Gujarat High Court
Yunusbhai Adambhai Vohra vs Gunwantbhai Harmanbhai Patel Thorugh ... on 23 August, 2023
NEUTRAL CITATION
R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 16511 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 16423 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 16393 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 16410 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== YUNUSBHAI ADAMBHAI VOHRA Versus GUNWANTBHAI HARMANBHAI PATEL THORUGH JAYDEEPBHAI GUWANTBHAI PATEL ========================================================== Appearance:
SIDDHARTH R KHESKANI(9483) for the Applicant(s) No. 1 KISHAN Y DAVE(8293) for the Respondent(s) No. 1 MR.HEMANG H PARIKH(2628) for the Respondent(s) No. 1 MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 2 ========================================================== CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT Date : 23/08/2023 COMMON CAV JUDGMENT Page 1 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined
1. All these applications are filed under Section 482 of the Code of Criminal Procedure, 1973 (`the Code' for short) for quashing and setting aside the complaints being Criminal Case Nos.448 of 2019, 449 of 2019, 450 of 2019 and 451 of 2019 pending before the learned Chief Judicial Magistrate, Umreth respectively filed under the provisions of the Negotiable Instruments Act (`NI Act' for short).
2. As the common question of facts and law are involved in all these applications, at the request of learned advocates for the parties, they are heard together and disposed of by this common judgment.
3. Rule. Learned advocate Mr.Parikh waives service of notice of rule for respondent no.1 and learned APP Mr.Jayswal waives service of notice of rule for respondent no.2.
4. For the sake of convenience, the facts of Criminal Miscellaneous Application No.16511 of 2019 are considered, which are as under:Page 2 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023
NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 4.1 It is averred in the application that the impugned complaints came to be filed alleging that the cheques issued and signed by the petitioner herein were presented and they were returned with an endorsement `Funds insufficient'; that notice under Section 138 of the NI Act was issued, which was replied by the applicant;
however, the payment is not made and therefore the complainant has filed the impugned complaints.
5. Heard learned advocate Mr.Kheskani for the applicant, learned advocate Mr.Parikh for respondent no.1-complainant and learned APP Mr.Jayswal for respondent no.2-state.
5.1 Learned advocate Mr.Kheskani for the applicant has submitted that the present complaint is filed by the power of attorney without specific authorization to file the complaint for the impugned cheques and the mandate of Section 142 of the NI Act is not met as the `payee and holder in due course' has not filed the complaint. He submitted that the power of attorney annexed with the complaint does not specify that Jaydeepbhai Gunwantbhai Patel is competent to file the Page 3 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined private complaint under the NI Act for the return of the impugned cheques as there is no specification or mention of any cheques or any specific authority so delegated to Jaydeepbhai Gunwantbhai Patel for file a complaint under the NI Act. He submitted that the power of attorney was issued on 26.2.2018 and cause of action has arisen on 28.1.2019 and the scope and ambit of the power of attorney does not include the power to file a complaint under the NI Act. He submitted that the power of attorney has filed an affidavit under Section 145 without any assertion with regards to the knowledge of the transaction and no documents have been annexed with the complaint to prove the existence of any transaction and the Hon'ble Apex Court has held that the complaint filed by the power of attorney is legal and valid, however, it should be specific and the power of attorney holder is not competent to depose and file affidavit under Section 145 of the NI Act, unless there is a specific assertion with regards to the knowledge of the attorney of the transaction.
5.2 Learned advocate for the applicant has further submitted that the mandatory requirements of the NI Page 4 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined Act have not been complied with i.e. (i) the power of attorney annexed to the complaint does not mention the cheque and there is no specific authorization; (ii) that the power of attorney does not mention the competency to file the complaint under NI Act as the payee and holder in due course; (iii) not a single averment is made in the complaint with regards to the issuance of the power of attorney; (iv) not a single averment is made in the complaint or the affidavit with regards to the knowledge of the transaction; (v) the `payee and holder in due course' has not filed the Section 145 affidavit due to which no reliance can be placed on the affidavit as no averment as to the knowledge of the attorney has been made. He further submitted that the power of attorney dated 26.2.2018 granted to the respondent no.1 herein is devoid of any specific averment granting authority for initiation of complaint about the cheques in question and therefore the essential ingredients for initiation of prosecution under Section 142 of the NI Act are not satisfied and therefore prayed to allow these applications and quash the impugned complaints.
5.3 In support of his submissions, learned advocate Page 5 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined for the applicant relied on the following decisions:
(1) A.C.Narayanan V/s State of Maharashtra, reported in (2014) 11 SCC 790, paragraphs 30 to 33.
