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2016 (2) TMI 1302 - HC - Indian LawsDishonor of Cheque - notice issued upon the director/authorized signatory of the company - validity of notice issued under Section 138(b) of the Negotiable Instruments Act, 1881 - HELD THAT:- Petitioner No. 2 to whom the notices were addressed is the director and authorised signatory of the company who represented the company throughout the transaction which is the subject-matter of the impugned prosecution. It is claimed that he had signed the agreement from which the liability arose in respect whereof the dishonoured cheque was issued. He is also alleged to be the signatory of the cheque and had received the notice of dishonour at the registered office of the company. Under such premises, the petitioner No. 2 can be safely assumed to be the alter ego of the company. He is the principal director of the company and was the human agency representing the company in the transaction which is the subject matter of prosecution. A corporate entity has to function through a human agency and the mental state of such human agency is attributable to the company. Hence, knowledge of petitioner No. 2 of such notice and his response thereto can be attributed to the juristic entity as the former is nothing but the alter ego of such corporate entity. Negotiable Instruments Act is a legislation operating in the commercial field and section 138 thereof was incorporated to give tooth and claw to the legislation so as to ensure greater accountability and creditability in commercial transactions relating to cheques. This legislative intention ought to be the guiding principle while construing the validity of notice issued under the aforesaid provision of law - The issue as to whether a notice issued upon the director/authorized signatory of the company can be deemed to be a valid notice under Section 138(b) of the Negotiable Instruments Act fell for consideration Bilakchand Gyanchand Co. Vs. A. Chinnaswami [1999 (3) TMI 620 - SUPREME COURT] and Rajneesh Aggarwal Vs. Amit J. Bhalla [2001 (1) TMI 855 - SUPREME COURT]. In Bilakchand, notice issued upon the Managing Director/signatory was held to be a valid notice under Section 138(b) of the Act. The petitioner No. 1 company had sufficient notice of dishonor of the cheques and had failed to make payment within the stipulated time and the impugned prosecutions are not liable to be quashed on such score - the revision petitions are dismissed.
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