2025 INSC 1
SUPREME COURT OF INDIA
(HON’BLE B.R. GAVAI, J. AND
HON’BLE K. V. VISWANATHAN, JJ.)
M/S NARESH POTTERIES
Petitioner
VERSUS
M/S AARTI INDUSTRIES
Respondent
Criminal
Appeal No. OF 2025 (Arising out of SLP (Crl.) No. 8659 of 2023)-Decided on
02-01-2025
Dish of Chq
Inherent Powers not
to use for premature quashing based on procedural technicalities that can be
adjudicated later
(A) Negotiable Instruments Act,
1881 – Section 138, 142 –
Dishonour of Cheque – Quashing by High
Court on technical ground set aside - Power of Attorney - The High Court
held that the complaint was defective because the affidavit of the power of
attorney holder lacked specific assertions of personal knowledge regarding the
transaction. However, the Supreme Court found that the complaint satisfied the
requirements of Section 142 of the NI Act, as it was filed by the designated
payee and the power of attorney holder had sufficient knowledge through
day-to-day involvement in the business. The complaint documents demonstrated
that the power of attorney holder was conversant with the facts, thereby
meeting the requirement for personal knowledge. The court emphasized that the
personal knowledge requirement should not lead to an automatic quashing of
complaints and reaffirmed that examination of the complainant on oath is
discretionary.
(Para
3, 10, 18, 26, 30, 34)
(B) Negotiable Instruments Act,
1881- Section 138, 142 - Code of Criminal Procedure, 1973 – Section 200 - Corporate
Complainants - De Jure and De Facto Complainants – Complaint of Dishonour of
cheque - The
Supreme Court ruled that when a complaint is filed by a company under Section
138 of the NI Act, it should be in the company's name, and the complaint can be
represented by an authorized employee or agent. The distinction between a de
jure complainant (the company) and a de facto complainant (the person
representing the company) was emphasized. The court stated that to meet the
requirements of Section 142 of the NI Act, it suffices that the complaint is
filed in the name of the payee, and that the person prosecuting the complaint
is duly authorized to do so. The appellant's power of attorney holder had the requisite
knowledge of the transaction and was properly authorized to file the complaint
on behalf of the company.
(Para
15, 19, 21, 25)
(C) Negotiable Instruments Act,
1881- Section 138 - Code of Criminal Procedure, 1973 - Section 482 - Inherent
Powers - Premature quashing based on procedural technicalities that can be
adjudicated later.
- The Supreme Court cautioned against the reckless use of inherent powers under
Section 482 of the Cr.P.C. to quash complaints at an early stage. It reiterated
that complaints under Section 138 of the NI Act should not be dismissed merely
on technical grounds related to the power of attorney or knowledge
requirements, as such issues are to be resolved during trial. The decision
emphasized the necessity for courts to provide an opportunity for trial rather
than premature dismissal based on procedural technicalities that can be
adjudicated later.
(Para
34, 36, 37)
JUDGMENT
B.R. Gavai, J. :- Leave granted.
2.
This appeal challenges the judgment and final order dated 12th April 2023
passed by the learned Single Judge of the High Court of Judicature at Allahabad
in Criminal Miscellaneous Application No. 29906 of 2022. The learned Single
Judge allowed the Criminal Miscellaneous Application filed by M/s Aarti
Industries, Respondent No. 1 herein and quashed the summoning order dated 22nd
November 2021 passed by the Additional Chief Judicial Magistrate, Khurja,
Bulandshahar[Hereinafter referred to as
‘trial court’.] in Complaint Case
No. 701 of 2021, as well as the entire proceedings arising from the said
complaint case filed by the present appellant under Section 138 of the
Negotiable Instruments Act, 1881[For
short ‘NI Act’], pending before the trial court in C.N.R. No.
UPBU160012972021.
3.
The facts giving rise to the present appeal are as follows:
3.1.
M/s Naresh Properties through its Manager Neeraj Kumar, appellant herein, deals
in the manufacture and sale of crockeries, insulators, polymer insulators and
other such hardware fittings.
3.2.
Between the period from 18th June 2021 to 2nd July 2021, M/s Aarti Industries
represented by its sole proprietor Sunita Devi, Respondent No. 1 herein, had
purchased polymer insulators scrap rejected material, worth Rs. 1,70,46,314/-from
the present appellant. After the materials were supplied to Respondent No.1,
the appellant raised several bills/invoices seeking payment for the supplied
goods.
3.3.
Subsequently, on 12th July 2021, the appellant was given a cheque issued in its
favour by Respondent No.1 for a sum of Rs.1,70,46,314/-. The said cheque
bearing No. 086295 dated 10th July 2021 had been drawn on the A/c No.
3640670725 belonging to M/s Aarti Industries at the Central Bank of India,
Branch Khurja.
3.4.
