TMI Blog2022 (12) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... egally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The presumptions raised under Section 118(b) and Section 139 of the Act are rebuttable. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debtor other liability - cheques not having been drawn on the account of petitioner No.1- private limited company, which is a separate legal entity, the complaint qua it, is not maintainable. Liability in so far as petitioner No.2, sole proprietor - HELD THAT:- In absence of the firm being not arrayed as an accused, is concerned, the exposition of law as settled by Hon'ble The Supreme Court in the case of RAGHU LAKSHMINARAYANAN VERSUS FINE TUBES [ 2007 (4) TMI 367 - SUPREME COURT] , draws a clear distinction emerging therefrom that only the proprietor can be held liable under Section 138 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law and facts between the same parties. For the sake of brevity, the facts are being taken from CRM-M-30783-2017. 2. By means of the instant petitions, the jurisdiction of this Court under Section 482 Cr.P.C. has been invoked seeking quashing of criminal complaint dated 14.07.2016 bearing no. 4801 of 2016 titled as Bhushan Power and Steel Ltd. vs. Royal Pressing and Component Pvt Ltd. and another filed under Section 138 /141 of the Negotiable Instruments Act, 1881 (for short 'the Act') and consequent summoning order dated 14.07.2016, Annexure P-3. 3. Concisely, the facts are that, three cheques dated 02.05.2016, 16.05.2016 and 30.05.2016 issued by Royal Pressing and Components were dishonoured with remarks account closed vide three different memos of even date 02.06.2016. The impugned complaint came to be filed on 13.7.2016 against the present petitioners. Consequent thereto, summoning order dated 14.07.2016, Annexure P-3, was issued, whereby they were summoned. Submissions: 4. Learned counsel for the petitioners had submitted that M/s Royal Pressing and Components Private Ltd. and Royal Pressing and Components, a proprietorship concern, are two separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Limited and others vs. Water Base Limited 2010(12) SCC 146 and Hon'ble Delhi High Court in the case of Manish Kant Aggarwal vs. National Agricultural Cooperative Marketing Federation of India Ltd. 2008(23) RCR (Crl.) 353 (DH) to contend that a company and its Director, could not be held liable or prosecuted, for a cheque not having been drawn on its account. Further, in case the proceedings, are found to be an abuse of process of law, the same can be quashed under section 482 of Cr.P.C. as was held by Hon'ble The Supreme Court of India in the case of Jugesh Sehgal vs. Shamsher Singh Gogi 2009(3) RCR (Crl.) 712. In view of the above, he prayed that the complaint and the summoning order, are liable to be quashed and he thus rested his case. 8. Opposing the petitions, learned counsel for the respondent submitted that the hyper-technical objection taken by the learned counsel for the petitioners is that in place of M/s Royal Pressing and Components Pvt. Ltd. the proprietorship firm ought to have been arrayed as an accused, on the account of which, the cheques were drawn, is not tenable. In this regard it was his submission that when admittedly the company and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oprietorship firm in question, which had issued the cheques in question was Plot No.436-C, Shree Developers Industrial Estate, Mahuakherea Ganj, Kashipur, Udhamsingh Nagar, Uttrakhand, address of which has been mentioned in Annexure P-5, which is a Central Excise Registration Certificate of the proprietorship firm as well as Central Board of Excise and Custom, Annexure P-6, wherein also the same address has been mentioned, whereas the address of petitioner No.1 was I-35 to I-38 51, 52 Site-C, Surajpur, Industrial Area, Greater Noida (UP), as is easily discernible from the complaint itself, mentioned therein as the second address as well as in the Resolution of the Pvt. Ltd. Company, attached alongwith the power of attorney in this petition. 11. Submissions of the learned counsel appearing on behalf of the respective parties were heard at length and the material on record considered. 12. At the outset, a reference is made to the response of learned counsel for the petitioners to a pointed query posed during the course of hearing, admitting that accused No.2 in the complaint and petitioner No.2 in the present petition are the same person, whose name somehow due to typographic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both. 15. Perusal of the aforesaid provision makes it manifestly clear that the following conditions are required to be satisfied: i) that the cheque is drawn by a person and on an account maintained by him with a banker; ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability; and iii) the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account. 16. In light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 SCC OnLine SC 788 , is made, wherein it has been held that once issuance of a cheque and signature hereon are admitted, presumption as envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. 19. Hon'ble The Supreme Court of India in the case of Basalingappa vs. Mudibasappa (2019) 5 SCC 418 has summarised the principles pertaining to the presumptions and the onus of proof which read thus:- 25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cern. The proprietary concern is not a juristic person so as to attract the concept of vicarious liability. The concept of vicarious liability is attracted only in the case of juristic person, such as the company registered under the provisions of the Companies Act, 1956 or the partnership firm registered under the provisions of Partnership Act, 1932 or association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. The proprietary concern stands absolutely on different footing. A person may carry on a business in the name of the business concern being proprietor of such proprietary concern. In such case the proprietor of proprietary concern alone can be held responsible for the conduct of business carried in the name of such proprietary concern. Therefore, Section 141 of the Negotiable Instruments Act have no applicability in a case involving the offence committed by a proprietary concern. 23. Still further, in M. M. Lal vs. State NCT of Delhi 2012 (4) JCC 284, the High Court of Delhi while following the dictum of Hon ble The Supreme Court of India, held as under:- It is well settled that a sole proprietorship firm ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. It was also observed in the case that the bounced cheque did not even bear the seal of the company, thus, it could not be held liable, and the Directors can also not be held liable for dishonour of cheque drawn by one of the other Directors from his own personal account. Quite similar were the facts in the case of PJ Agro (supra) that the cheque in question had been issued by K. Balashankar Reddy from out of his personal savings bank account and that none of the Directors had signed the said cheque. It was thus submitted that the proceedings against the company and its Directors were not maintainable and it was held that the High Court had erred in law in not quashing the proceedings. 26. The sine qua non for an offence under Section 138 of the Act is that the cheque must be drawn on an account maintained by the accused and admittedly, it is the case of the petitioners themselves that in the present case, cheques were drawn on the account of the proprietorship concern on the account on which the cheques in question were drawn on the account maintained by the sole proprietor of sole proprietorship firm- M/s Royal Pressing and Components, who signed the same. There is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner No.2, has no force, in light of it having been elucidately held in the cases of Raghu Lakshminarayan and M.M. Lal (supra), that Section 141 of the Act does not cover within its ambit, the proprietary concern. It is not a juristic person so as to attract the concept of vicarious liability. A sole proprietorship firm has no separate legal identity and in fact is a business in the name of the sole proprietor. Thus, in the case of a proprietorship concern, only the proprietor can be held liable under Section 138 of the Act as the proprietorship concern and the proprietor are one and the same. 30. It is quite apparent from the facts of the case that petitioner no.2 has tried to avoid his liability of a legally enforceable debt, he having not disputed his signatures on the cheques either in the petition or during the course of arguments, leading to a presumption as envisaged in Section 118 of the Act legally inferring that the cheque was drawn for consideration on the date which the cheque bears and Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability, the burden of which was on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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