Offences committed by firm in India can't be challenged in Dubai court
Jurisdiction shall be determined by the place where the crime occurred.
Q1) In August 2018, I had made certain investments in a company based in India. At the time of making the investments, I received a contract and post-dated cheques dated August 2019 issued by the said company which were towards the principal amount and the profit.
Thereafter, upon the completion of one year, when the aforesaid cheques were deposited, they were dishonoured owing to the account being dormant. Further, the company requested me to return the dishonoured cheques and assured me that they will transfer my money to my bank account. I returned the dishonoured cheques to the company. However, since August 2019, no transfer of my money has been made to my bank account in India. I understand that the owner of the company in which I had invested money has started a new firm in Dubai. I am in possession of all the details of the new company based in Dubai, including its trade licence.
Can I initiate legal proceedings against the owner of the company in Dubai? What are the documents and attestations that may be required for the legal procedure?
At the outset, it is assumed that the post-dated cheques were issued by the company to you and the same were presented for collection to your bank based in India. Pursuant to your queries, it should be noted that both in India as well as in the UAE, the dishonour of cheques is an offence that is both criminal and civil in nature. Further, the jurisdiction of a court in civil matters lies in the UAE with the courts of the territory where the defendant's residence exists.
This is in accordance with Article 31 (1) of Federal Law No. (11) of 1992 regarding Civil Procedures Law of UAE (the 'Civil Procedures Law'), which states:
"Article 31: (1) The court, in which area the defendant's residence exists, should have the jurisdiction unless the law stipulates otherwise, in case he is not a residence in the state, the jurisdiction should be given to the court in which area his residence or his workplace exists. ."
In the instant case, whereas you have mentioned that the company in which you had invested is incorporated in India, it may be noted that the jurisdiction may lie with competent courts in India.
In continuance, based on the presumptions that the post-dated cheques were presented for collection in a bank based in India and the subsequent dishonour of these cheques occurred in India, the said offence is construed to have taken place in India. As per the provisions of Federal Law No. (35) of 1992 related to Criminal Procedure Law of UAE (the 'Criminal Procedure Law'), the jurisdiction of a court in criminal matters is determined by the place wherein the offence occurred. This is in accordance with Article 142 of the Criminal Procedure Law, which states:
"Jurisdiction shall be determined by the place where the crime occurred."
Based on the aforementioned provisions of the UAE law, it should be noted that the company incorporated in India and the one incorporated in Dubai are two separate legal entities. No legal action can be pursued against the company incorporated in Dubai for the offences committed by the other company incorporated in India, despite both the companies having the same shareholder(s). Further, one should note that a company is a juristic person having a separate and distinct legal identity from that of its owner who is a natural person.
In view of the foregoing, you may initiate legal proceedings against the company incorporated in India before the competent courts of India. Further, you may file a criminal complaint by approaching the competent authorities in India for the dishonour of cheques in accordance with Section 138 of the Indian Negotiable Instruments Act of 1881, along with relevant documentary evidence such as the contract between you and the company, the dishonoured cheques issued by the company and the cheque return memo issued by the bank to you and any correspondence between you, the company and the owner of company which may prove your assertions. Thereafter, if the signatory of the dishonoured cheques and the authorised personnel in charge of and responsible for the business of the company based in India are convicted by a criminal (sessions) court in India for dishonour of the said cheques, you may approach competent authorities in India to put on a lookout notice against them.
Know the law
Jurisdiction shall be determined by the place where the crime occurred
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: firstname.lastname@example.org or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.