Upon receiving the said cheque, the appellant deposited it in its A/c No.
07382560000285 at HDFC Bank, Branch Khurja on 12th July 2021 for encashment.
However, the cheque came to be dishonoured and on 13th July 2021, the cheque
was returned to the appellant with a return memo which stated that the cheque
amount ‘exceeds arrangement’.
3.5.
Aggrieved thereby, on behalf of Smt. Shakti Khanna, the owner/proprietor of the
appellant-firm, a legal notice dated 15th July 2021 was issued to Respondent
No.1 through its sole proprietor, Sunita Devi under the NI Act. According
to the legal notice, Respondent No.1 was to pay the cheque amount of Rs.
1,70,46,314/- within a period of 15 days of receiving the notice, failing which
the offence punishable under Section 138 of the NI Act was liable to
be attracted.
3.6.
Immediately thereafter, on 16th July 2021, as a counter blast to the legal
notice, Angad the son of the sole proprietor of Respondent No.1 lodged a First
Information Report under Sections
420, 467, 468 and 471 of the Indian Penal Code, 1860
against 7 accused persons. It was alleged that Ashish Khanna, the owner of the
appellant-firm, the staff of the appellant-firm and the branch manager of the
Central Bank of India, Branch Khurja had colluded together to obtain a cheque
book in the name of M/s Aarti Industries by forging the signature of Sunita
Devi. It was further alleged that the said cheque book containing cheques from
SI No. 86281 to 86380 was thereafter used by the appellant-firm to issue two
cheques- first, cheque No. 086291 dated 10th July 2021 for a sum of Rs.
1,62,28,445/- issued in favour of Shakti Ceramics and second, cheque No. 086295
dated 10th July 2021 for a sum of Rs. 1,70,46,314/- issued in favour of the
present appellant.
3.7.
Subsequently, on 31st August 2021, Smt. Shakti Khanna being the sole proprietor
of the appellant-firm issued a Letter of Authority thereby authorizing Sh.
Neeraj Kumar, the manager and caretaker of the appellant-firm to file a
complaint and take all such necessary steps in the matter of the dishonour of
the cheque.
3.8.
Upon being so authorized, Sh. Neeraj Kumar in the name of M/s Naresh Potteries,
filed a complaint being Complaint No. 701 of 2021 under Section
138 of the NI Act on 8th September 2021 against Respondent No.1 before the
trial court. Being the deponent in the aforesaid complaint, Sh. Neeraj Kumar
also filed an affidavit solemnly affirming that he was well- conversant with
the facts and circumstances of the facts leading to the complaint and as such
was competent to file the said affidavit.
3.9.
Subsequently, on 22nd October 2021, Sh. Neeraj Kumar filed an Affidavit of
Evidence under Section 200 of the Code of Criminal Procedure, 1973[For short ‘Cr.P.C.’], before the trial
court wherein he reiterated the facts of the complaint case and once again,
affirmed that he was well-conversant with the facts and circumstances of the
case, being the manager of the appellant- firm.
3.10.
On 22nd November 2021, on the basis of the evidence in the form of the
aforesaid examination under Section 200 of the Cr.P.C. and the
documentary evidence adduced, the trial court found that there was sufficient
ground to issue summons to Sunita Devi, the sole owner/proprietor of Respondent
No.1- firm for the offence punishable under Section 138 of the NI
Act. Accordingly, an order was passed thereby summoning Sunita Devi to face
trial for the aforesaid offence. 3.11. Aggrieved thereby, Respondent No.1
preferred a Criminal Miscellaneous Application under Section 482 of
the Cr.P.C. to quash the aforesaid summoning order as well as the entire
proceedings of the complaint case pending before the trial court.
3.12.
The High Court by the impugned judgment and order allowed the Criminal Miscellaneous
Application. 3.13. Being aggrieved thereby, the present appeal.
4.
We have heard Mr. Navin Pahwa, learned Senior Counsel, appearing on behalf of
the appellant and Mr. Shailesh Sharma, learned counsel, appearing on behalf of
Respondent No.2.
5.
In spite of being duly served, none appeared for Respondent No.1.
6.
Mr. Navin Pahwa, learned Senior Counsel, submitted that the High Court had
quashed the complaint case on an incorrect assumption of fact as well as an
incorrect interpretation of the law laid down by this Court
in TRL Krosaki Refractories Limited v. SMS Asia Private Limited and
Another[(2022) 7 SCC 612 : 2022 INSC 214].
7.
Mr. Navin Pahwa further submitted that the High Court had quashed the criminal
case on the simple ground that from a conjoint reading of the averments made in
the Letter of Authority and the affidavit of evidence under Section
200 of the Cr.P.C. , Sh. Neeraj Kumar, the power of attorney holder was
found to have no personal knowledge of the facts and circumstances of the case.
He submitted that the only purpose of a sworn statement under Section
200 of the Cr.P.C. by the power of attorney holder who has knowledge of
the facts stated in the complaint is to satisfy the court of the prima facie
existence of an offence which is to be tried and the final outcome of the trial
would be determined on the basis of the evidence. He submitted that, if
necessary, the complainant could be called at a later stage for further
examination and cross-examination. He submitted that this was beside the fact
that the power of attorney holder in the present matter had on three separate
occasions clearly stated that he had personal knowledge of the facts of the
complaint case.
8.
Mr. Navin Pahwa placed reliance on the judgments of this Court in the cases
of Shankar Finance and Investments v. State of Andhra Pradesh and Ors. [(2008) 8 SCC 536 : 2008 INSC 763] , Praveen
v. Mohd. Tajuddin[(2009) 12 SCC 706] , A.C.
Narayanan v. State of Maharashtra and Another[(2014) 11 SCC 790 : 2015 INSC 69] and Vinita S. Rao v.
Essen Corporate Services Private Limited and Another[(2015) 1 SCC 527 : 2014 INSC 643]. He submitted that in view of
the material placed on record and the authorities cited, the appeal deserves to
be allowed and the impugned judgment and order deserves to be quashed and set
aside.
9.
On behalf of Respondent No.2, Mr. Shailesh Sharma, learned counsel, has
submitted that the present matter is essentially a dispute between private
parties. He has adopted the submissions of the appellant and has prayed that
the appeal may be allowed.
10.
We have considered the rival submissions and perused the material placed on
record.
11.
The solitary question that we are called upon to answer is as to whether the
complaint filed by the appellant herein under Section 138 of the NI
Act is in accordance with the requirement under Section 142 of the NI
Act.
12.
The relevant provision of the NI Act that falls for our consideration
is as follows:
“142. Cognizance of offences.—(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973
(2 of 1974),—
(a) no court shall take
cognizance of any offence punishable under Section 138 except upon a
complaint, in writing, made by the payee or, as the case may be, the holder in
due course of the cheque;
…………….”
13.
Ordinarily, under Section 190 of the Cr.P.C., a Magistrate is
empowered to take cognizance of an offence upon receiving a complaint of facts
which constitute such offence. Prior to taking such cognizance, in accordance
with and as provided by Section 200 of the Cr.P.C., the Magistrate is
required to examine upon oath the complainant and witness present, if any. However, Section
142 of the NI Act creates a legal bar on the court from taking cognizance
of any offence punishable under Section 138 of the NI Act except upon
a complaint, in writing, made by the payee, or as the case may be, the holder
in due course of the cheque.
14.
The law on the subject-matter at hand is no longer res integra and has been
well-settled by a series of judgments passed by this Court.
15.
This Court in the case of National Small Industries Corporation Limited v.
State (NCT of Delhi) and Others[(2009) 1
SCC 407 : 2008 INSC 1308] had an occasion to consider the validity of
a complaint under Section 138 of the NI Act and the satisfaction of
the requirement under Section 142 thereof, as well as to determine as
to who could be considered to be the complainant/representative in a case where
the complaint is to be filed by an incorporated body. This Court held as
follows:
“14. The term “complainant” is
not defined under the Code. Section 142 of the NI Act requires a
complaint under Section 138 of that Act to be made by the payee (or
by the holder in due course). It is thus evident that in a complaint relating
to dishonour of a cheque (which has not been endorsed by the payee in favour of
anyone), it is the payee alone who can be the complainant. The NI Act only
provides that dishonour of a cheque would be an offence and the manner of
taking cognizance of offences punishable under Section 138 of that
Act. However, the procedure relating to initiation of proceedings, trial and
disposal of such complaints, is governed by the Code. Section 200 of the Code
requires that the Magistrate, on taking cognizance of an offence on complaint,
shall examine upon oath the complainant and the witnesses present and the
substance of such examination shall be reduced to writing and shall be signed
by the complainant and the witnesses. The requirement of Section
142 of the NI Act that the payee should be the complainant, is met if the
complaint is in the name of the payee. If the payee is a company, necessarily
the complaint should be filed in the name of the company. Section
142 of the NI Act does not specify who should represent the company, if a
company is the complainant. A company can be represented by an employee or even
by a non-employee authorised and empowered to represent the company either by a
resolution or by a power of attorney.
…..
19. Resultantly, when in a
complaint in regard to dishonour of a cheque issued in favour of a company or
corporation, for the purpose of Section 142 of the NI Act, the
company will be the complainant, and for purposes of Section 200 of the Code,
its employee who represents the company or corporation, will be the de facto
complainant. In such a complaint, the de jure complainant, namely, the company
or corporation will remain the same but the de facto complainant (employee)
representing such de jure complainant can change, from time to time. And if the
de facto complainant is a public servant, the benefit of exemption under clause
(a) of the proviso to Section 200 of the Code will be available, even though
the complaint is made in the name of a company or corporation.”