(2) M/s TRL Krosaki Refractories Ltd. V/s SMS Asia Pvt.
Ltd. And Anr. Reported in (2022) 7 SCC 612, paragraphs 10 to 15.
(3) Mita India Pvt. Ltd. V/s Mahendra Jain, reported in 2023 SCC Online SC 163, paragraph 7.
6. Per contra, learned advocate Mr.Parikh for the respondent no.1-complainant submitted that the applicant had admitted the issuance of the cheques and not denied the dishonour of the cheques; that in the reply, it is not stated by the applicant that the amount due is paid and there is nothing due and payable; that the applicant has not replied in the reply to the notice that how the power of attorney is not entitled to issue notice under Section 138 of the NI Act; that the general power of attorney gives the authority to manage and maintain the account and it is also the duty of the power of attorney Page 6 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined holder to protect the interest by initiating legal proceedings; that the contention of the applicant regarding applicability of Section 142 of the NI Act is not res integra.
6.1 He further submitted that the contentions of the applicant are ill founded and against the law as the respondent no.1 has a knowledge of the entire transaction and upon his instructions, the proceedings under the NI Act are initiated before the learned trial Court; that the applicant had not disputed that he has not issued the cheques and the applicant has admitted that he has issued the cheques and given an instruction of `stop payment'; but the cheques were returned due to `insufficient funds' and this conduct of the applicant clearly reveals that he was in knowledge that he has issued the cheques and the same is going to be dishonoured. He submitted that the complainant, had in the complaint and his affidavit stated that he is a power of attorney holder and he is in knowledge of the entire sale transaction, which fact is not denied by the applicant in reply to the notice and also not stated by the applicant in the reply to the notice that there is Page 7 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined nothing due and payable to the complainant.
6.2 In support of his submissions, learned advocate Mr.Parikh for respondent no.1-complainant has relied on the following decisions:
(1) M/s TRL Krosaki Refractories Ltd. V/s SMS Asia Pvt. Ltd. And Anr. Reported in (2022) 7 SCC 612, paragraphs 10 to 15.
(2) Mita India Pvt.Ltd. V/s Mahendra Jain, reported in 2023 SCC Online SC 163.
(3) Order dated 3.5.2023 passed in Criminal Revision Application No.1390 of 2022.
7. Learned APP Mr.Jayswal for respondent no.2- state has objected these applications and submitted that this Court should not exercise its powers by interfering with the proceedings of recovery of amount and the proceedings initiated under Section 138 of the Act are perfectly justified and therefore, this Court should not exercise inherent powers under Section 482 of the Code, Page 8 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined which otherwise, should be exercised sparingly. He, therefore, prayed to dismiss all these applications.
8. I have considered the rival submissions and perused the material on record.
9. At the outset, the provisions of Sections 138 and 142 of the NI Act are required to be seen, which read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount Page 9 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability"
means a legally enforceable debt or other liability."
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 Page 10 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined by the payee or, as the case may be, the holder in due course of the cheque;
(b) 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: 2 [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;]
(c) 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.].
[(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation.--For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in Page 11 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined which the payee or holder in due course, as the case may be, maintains the account.] [142A. Validation for transfer of pending cases.-- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.
(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26 of 2015), more than Page 12 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.]
10. Now, if the facts of the present case are perused, it transpires from the record that the complaint is filed by Jaydeepbhai Gunwantbhai Patel as power of attorney of Gunwantbhai Harmanbhai Patel in whose favour the cheques were issued. It also transpires that in the verification affidavit filed at the time of filing of complaint under Section 138 of the NI Act and in the complaint, there is no specific averment that specific power to file complaint for the present transactions is given to the present complainant-power of attorney holder of Gunwantbhai Harmanbhai Patel. It also transpires that the power of attorney which is a general power of attorney is admittedly executed in the year 2018 and the cheques are issued in the year 2019 in favour of Gunwantbhai Harmanbhai Patel which were Page 13 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined bounced by the concerned bank with the endorsement `funds insufficient' i.e. the general power of attorney executed is much prior to the issuance of cheques. It also transpires that though notice correspondence is there and the reply is also given by the present applicant to the said notice issued under Section 138 of the NI Act, the tenor of the verification affidavit does not disclose the aspect of any specific powers or aspect of personal knowledge of the power of attorney holder about the said transaction as well as the said authority given by the said Gunwantbhai Harmanbhai Patel in favour of the power of attorney holder Jaydeepbhai Gunwantbhai Patel as is required under the law.
