Shivani Thakur
Published on: April 20, 2022 at 09:35 IST
The Karnataka High Court has ruled that if the Legal demand notice was issued to the Managing Director, the Company’s Knowledge of the demand can be presumed and the Cheque Bounce Case can be maintained.
Justice Patil passed a Judgement in the Case titled Maxworth Realty India Ltd Vs. M.K.Veerendra Babu on September 13, 2019.
In this Case, Accused No.1 has not been served with a Summons. Only Accused No.2 has received a Notice in accordance with Ex. P17. It is his further contention that if no Notice has been issued to Accused No.1-Company, then there is no demand being made in writing by the holder of the Cheque by Issuance of a Notice, and thus there is no cause of action to file the complaint.
The High Court stated that “However, as can be seen from the notice at Ex. P17, it was served on Accused No.2 as Chairman and Managing Director of M/S Maxworth Realty India Limited, and even the reply given at Ex. P20 contains the same address.”
The High Court observed,
“The reason for creating vicarious liability is plainly that a Juristic Entity, i.e., a Company, would be run by living persons who are in charge of its affairs and who guide the action of that Company, and if such juristic entity is Guilty, ultimately it is the persons who are responsible for its affairs and they must be held Responsible and Convicted,”
Then ruled that it is indisputable that Accused No. 1 is a corporation and Accused No. 2 is the Managing Director of the company.
When Statutory Notice is given to the Chairman and Managing Directors of the company, and both the Company and the Managing Director of the Company are is in Charge of the Matters, the Company is in turn Liable.
In these circumstances, the contention of the Learned Senior Counsel that there is no cause of action as the Notice was not served is without merit and “a formal explanation”. Likely to be Rejected.