(emphasis
supplied)
16.
While this Court was primarily concerned with the issue relating to the
exemption available against examining a public servant in view of Section
200(a) of the Cr.P.C., this Court nevertheless clarified that the
requirement of Section 142 of the NI Act that the payee should be the
complainant would be met if the complaint is in the name of the payee.
Where the payee is a company, this Court observed that the complaint should
necessarily be filed in the name of the company, if the company is the
complainant. In such cases, this Court held that a company can be represented
by an employee or even a non-employee authorised and empowered to represent the
company either by a resolution or by a power of attorney. As a consequence of
the aforesaid discussion, this Court concluded that for the purposes
of Section 142 of the NI Act, the company will be the complainant and
for the purposes of Section 200 of the Cr.P.C., its employee who
represents the company, will be the de facto complainant while the company will
remain the de jure complainant, regardless of any change in the de facto
complainant.
17.
Having discussed as to who could file a complaint on behalf of an incorporated
body, it would be apposite to consider the legal validity of a complaint by the
power of attorney holder of such an incorporated body. A three-Judge Bench of
this Court in the case of A.C. Narayanan (supra) was called upon to
answer a reference with regard to the conflicting decisions delivered by two
Division Benches of this Court in M.M.T.C. Ltd. and Another v. Medchl
Chemicals & Pharma P. Limited and Another[(2002) 1 SCC 234 : 2001 INSC 572] and Janki Vashdeo
Bhojwani and Another v. IndusInd Bank Limited and Others[(2005) 2 SCC 217 : 2004 INSC 695]. While answering the reference,
what fell for consideration before this Court was the maintainability of a
complaint under Section 138 of the NI Act filed by the power of
attorney holder on behalf of the original complainant and the necessity of
specific averments as to the knowledge of the power of attorney holder with
respect to the facts and circumstances leading to the dishonour of the
cheque(s) and the preference of the criminal proceedings. This Court held as
follows:
“21. In terms of the reference
order, the following questions have to be decided by this Bench:
21.1. Whether a power-of-attorney
holder can sign and file a complaint petition on behalf of the
complainant?/Whether the eligibility criteria prescribed by Section
142(a) of the NI Act would stand satisfied if the complaint petition
itself is filed in the name of the payee or the holder in due course of the
cheque?
21.2. Whether a power-of-attorney
holder can be verified on oath under Section 200 of the Code? 21.3. Whether
specific averments as to the knowledge of the power-of-attorney holder in the
impugned transaction must be explicitly asserted in the complaint?
21.4. If the power-of-attorney
holder fails to assert explicitly his knowledge in the complaint then can the
power-of-attorney holder verify the complaint on oath on such presumption of
knowledge? 21.5. Whether the proceedings contemplated under Section 200 of the Code
can be dispensed with in the light of Section 145 of the NI Act which
was introduced by an amendment in the year 2002? ….
28. The power-of-attorney holder
is the agent of the grantor. When the grantor authorises the attorney holder to
initiate legal proceedings and the attorney holder accordingly initiates such
legal proceedings, he does so as the agent of the grantor and the initiation is
by the grantor represented by his attorney holder and not by the attorney
holder in his personal capacity. Therefore, where the payee is a proprietary
concern, the complaint can be filed by the proprietor of the proprietary
concern, describing himself as the sole proprietor of the payee, the
proprietary concern, describing itself as a sole proprietary concern, represented
by its sole proprietor, and the proprietor or the proprietary concern
represented by the attorney holder under a power of attorney executed by the
sole proprietor. However, we make it clear that the power-of-attorney holder
cannot file a complaint in his own name as if he was the complainant. In other
words, he can initiate criminal proceedings on behalf of the principal.
29. From a conjoint reading
of Sections 138, 142 and 145 of the NI Act as well as
Section 200 of the Code, it is clear that it is open to the Magistrate to issue
process on the basis of the contents of the complaint, documents in support
thereof and the affidavit submitted by the complainant in support of the
complaint. Once the complainant files an affidavit in support of the complaint
before issuance of the process under Section 200 of the Code, it is
thereafter open to the Magistrate, if he thinks fit, to call upon the
complainant to remain present and to examine him as to the facts contained in
the affidavit submitted by the complainant in support of his complaint.
However, it is a matter of discretion and the Magistrate is not bound to call
upon the complainant to remain present before the court and to examine him upon
oath for taking decision whether or not to issue process on the complaint
under Section 138 of the NI Act. For the purpose of issuing process
under Section 200 of the Code, it is open to the Magistrate to rely upon the
verification in the form of affidavit filed by the complainant in support of
the complaint under Section 138 of the NI Act. It is only if and
where the Magistrate, after considering the complaint under Section
138 of the NI Act, documents produced in support thereof and the
verification in the form of affidavit of the complainant, is of the view that
examination of the complainant or his witness(s) is required, the Magistrate
may call upon the complainant to remain present before the court and examine
the complainant and/or his witness upon oath for taking a decision whether or
not to issue process on the complaint under Section 138 of the NI
Act. ….