11. At this stage, it will be fruitful to consider the judgment in the case of M/s TRL Krosaki Refractories Ltd. (supra), relied on by learned advocate Mr.Kheskani for the applicant in support of his submission that the complainant cannot be said to be a `payee and holder in due course' as required under the provisions of Sections 138 read with Section 142 of the NI Act and also that there is no specific averment in the complaint where the power of attorney holder had any knowledge about the Page 14 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined transaction or he was witness to the transaction, wherein the Hon'ble Supreme Court has held in paragraphs 7 to 14, which read as under:
"7. The learned Senior Counsel would also point out that in addition to the fact that he was a Senior Managerial Officer of the appellant company, Mr. Subhasis Kumar Das was also authorized by the Managing Director on 23.05.2015, to initiate the legal proceedings. The Managing Director on the other hand, was authorized by the Chairman based on the approval of the Board of Directors. In that view, it is contended that the complaint was filed in accordance with law and the learned Magistrate having applied his mind, had taken cognizance which was quashed by the High Court without appropriately applying its mind.
8. Mr. Santosh Kumar, learned counsel for the respondent would however, seek to sustain the judgment passed by the High Court. It is contended that the High Court having noted the judgment in A.C. Narayanan (supra) and also the judgments of the Orissa High Court had arrived at the conclusion that the complaint filed did not satisfy the requirement of Section 142 of N.I. Act as the complaint was not filed by a person who was authorized by the company. It is further contended that in A.C. Narayanan (supra) this Court has held that there should be Page 15 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined explicit averment to the effect that the person filing the complaint is authorized by the complainant and has knowledge of the transaction in question so as to maintain the complaint. It is contended that since the High Court has arrived at its conclusion by relying on a decision rendered by this Court, such a decision would not call for interference in this appeal.
9. Having noted the sequence of events and the rival contentions put forth by the learned counsel for the parties, the solitary issue for consideration herein is as to whether the complaint filed by the appellant herein under Section 138 of N.I. Act is in accordance with the requirement under Section 142 of the N.I. Act. The relevant provision reads as hereunder:
"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;
10. In that background, a perusal of the complaint (Annexure P14) would disclose that the complainant named therein is M/s. TRL Krosaki Refractories Limited through its General Manager (Accounting) Subhasis Kumar Das. A perusal of the cheques (Annexures P3 to P9) which are the Page 16 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined subject matter of the said complaint under Section 138 of NI Act would disclose that the "payee" named in the said cheques is M/s. TRL Krosaki Refractories Limited. If that be the position, the requirement as contemplated under Section 142 (1) (a) of NI Act that the complaint ought to be in writing and that it should be filed by the payee or the holder in due course, stands satisfied. The issue raised is that the complaint filed by Mr. Subhasis Kumar Das, General Manager (Accounting) on behalf of the company is not competent for want of authorisation and that there is no averment with regard to his knowledge about the transaction. On this aspect, strong reliance is placed by the learned counsel for the respondents on A.C. Narayanan (supra). Further, the judgment passed by the High Court is also entirely based on the guidelines laid down in the said decision.
11. 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. v. Medchi Chemicals and Pharma (P} Ltd. (2002) 1 SCC 234 : (AIR 2002 SC 182), had taken note of an earlier decision of this Court in Vishwa Mitter v. O.P. Poddar(1983) 4 SCC 701 : (AIR 1984 SC 5), wherein it was held that anyone can set the criminal law in motion by Page 17 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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.
12. However, in a subsequent decision in Janaki Vashdeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. (2005) 2 SCC 217 : (AIR 2005 SC 439) 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 Page 18 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined Division Bench while considering A.C. Narayanan (supra) and therefore it desired clarification.
13. In that view, the matter in A.C. Narayanan (supra) was referred to a Bench of three Hon'ble Judges. The said Bench after holding that the said two judgments of this Court are not in conflict with each other has considered the scope and requirement of Section 142 (1)(a) of N.I. Act and formulated the questions for consideration as contained in para 21 of the judgment which read as hereunder:
"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?Page 19 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023
NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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?"
14. The consideration made in paras 29 to 30 would be relevant to be noted, which read as hereunder:
"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 Page 20 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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 Page 21 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined holder alone is personally aware of the transactions, there is no reason why the attorney holder 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."
12. The said judgment in the case of M/s TRL Krosaki Refractories Ltd. (supra) is also relied on by learned advocate Mr.Parikh for the respondent no.1- complainant, however, the ratio laid down in the judgment is helpful to the applicant rather than the complainant.
13. It is also held by the Hon'ble Apex Court in paragraphs 17 and 18 of the said judgment as under:
"17. 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 the transaction between the parties is based on the agreement dated 18.07.2014 (Annexure P1). The said document depicts, below the Page 22 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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 P 11, 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.
