 929 - HC - Indian Laws

Dishonour of cheque - Theft or misappropriation of the cheques - concept of vicarious liability - Does the complaint not maintainable for its omission to array the Proprietary concern Sudha Gas Agency as accused? - plea is liable to be rejected outright for the simple reason that Section 141 of N.I. Act contemplates procedure in case of offence committed by company - Held that - Company is a legal entity by itself. Being a juristic body it can sue or be sued. Though company being a juristic body and can sue and be sued, it cannot operate itself. Some human agency is required. Therefore company being the principal, the human agency who operates the company become its agent. So, the natural person either individual or group of individuals who operates on behalf of the company is vicariously held liable for the act he do for or on behalf of the company. Hence Section 141 of the N.I. Act, say, besides company, whom else to be prosecuted when the company is the offender. Whereas Proprietorship concern is not a juristic body. It cannot sue or be sued - there cannot be any vicarious liability unless there is prosecution against the company. The said dictum does not cover proprietary concern. Does mere denial of facts regarding transaction, sufficient to hold the accused has rebutted the statutory presumption under Section 139 of N.I. Act? - Held that - When the complainant has proved the agreement Ex.P.2 through attesting witnesses and the claim of alibi not proved by the accused, the lower appellate Court has erroneously held that Ex.P.2 is titled as Agreement, it is not written in stamp papers, the agreement required stamp duty, so Without getting stamp duty penalty, the trial Court has wrongly admitted the same in evidence and marked as exhibit - It is very unfortunate that the lower appellate Court has failed to appreciate the document Ex.P.2 in proper perspective. It is always the content of the document decides the nature of the document, but not the title it carries. Ex.P.2 is recording of the compromise of the panchayat held on 12.07.2002. It is not relied to enforce the content of the document, which disclosed existence of a liability. For collateral purpose to show the cheques in dispute were issued pursuant to the panchayat, it is marked. The accused in this case, has attempted to probabilise there was no passing of consideration to issue cheques and the cheques were stolen by the accused while he was employed as Manager. From the evidence let in by the complainant as pointed out earlier, the complainant has established to the core that he was not mere a Manager in Sudha Gas Agency, he and his family members have contributed to the business and the same has been acknowledged by the accused himself in his letters to HPCL just few months before the trouble started - Mere denial of liability or passing of consideration will not be sufficient to rebut the presumption under section 139 of the N.I. Act. Such a rebuttal should be backed by some material evidence which could probabilise the facts content in it. The points framed for consideration answered accordingly. The Trial Court is directed to secure the respondent/accused and commit him to prison to undergo the period of sentence - appeal allowed.

Summary

Issues Involved:
1. Maintainability of the complaint for omission to array the Proprietary concern Sudha Gas Agency as accused.
2. Sufficiency of mere denial of facts regarding the transaction to rebut the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 (N.I. Act).

Issue-wise Detailed Analysis:

1. Maintainability of the Complaint:
The first issue addressed whether the complaint was maintainable despite not naming the Proprietary concern Sudha Gas Agency as an accused. The court rejected this plea outright, clarifying that Section 141 of the N.I. Act pertains to offenses committed by companies, which are distinct legal entities capable of suing and being sued. In contrast, a proprietorship concern is not a juristic body but an individual operating under a trade name. Thus, the individual who issues the cheque as the proprietor is solely liable for prosecution. The court cited the Supreme Court judgment in *Aneeta Hada v. Godfather Travels and Tours (P) Limited* to support this distinction, emphasizing that the concept of vicarious liability applies to companies but not to proprietorship concerns.

2. Rebuttal of Statutory Presumption:
The second issue examined whether mere denial of facts regarding the transaction was sufficient to rebut the statutory presumption under Section 139 of the N.I. Act. The court noted that the cheques (Ex.P.3 to Ex.P.9) were related to the accused's accounts, and the signatures on these cheques were not denied. The appellate court had disbelieved the purpose of the cheques based on variations in ink and handwriting. However, the court emphasized Section 20 of the N.I. Act, which presumes that a person signing a blank or incomplete negotiable instrument authorizes the holder to complete it.

The court found that the accused failed to substantiate his defense that the cheques were stolen by the complainant. The accused had closed the relevant accounts before the cheques were presented and only alleged the theft through a public notice after the cheques were returned. The accused did not provide evidence of informing the banks about the missing cheques a year earlier, as claimed in the public notice. The court also noted the accused's failure to prove his alibi that he was in Chennai on the date the cheques were allegedly handed over.

The court referenced the Supreme Court's observations in *Kumar Exports v. Sharma Carpets* and *Kishan Rao v. Shankargouda*, emphasizing that the accused must bring on record facts and circumstances to rebut the presumption of consideration and debt. The accused's contradictory statements and failure to produce supporting evidence led the court to conclude that the presumption under Section 139 of the N.I. Act was not rebutted.

Conclusion:
The court allowed the criminal appeal, set aside the judgment of the Second Additional Sessions Judge, Tuticorin, dated 06.02.2014, and restored the judgment of the Judicial Magistrate, Fast Track Court (Magistrate Level), Tuticorin, dated 20.09.2013. The trial court was directed to secure the respondent/accused and commit him to prison to undergo the period of sentence.