33. While holding that there is
no serious conflict between the decisions in M.M.T.C. [M.M.T.C. Ltd. v.
Medchl Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234 : 2002 SCC (Cri)
121] and Janki Vashdeo Bhojwani [Janki Vashdeo Bhojwani v. IndusInd Bank Ltd.,
(2005) 2 SCC 217] , we clarify the position and answer the questions in the
following manner: 33.1. Filing of complaint petition under Section
138 of the NI Act through power of attorney is perfectly legal and
competent.
33.2. The power-of-attorney
holder can depose and verify on oath before the court in order to prove the
contents of the complaint. However, the power-of-attorney holder must
have witnessed the transaction as an agent of the payee/holder in due
course or possess due knowledge regarding the said transactions. 33.3. It is
required by the complainant to make specific assertion as to the knowledge of
the power-of-attorney holder in the said transaction explicitly in the
complaint and the power-of-attorney holder who has no knowledge regarding the
transactions cannot be examined as a witness in the case.
33.4. In the light
of Section 145 of the NI Act, it is open to the Magistrate to rely
upon the verification in the form of affidavit filed by the complainant in
support of the complaint under Section 138 of the NI Act and the
Magistrate is neither mandatorily obliged to call upon the complainant to
remain present before the Court, nor to examine the complainant of his witness
upon oath for taking the decision whether or not to issue process on the
complaint under Section 138 of the NI Act.
33.5. The functions under the
general power of attorney cannot be delegated to another person without
specific clause permitting the same in the power of attorney. Nevertheless, the
general power of attorney itself can be cancelled and be given to another
person.
34. We answer the reference on
the above terms and remit the matter to the appropriate Bench for deciding the
case on merits.”
(emphasis
supplied)
18.
This Court while answering the reference has thoroughly considered the scope
and requirement of Section 142(1)(a) of the NI Act. This Court held
that from a conjoint reading of Sections
138, 142 and 145 of the NI Act as well as Section
200 of the Cr.P.C., it is clear that calling upon the complainant
to remain present and to examine him as to the facts contained in the
affidavit submitted by the complainant to support his complaint, is a matter of
discretion on the part of the Magistrate. This Court clarified that it is only
if and where the Magistrate, after considering all the relevant documents, is
of the view that examination of the complainant or his witness(s) is required,
the Magistrate may call upon the complainant to remain present before the court
and examine the complainant and/or his witness upon oath for taking a decision
whether or not to issue process on the complaint under Section 138 of
the NI Act.
19.
After discussing the discretionary powers of the Magistrate, this Court went on
to hold that the power of attorney holder may be allowed to file, appear and
depose for the purpose of issue of process for the offence punishable
under Section 138 of the NI Act. This Court, however, cautioned that
an exception to the above would be when the power-of-attorney holder does not
have a personal knowledge about the transactions, in which case, he cannot be
examined. Nevertheless, this Court clarified that where the power-of- attorney
holder of the complainant is in charge of the business of the complainant
payee and the power of attorney holder alone is personally aware of the
transactions, there is no reason why he cannot depose as a witness, however,
such personal knowledge must be explicitly asserted in the complaint and a
power-of-attorney holder who has no personal knowledge of the transactions
cannot be examined as a witness in the case.
20.
More recently, in the case of TRL Krosaki Refractories Limited (supra)
similar facts as the present matter arose for consideration by this Court. In
the said case, a complaint came to be filed by the payee company through its
General Manager (Accounting) under Sections 138 and 142 of
the NI Act. The complaint was registered based on the affidavit filed on behalf
of the complainant, in lieu of an oral sworn statement. Upon being satisfied
that there was sufficient material and the complaint under Section
138 of the NI Act against the accused was in accordance with law, the SDJM
took cognizance of the complaint and issued summons to the accused-firm
therein. Assailing the summoning order, the accused-firm filed a petition
before the High Court under Section 482 of the Cr.P.C. for quashing
of the summoning order, being aggrieved by the fact that the complaint had
been filed by an incompetent person inasmuch as the complainant neither had
knowledge about the alleged transaction, nor had he witnessed the same, nor was
there any averment in the complaint that the complainant had been duly
authorized by the payee-firm to initiate criminal proceedings on its behalf.
