IMPORTANT POINTS
(1) When two companies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business. However, their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective.
(2) If the material or the relevant evidence is withheld by a party, then the presumption raised against the opposite party stands rebutted.

R.S. Chauhan, J.—The appellant, Ashok Leyland Finance Limited, is aggrieved by the judgment dated 10.8.2011 passed by Special Judicial Magistrate, N.I. Act Cases, No.2, Udaipur, whereby the learned Magistrate has acquitted Pratap Singh, respondent No.2, of offence under Section 138 of the N.I. Act (‘the Act’ for short).

2. Briefly, the facts of the case are that the appellant-company, was registered as financial institution to provide loan for buying vehicles. According to it, the accused-respondent took a loan of Rs. 8,60,000/- for buying a vehicle, registered as RJ- 27-G-7121. The accused-respondent was required to pay a total amount of Rs. 10,89,630/- in thirty-five installments. However, as the accused-respondent failed to pay the said amount, the vehicle was repossessed by the appellant; subsequently, it was sold in auction. According to the appellant, the accused-respondent had given a cheque, cheque no. 743389 dated 9.2.2006 for amount of Rs. 2,84,521/-. But when the said cheque was submitted for encashment, it was dishonoured. Therefore, the appellant sent a registered notice to the accused respondent. However, the said notice was returned with the noting that the accused-respondent no longer lives at the address. According to him, the cheque amount was never repaid by the accused-respondent. Therefore, the complaint under Section 138 of the Act.

3. In order to buttress its case, the appellant examined K. Shriniwasan (P.W.1), and submitted nine documents. Although the accused-respondent did not examine any witness, but he did submit four documents. After going through the oral and documentary evidence, vide judgment dated 10.8.2011 the learned Magistrate acquitted the accused respondent. Hence, this

criminal leave to appeal before this Court.

4. Mr. Davendra Mahlana, the learned counsel for the appellant, has vehemently contended that the learned Judge has failed to see the difference between a wind-up of a company, and a merger of the company. Although, Ashok Leyland Finance Limited had merged with the Indusind Bank, as the division of the bank, but the finding given by the learned Magistrate that after its merger in Indusind Bank, it stopped existing as a legal entity, is misplaced. Moreover, the power of attorney was given as far back as in 1998. K. Sriniwasan (P.W.1) was an authorised person to file the complaint against the accused respondent. Hence, the conclusion drawn by the Magistrate that K. Sriniwasan (P.W.1) was not a duly authorised person is without any basis. Furthermore, even if the company had not submitted its statement of account, it was obvious from the testimony of K. Sriniwasan (P.W.1), that the cheque amount was with regard to the discharge of the loan taken by the accused respondent. Lastly, learned Magistrate has failed to invoke the presumption under Section 139 of the Act against the accused respondent. Hence, the learned Magistrate has committed grave illegality in acquitting the accused respondent.

5. Heard the learned counsel for the appellant, and perused the impugned judgment.

6. The first contention raised by the learned counsel is highly misplaced. Since it was the case of the appellant itself that the Ashok Leyland Finance Ltd had merged with the Indusind Bank, there was no need for the learned judge to distinguish between winding up of a company, and an amalgamation of a company. Moreover, in the cases of General Radio and Appliances Co. Ltd. v. M.A. Khader1 and in Saraswati Industrial Syndicate Ltd. v. CIT2 the Hon’ble Supreme Court has held that “The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that when two companies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business. However, their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect f