Appeal
Appeal against the quashing of summoning order by the Hon’ble High Court
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 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, pending before the trial court in C.N.R. No. UPBU160012972021.
Analysis
10. We have considered the rival submissions and perused the material placed on record.
Whether complaint filed in accordance with section 138 r/w 142 N.I Act?
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.
Section 142 N.I 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;
…………….”
Only upon filing the complaint in writing the offence under section 138 N.I Act could be taken cognizance under section 142 N.I Act
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.
Settled proposition that a company may represent in court through Power Of Attorney
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 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)
Complaint in the name of the company and it can be represented by an employee or non-employee
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.
Complaint must contain the must have the specific averments as to the knowledge of power of attorney
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 and Janki Vashdeo Bhojwani and Another v. IndusInd Bank Limited and Others. 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 15 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 16 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)
Only where the magistrate requires may call upon the complainant and examine the complainant and/or his witness upon oath
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.
If the power of attorney holder does not have personal knowledge about the transactions he cannot be examined
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-ofattorney 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.
Knowledge of Power of Attorney of an individual payee must be specifically stated and in the case of company being a payee the authorised person who has knowledge would be sufficient
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.
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).
High Court has quashed the Present complaint in the ground that it is silent as to any such personal knowledge
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.
Complaint was filed in the company name
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.
Co-joint reading or complaint and affidavit revealed that the duly authorized person had personal knowledge
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 incharge of the day-to-day affairs of the appellant-firm and as such had personal knowledge of the facts of the matter.
Section 482 should be exercised sparingly
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.
Conclusion
Appeal allowed
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.
Judgments that are cited
1. TRL Krosaki Refractories Limited v. SMS Asia Private Limited and Another – (2022) 7 SCC 612.
2. National Small Industries Corporation Limited v. State (NCT of Delhi) and Others – (2009) 1 SCC 407.
3. A.C. Narayanan v. State of Maharashtra and Another – (2014) 11 SCC 790.
4. Shankar Finance and Investments v. State of Andhra Pradesh and Ors – (2008) 8 SCC 536.
5. Praveen v. Mohd. Tajuddin – (2009) 12 SCC 706.
6. Vinita S. Rao v. Essen Corporate Services Private Limited and Another – (2015) 1 SCC 527.
7. M.M.T.C. Ltd. and Another v. Medchl Chemicals & Pharma P. Limited and Another – (2002) 1 SCC 234.
8. Janki Vashdeo Bhojwani and Another v. IndusInd Bank Limited and Others – (2005) 2 SCC 217.
9. Samrat Shipping Co. (P) Ltd. v. Dolly George – (2002) 9 SCC 455.
Acts and sections referenced in the judgment
Negotiable Instruments Act, 1881
– Section 138 (Dishonour of cheque)
– Section 142 (Cognizance of offences)
– Section 145 (Verification of complaint)
Code of Criminal Procedure, 1973 (Cr.P.C.)
– Section 190 (Cognizance of offences)
– Section 200 (Examination of complainant on oath)
– Section 482 (Inherent powers of High Court)
Indian Penal Code, 1860 (mentioned in FIR context)
– Sections 420, 467, 468, 471 (related to forgery and cheating)
Party
M/S Naresh Potteries vs M/S Aarti Industries – Criminal Appeal No. of 2025 (Arising out of SLP (Crl.) No. 8659 of 2023) – 2025 INSC 1 – January 2, 2025 – Hon’ble Justice B.R. Gavai and Hon’ble Justice K.V. Viswanathan.