The High Court had allowed the petition under Section 482 of the
Cr.P.C. and set aside the summoning order, which led to an appeal being filed
before this Court. A three-Judge Bench of this Court upon a thorough
consideration of the judgments of this Court by which the law on the
subject-matter at hand has been crystallised, allowed the appeal and set aside
the judgment of the High Court. This Court held as follows:
“21. A meaningful reading of the
above would indicate that the company having authorised the General Manager
(Accounting) and the General Manager (Accounting) having personal knowledge had
in fact been clearly averred. What can be treated as an explicit averment,
cannot be put in a straitjacket but will have to be gathered from the
circumstance and the manner in which it has been averred and conveyed, based on
the facts of each case. The manner in which a complaint is drafted may vary
from case to case and would also depend on the skills of the person drafting
the same which by itself, cannot defeat a substantive right. However, what is
necessary to be taken note of is as to whether the contents as available in the
pleading would convey the meaning to the effect that the person who has
filed the complaint, is stated to be authorised and claims to have knowledge of
the same. In addition, the supporting documents which were available on the
record by themselves demonstrate the fact that an authorised person, being a
witness to the transaction and having knowledge of the case had instituted the
complaint on behalf of the “payee” company and therefore, the requirement
of Section 142 of the NI Act was satisfied. In Vinita S.
Rao v. Essen Corporate Services (P) Ltd. [Vinita S. Rao v. Essen Corporate
Services (P) Ltd., (2015) 1 SCC 527 : (2015) 1 SCC (Civ) 558 : (2015) 1 SCC
(Cri) 726] , to which one of us (the Hon'ble CJI) was a member of the Bench has
accepted the pleading of such a nature to indicate the power to prosecute the
complaint and knowledge of the transaction as sufficient to maintain the
complaint.
22. Despite our conclusion that
the documents available on record would on facts satisfy the requirement
relating to delegation of power and also knowledge of the transaction by the
person representing the Company in the instant case, it is also necessary for
us to keep in perspective that though the case in A.C. Narayanan [A.C.
Narayanan v. State of Maharashtra, (2014) 11 SCC 790 : (2014) 4 SCC (Civ) 343]
has taken the centre stage of consideration, the facts involved therein were in
the background of the complainant being an individual and the complaint filed
was based on the power of attorney issued by the “payee” who was also an
individual. In such an event, the manner in which the power was being exercised
was to be explicitly stated so as to establish the right of the person
prosecuting the complaint, to represent the payee i.e. the complainant. The
position that would emerge when the complainant is a company or a corporate
entity will have to be viewed from a different standpoint.
23. In this regard in Samrat
Shipping Co. (P) Ltd. v. Dolly George [Samrat Shipping Co. (P) Ltd. v.
Dolly George, (2002) 9 SCC 455 : 2003 SCC (Cri) 1224] , while disapproving
the manner in which cognizance was refused to be taken and the complaint had
been dismissed by the learned Magistrate at the threshold, this Court has held
as hereunder : (SCC p. 456, para
3) “3. Having heard both sides we
find it difficult to support the orders challenged before us. A company can
file a complaint only through human agency. The person who presented the
complaint on behalf of the Company claimed that he is the authorised
representative of the company. Prima facie, the trial court should have accepted
it at the time when a complaint was presented. If it is a matter of evidence
when the accused disputed the authority of the said individual to present the
complaint, opportunity should have been given to the complainant to prove the
same, but that opportunity need be given only when the trial commences. The
dismissal of the complaint at the threshold on the premise that the individual
has not produced certified copy of the resolution appears to be too hasty an
action. We, therefore, set aside the impugned orders and direct the trial court
to proceed with the trial and dispose of it in accordance with law. Parties are
directed to appear before the trial court on 31-1-2000.”
25. In that view, the position
that would emerge is that when a company is the payee of the cheque based on
which a complaint is filed under Section 138 of the NI Act, the
complainant necessarily should be the company which would be represented by an
employee who is authorised. Prima facie, in such a situation the indication in
the complaint and the sworn statement (either orally or by affidavit) to the
effect that the complainant (Company) is represented by an authorised
person who has knowledge, would be sufficient. The employment of the terms
“specific assertion as to the knowledge of the power-of- attorney holder” and
such assertion about knowledge should be “said explicitly” as stated
in A.C. Narayanan [A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC
790 : (2014) 4 SCC (Civ) 343] cannot be understood to mean that the assertion
should be in any particular manner, much less only in the manner understood by
the accused in the case. All that is necessary is to demonstrate before the
learned Magistrate that the complaint filed is in the name of the “payee” and
if the person who is prosecuting the complaint is different from the payee, the
authorisation therefor and that the contents of the complaint are within his
knowledge. When, the complainant/payee is a company, an authorised employee can
represent the company. Such averment and prima facie material is sufficient for
the learned Magistrate to take cognizance and issue process. If at all, there
is any serious dispute with regard to the person prosecuting the complaint not
being authorised or if it is to be demonstrated that the person who filed the
complaint has no knowledge of the transaction and, as such that person could
not have instituted and prosecuted the complaint, it would be open for the
accused to dispute the position and establish the same during the course of the
trial. As noted in Samrat Shipping Co. [Samrat Shipping Co. (P) Ltd.
v. Dolly George, (2002) 9 SCC 455 : 2003 SCC (Cri) 1224] , dismissal of a
complaint at the threshold by the Magistrate on the question of authorisation,
would not be justified. Similarly, we are of the view that in such
circumstances entertaining a petition under Section 482 to quash the order
taking cognizance by the Magistrate would be unjustified when the issue of
proper authorisation and knowledge can only be an issue for trial.
