WHO CAN FILE COMPLAINT FOR COMPANY U/S 142 N.I ACT? – EXPLAINED
This judgment has explained though any person (anyone) can set the law in motion before the magistrate by filing a complaint in writing, but if special statute requires certain conditions to set the law in motion than that procedure shall be followed. The case on hand is Negotiable Instruments Act, 1881 and it is a special statue, hence only the payee for the company u/s 142 N.I. Act can file complaint.
9.To place the matter in perspective, it would be necessary for us to take note of the circumstances under which the consideration arose in A.C. Narayanan (supra). In that regard, it is noticed that this Court while considering the scope of Section 142 (1)(a) of N.I. Act in the case of M/s. M.M.T.C. Ltd. vs. Medchi Chemicals and Pharma (P} Ltd., (2002) 1 SCC 234, had taken note of an earlier decision of this Court in Vishwa Mitter vs. O.P. Poddar, (1983) 4 SCC 701 wherein it was held that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence, before a Magistrate entitled to take cognizance. It was further held in Vishwa Mitter (supra) that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complaint requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by such statute. In that circumstance, it was held that the only eligibility criteria prescribed by Section 142 of N.I. Act is that the complainant must be by the payee or the holder in due course. However, in a subsequent decision in Janaki Vashdeo Bhojwani & Anr. vs. Indusind Bank Ltd. & Ors. (2005) 2 SCC 217, while considering the right of a power of attorney holder to act on behalf of the principal in a civil proceeding, the provision contained in Order III Rule 1 and 2 of CPC was kept in view and it was held that if the power of attorney holder has rendered some acts in pursuance of the power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal is entitled to be cross examined. The said two decisions which were rendered by Division Benches were assumed to be in conflict with each other by another Division Bench while considering A.C. Narayanan (supra) and therefore it desired clarification.
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11. A cumulative perusal of the facts of the instant case would indicate that the requirement as indicated in A.C. Narayanan, (supra) are in fact satisfied. Firstly, as noted above, the complaint was filed in the name of the company i.e., “the payee”, through Mr. Subhasis Kumar Das, General Manager (Accounting). The authorisation dated 23.05.2015 by the Managing Director in his favour (Annexure P17) discloses that Mr. Priyabrata Panda, Managing Director of the appellant company had authorised Mr. Subhasis Kumar Das, General Manager (Accounting) to institute criminal proceedings, including proceedings under the provisions of the N.I. Act and civil proceedings on behalf of the company against M/s. SMSAsia Private Limited (respondent), to represent the company and take all necessary actions in the matter in learned SDJM’s Court. The specimen signature of Mr. Subhasis Kumar Das has also been attested by the Managing Director. The Managing Director apart from himself being the key managerial personnel of the appellant company, has also been delegated the power by the Board of Directors through the document dated 06.04.1998 (Annexure P16). Through the said document the Managing Director has been delegated, in general, all powers necessary for the management and operation of the company and it has been specified among others, to exercise the power relating to important issues affecting the company’s land and property. Through the said document, the Managing Director is also empowered to delegate where necessary and to the extent required, any of the powers delegated to him, to his subordinate officers. The above noted documents would disclose that the complaint under Section 138 NI Act was filed on behalf of the “payee” company with due authorisation.
12. The next aspect on which the High Court has interfered is on accepting the contention that there is no averment in the complaint as to whether the General Manager (Accounting) had any knowledge about the transaction or he was a witness to the transaction. On the said aspect it is noted that thetransaction between the parties is based on the agreement dated 18.07.2014 (Annexure P1). The said document depicts, below the signature of the executives representing the appellant and the respondent company, a witness each from either side have appended their signatures. The witness on behalf of the appellant company is none other than Mr. Subhasis Kumar Das who was at that point in time, designated as General Manager (Commercial). Further, the document for reconciliation of account spanning the period from 01.04.2011 to 30.09.2014, as carried out on 28.10.2014, depicts that the same was attested by the representatives of both the companies. The appellant company is represented by Mr. Subhasis Kumar Das. That apart, when the cheques were dishonoured, it was Mr. Subhasis Kumar Das, General Manager (Accounting) who had issued the notices (Annexure P11, 1213) on behalf of the appellant company, to the respondent company. The said documents would indicate that the person who had knowledge of the transaction and was witness to it, has been authorized and has instituted the complaint on behalf of the company.
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14. A meaningful reading of the above would indicate that the company having authorized 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 authorized 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 authorized 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 N.I. Act was satisfied. In Vinita S. Rao vs. Essen Corporate Services (P) Ltd. (2015) 1 SCC 527, to which one of us (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.
15. 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 (supra) has taken the center 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. In this regard in Samrat Shipping Co. Pvt. Ltd. Vs. Dolly George (2002) 9 SCC 455, 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:
“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 authorized 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.”
(Emphasis supplied)…
16. Further, in National Small Industries Corporation Ltd. Vs. State (NCT of Delhi) and Ors. (2009) 1 SCC 407, this Court though was essentially considering the issue relating to the exemption available against examining a public servant keeping in view the scope under Section 200 (a) of Cr.PC, has exhaustively considered the validity of a complaint under Section 138 of N.I. Act and the satisfaction of the requirement under Section 142 thereof. In the said context this Court has held as hereunder: “
“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, if a company is the complainant. A company can be represented by an employee or even by a nonemployee authorizedand empowered to represent the company either by a resolution or by a power of attorney.
16. Section 142 only requires that the complaint should be in the name of the payee. Where the complainant is a company, who will represent the company and how the company will be represented in such proceedings, is not governed by the Code but by the relevant law relating to companies. Section 200 of the Code mandatorily requires an examination of the complainant; and where the complainant is an incorporeal body, evidently only an employee or representative can be examined on its behalf, As a result, the company becomes a de jure complainant and its employee or other representative, representing it in the criminal proceedings, becomes the de facto complainant. Thus in every complaint, where the complainant is an incorporeal body, there is a complainant – de jure, and a complainant defacto. Clause (a) of the proviso to Section 200 provides that where the complainant is a public servant, it will not be necessary to examine the complainant and his witnesses. Where the complainant is an incorporeal body represented by one of its employees, the employee who is a public servant is the de facto complainant and in signing and presenting the complaint, he acts in the discharge of his official duties. Therefore, it follows that in such cases, the exemption under clause (a) of the first proviso to Section 200 of the Code will be available.
19. Resultantly, when in a complaint in regard to dishonour of a cheque issued in favor 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)…
17. 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 N.I. Act, the complainant necessarily should be the Company which would be represented by an employee who is authorized. Primafacie, 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 authorized 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 (supra) 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 authorized 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 authorized 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. Pvt. Ltd. (supra), 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.
PARTY: M/s TRL Krosaki Refractories Ltd vs M/s SMS Asia Private Limited & Anr – CRIMINAL APPEAL NO. 270 OF 2022 (Arising out of SLP (Crl.) No.3113 of 2018) – February 22, 2022.
Source: https://main.sci.gov.in/supremecourt/2018/9193/9193_2018_1_1501_33590_Judgement_22-Feb-2022.pdf
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