TRL Krosaki Refractories Ltd., aggrieved by the decision of the Odisha High Court, filed an appeal in the Apex Court against SMS Asia Private Ltd. who had issued 7 cheques. Upon presentation these cheques were dishonoured by the bank with endorsement “account closed”. Appellant issued notices for the acknowledgement of dues but the respondent had failed to comply or reply to the notice upon which a complaint was filed by the appellant to the Sub-Divisional Judicial Magistrate under Sections 138 and 142 of the Negotiable Instruments Act, 1881. The SDJM after being satisfied that there is sufficient material for a suit under Section 138 of the NI Act summoned the respondent. Later, the respondent applied to the High Court under Section 482 of the Criminal Procedure Code (CrPC) to quash the order of SDJM stating that the complaint was filed by an incompetent person without requisite averments as per section 142 of NI Act. Furthermore, it was contended that the General Manager (“GM”), who filed the complaint had neither knowledge about the transaction nor witnessed the same. It was contented by the Respondent that the GM was not authorized and there was no averment about his knowledge about the transaction. The High Court accepted the contention by placing reliance on A.C. Narayanan v. State of Maharashtra & Anr. (2014) 11 SCC 790. The apex court was hearing M/s TRL Krosaki Refractories Ltd. .… Vs M/s SMS Asia Private Limited & Anr.
Whether the complaint was filed by the appellant under Section 138 of N.I. Act is following the requirement under Section 142 of the N.I. Act.
Section 142 of the NIA: Despite what is contained in Criminal Procedure Code, according to Section 142 of the Negotiable Instrument Act 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. Such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138. Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.
No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.
Placing reliance on the judgment of this Court in A.C. Narayanan vs. State of Maharashtra & Anr. (2014) 11 SCC 790 has held that there is no mention in the complaint or affidavit as to when and in what manner the company had authorized its General Manager (Accounting) to represent the company to file the complaint. It is further held that there is no averment in the complaint as to whether the General Manager (Accounting) had knowledge about the transaction or he was a witness to the transaction. It was also held, neither any resolution of the Board of Directors of the complainant company nor any authorisation of the company in favour of the person representing it in the complaint was filed for perusal of the Magistrate. Only an authorisation letter issued by the Managing Director of the complainant company in favour of the General Manager (Accounting) was produced and the said authorisation does not indicate whether the Board of Directors had authorised the Managing Director to subdelegate his powers to the General Manager (Accounting) to file the complaint on behalf of the company. Important paras of judgment-
“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.
30. In the light of the discussion, we are of the view 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. An exception to the above is when the power of attorney holder of the complainant does not have a personal knowledge about the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainant payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorneyVholder cannot depose as a witness. Nevertheless, an explicit assertion as to the knowledge of the power of attorney holder about the transaction in question must be specified in the complaint. On this count, the fourth question becomes infructuous.”
The answer to the question raised for consideration is contained in para 33 which read as hereunder:
33.While holding that there is no serious conflict between the decisions in M.M.T.C. and Vashdeo Bhojwani, 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.” (Emphasis supplied)
While perusing the contentions put forth by the parties, the Supreme Court noted that Section 142 of the NI Act requires that any complaint filed under Section 138 must be filed by the payee in writing. Furthermore, the Court noted that High Court was wrong in noting that the conditions in AC Narayanan were not fulfilled when in fact all the conditions provided in the judgement were satisfied. Further, the court stated that it was clear from the documents submitted by the appellant that the GM was authorized to file a criminal complaint as he was granted such authorization by the Managing Director. The court overturned the contention that GM had no knowledge about the transaction, observing that GM was in fact the witness to the transaction as per the documents provided by the Appellant. To this effect, the court noted, “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 Court also noted that as dictated in AC Narayanan 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” cannot be understood to mean that the assertion should be in any particular manner. Furthermore, it was noted by the court that the only thing necessary is to demonstrate before the Magistrate that the complaint was filed in the name of the “payee” and if the person who is prosecuting the complaint is different from the payee, the authorisation therefore and that the contents of the complaint are within his knowledge. Hence, the order by the High Court was quashed noting that dismissal of a complaint at the threshold by the Magistrate on the question of authorisation, would not be justified when the issue of proper authorization and knowledge can only be an issue for trial
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