26. In that view of the matter,
we are of the opinion that the High Court was not justified in entertaining the
petition filed under Section 482CrPC and quashing the order dated
5-11-2015, taking cognizance of the complaint filed by the appellant.”
(emphasis
supplied)
21.
It could thus be seen that this Court distinguished the position of a
complainant filing a complaint on behalf of an individual from the position of
a complainant filing a complaint on behalf of a company. This Court clarified
that although the decision in the case of A.C. Narayanan (supra) had
taken centre stage, the facts involved in that case were in the
background that the complaint filed was based on the power of attorney issued
by the ‘payee’ who was also an individual. In such cases, the manner in which
the power was being exercised had to be explicitly stated. However, this Court
clarified that the position that would emerge when the complainant is a company
or a corporate entity will have to be viewed from a different standpoint. This Court
held that when the company is the payee of the cheque based on which a
complaint is filed under Section 138 of the NI Act, the complainant
should necessarily be the company which is to be represented by an authorised
employee and in such a situation, the indication in the complaint and the sworn
statement, oral or by affidavit, to the effect that complainant is
represented by an authorised person who has knowledge, would be
sufficient. Drawing a distinction from the “specific assertion as to the
knowledge of the power-of-attorney holder” which is to be “stated explicitly”
as categorically laid down in A.C. Narayanan (supra), this Court
held that in cases where the payee/complainant is the company, all that is
necessary to be demonstrated before the Magistrate is that the complaint is
filed in the name of the payee and if the complaint is being prosecuted by
someone other than the payee, he has knowledge of the contents of the complaint
and he is duly authorised to prosecute the complaint. This Court further
clarified that if there is any dispute with regard to the person prosecuting
the complaint not being authorised or it is to be demonstrated that the
complainant had no knowledge of the transaction, and as such could not have
instituted and prosecuted the complaint, it would be open for the accused
person to dispute the position and establish the same during the course of the
trial. However, dismissal or quashing of the complaint at the threshold would
not be justified. It was held that the issue of proper authorisation and
knowledge can only be an issue for trial.
22.
Having discussed the law on the subject, we now proceed to consider the facts
of the present case.
23.
As we have noted earlier, despite being duly served, none appeared for
Respondent No.1.
24.
From a perusal of the impugned order, we find that the issue raised by
Respondent No.1 before the High Court is that complaint filed by Sh. Neeraj
Kumar on behalf of the appellant-firm has been rendered defective as there is
no specific averment with regard to his knowledge about the transaction in the
relevant documents. To buttress its submission, reliance was placed on the
decision in the case of A.C. Narayanan (supra).
25.
We find that judgment passed by the High Court is entirely based on the
guidelines laid down in A.C. Narayanan (supra). Although
the High Court took note of the decision in TRL Krosaki Refractories
Limited (supra), the sole reason on which it passed the impugned order was
that there was no specific pleading in the Letter of Authority or the affidavit
of the power of attorney holder under Section 200 of the Cr.P.C. to
the effect that he had personal knowledge of the facts giving rise to the
proceedings under Section 138 of the NI Act and further that
complaint was totally silent as to any such personal knowledge.
26.
A perusal of the complaint (Annexure P-18) would reveal that Complaint No. 701
of 2021 has been filed in the name of M/s Naresh Potteries through Neeraj Kumar
(Manager and Authority-letter holder). Further, a perusal of the cheque which
is the subject-matter of the complaint would reveal that it has been issued in
the name of Naresh Potteries. As aforementioned, Section 142 of the
NI Act contemplates that the complaint filed under Section 138 of the
NI Act should be in writing and should be filed by the payee or the holder of
the cheque. Therefore, it is abundantly clear that the complaint in the present
matter satisfies the requirements of Section 142 of the NI Act.
27.
Further, a cumulative study of the relevant material being the Letter of
Authority (Annexure P-9), the affidavit in support of the complaint (Annexure
P-10) and the affidavit of evidence under Section 200 of the Cr.P.C.
(Annexure P-11) would reveal that Sh. Neeraj Kumar, the power of attorney
holder being the manager of the appellant-firm and the caretaker of its
day-to-day business, was well-conversant with
the
transactions which led to the issuance of the cheque to the appellant-firm and
which eventually led to the initiation of the criminal proceedings against
Respondent No.1.
28.
Since the High Court has quashed the summoning order on a categorical finding
that the power of attorney holder did not have personal knowledge of the facts
giving rise to the criminal proceedings as there was no specific pleading to
that effect in the letter of authority and the affidavit of the power of
attorney holder under Section 200 of the Cr.P.C., we find it apposite
to reproduce the relevant portions of the aforesaid documents which contain
averments regarding authorisation in favour of and knowledge on the part of Sh.
Neeraj Kumar.
29.
The Letter of Authority dated 31st August 2021 issued by the sole proprietor of
the appellant-firm reads as under:
“Certified that I, Smt. Shakti
Khanna, aged 72 years, w/o of Sh. Subhash Chand Khanna of M/s. Naresh
Potteries, G.T. Road, Khurja 203131 (UP) in the capacity of sole proprietor of
the above firm, authorize Sh. NEERAJ KUMAR s/o Sh. Suraj Narain, aged 42 years
r/o H.No. 934, Chandralok Colony, Street No.4, Khurja PS, Khurja Nagar,
District Bulandshahr, who is manager of the above firm and takes care of
general and day-to-day managerial business of the firm and is very well
conversant with everyday affairs, financial transactions and sale- purchase of
the firm, to file a complaint in the matter of dishonouring of cheque
(No.086295 /10.07.2021 for a sum of Rs.1,79,46,3141-) against M/s. Arti
Industries, Khurja in a competent Hon'ble Court on behalf of M/s, Naresh Potteries.
Khurja. Sh, Neeraj is well aware of this case and is given necessary
instructions also.”
30.
The verifying affidavit filed on behalf of Sh. Neeraj Kumar in support of his
complaint reads as under:
“02. Deponent is applicant in
this case who is posted as manager in complainant firm M/s. Naresh Potteries,
GT Road, Khurja and holds authority letter of the firm issued by the
owner/proprietor Smt. Shakti Khanna and is well conversant with the facts and
circumstances of the case. Thus, deponent is competent to file this affidavit.”
31.
Further, the affidavit of evidence under Section 200 of the Cr.P.C.
filed by Sh. Neeraj Kumar in lieu of the oral sworn statement before the trial
court on the basis of which the trial court took cognizance of the complaint,
reads thus:
“02. Deponent is applicant in
this case who is posted as manager in complainant firm M/s. Naresh Potteries,
GT Road, Khurja and holds authority letter of the firm issued by the owner Smt.
Shakti Khanna and is well conversant with the facts and circumstance of the
case. Thus, deponent is competent to file this affidavit.”
32.
A conjoint reading of the above would make it clear that it had been
categorically averred that the sole proprietor of the appellant-firm had duly
authorized Sh. Neeraj Kumar to act on its behalf in view of the fact that
Sh. Neeraj Kumar was in- charge of the day-to-day affairs of the appellant-firm
and as such had personal knowledge of the facts of the matter.
33.
As referred to above, this Court in TRL Krosaki Refractories
Limited (supra) had come to a categorical finding that what can be treated
as an explicit averment, cannot be put in a straightjacket but will have to be
gathered from the circumstance and manner in which it has been averred and conveyed,
based on the facts of each case. The relevant portion of the said
decision has already been extracted above. In the instant matter, the
averments made in the documents referred to above, make it wholly clear
that Sh. Neeraj Kumar possessed personal knowledge of the facts of the matter
at hand and was well-equipped and duly authorised to initiate criminal
proceedings against Respondent No.1. That beside the fact that it would always
be open for the trial court to call upon the complainant for examination and
cross- examination, if and when necessary, during the course of the trial. As
such, a peremptory quashing of the complaint case by the High Court is
completely unwarranted and that too on an incorrect factual basis.
34.
Apart from that, this Court has repeatedly cautioned that the inherent powers
under Section 482 of the Cr.P.C. should be exercised sparingly and
with great caution and further that inherent powers should not be used to
interfere with the jurisdiction of the lower courts or to scuttle a fair
investigation or prosecution. In light of the well-settled law on the subject,
we do not find that the instant matter called for any interference by the High
Court in exercise of its discretionary powers under Section 482 of
the Cr.P.C.
35.
In that view of the matter, we are of the considered view that the High Court
has passed the impugned judgment and order on a completely perfunctory and
erroneous reasoning which depicts absence of careful consideration. That being
the case, we are inclined to allow the appeal.
36.
In the result, we pass the following order:
i. The present appeal is allowed;
ii. The final judgment and order
dated 12th April 2023 passed by the learned Single Judge of the High Court of
Judicature at Allahabad in Criminal Miscellaneous Application No. 29906 of 2022
is quashed and set aside; and
iii. The Complaint No. 701 of
2021 is restored to the file of the Additional Chief Judicial Magistrate,
Khurja, Bulandshahar to be heard and decided on its own merits.
37.
Pending application(s), if any, shall stand disposed of.
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