18. Apart from the factual aspects as stated in the complaint, relating to the transaction, the complaint as also the affidavit supporting the complaint contain averments regarding authorization in favour of and knowledge on the part of Mr. Subhasis Kumar Das, which read as hereunder:
"That, the complainant Company incorporated under the companies Act 1956 and having registered office At/PO/PSBelpahar, Dist.Jharsuguda, (Odisha)represent Page 23 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined through its General Manager (Accounting), Shri Subhasis Kumar Das,aged about 47 years, S/O Shri Gopal Chandra Dasand also authorize by the Company to file this complaint."
14. It is observed by the Hon'ble Apex Court that "specific assertion as to the knowledge of the power of attorney holder" and such assertion about knowledge should be "said explicitly", which is squarely applicable to the facts of the present case as in the present case also, on bare reading of the complaint, more particularly, the verification affidavit, there is no specific averment or assertion regarding the personal knowledge of power of attorney holder of the complainant in whose name the complaint is filed by the power of attorney holder.
15. In the case of Mita India Pvt.Ltd. (supra), it is held by the Hon'ble Apex Court in paragraphs 7, 14 and 15 as under:
"7. The Apex Court through the above decision has laid down the following principles: -
i) Filing of a complaint under Section 138 Negotiable Instruments Act, 1881 through power of attorney holder is Page 24 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined perfectly legal provided he has due knowledge about the transaction (s) in question;
ii) Power of attorney holder can depose and verify on oath to prove the contents of the complaint if he has witnessed the transaction;
iii) The complaint filed through power of attorney holder must contain an assertion/ that he had the knowledge about transactions in question;(2014) 11 SCC 790
iv) Functions under general power of attorney cannot be delegated to another person without a specific clause permitting the same in the general power of attorney.
v) The affidavits of complainant, his witnesses or his power of attorney holder are permissible and sufficient for taking cognizance on the complaint; and
vi) The complaint by power of attorney holder on behalf of the original complainant is maintainable though he cannot file a complaint in his own name.
14. Now coming to the second aspect of the matter as to whether Kavindersingh Anand could depose on behalf of the appellant company, it has to be noted that he was one of the directors of the company who has been specifically authorised to lodge the complaint and to pursue it. It has come on record that he has filed his personal affidavit dated 26.03.2018 stating that he is general power of attorney holder of the appellant company and that since he is also a Page 25 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined director, he is fully conversant with the facts of the case and hence is competent to pursue the litigation on behalf of the appellant company. The High Court has very conveniently ignored the said affidavit and for the reason that as such an averment is not contained in the complaint, held that he was not authorised to depose on behalf of the appellant company.
15. We are of the considered opinion that the High Court manifestly erred in recording the above opinion when the affidavit of the power of attorney holder was on record containing that he has personal knowledge of the transactions."
16. In the case of A.C.Narayanan (supra), it is held in paragraphs 30 to 33 as under:
"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 N.I. 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 attorney holder cannot depose as Page 26 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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.
31. In view of the discussion, we are of the opinion that the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. We also reiterate that where the payee is a proprietary concern, the complaint can be filed
(i) by the proprietor of the proprietary concern, describing himself as the sole proprietor of the "payee";
(ii) the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and
(iii) the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor.
32. Similar substantial questions were raised in the appeal arising out of S.L.P (Cri.) No. 2724 of 2008, which stand answered as above. Apart from the above questions, one distinct query was raised as to whether a person authorized by a Company or Statute or Institution can delegate powers to their subordinate/others for filing a criminal complaint?
The issue raised is in reference to validity of sub-delegation of functions of the power of attorney. We have already clarified to the extent that the attorney holder can sign and Page 27 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined file a complaint on behalf of the complainant-payee. However, whether the power of attorney holder will have the power to further delegate the functions to another person will completely depend on the terms of the general power of attorney. As a result, the authority to sub-delegate the functions must be explicitly mentioned in the general power of attorney. Otherwise, the sub-delegation will be inconsistent with the general power of attorney and thereby will be invalid in law. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.
33. While holding that there is no serious conflict between the decisions in MMTC (AIR 2002 SC 182 : 2001 AIR SCW 4793) (supra) and Janki Vashdeo Bhojwani (AIR 2005 SC 439 : 2004 AIR SCW 7064) (supra), we clarify the position and answer the questions in the following manner:
33.1 Filing of complaint petition under Section 138 of N.I 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.Page 28 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023
NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined 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 N.I 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 N.I 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 N.I. 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."
17. Considering the above, in the present case, it is found that there is no specific averment made in the complaint about the personal knowledge of the power of attorney holder or that he is witness to the entire Page 29 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023 NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined transaction along with principal person who has executed power of attorney and he cannot be said as `payee and holder in due course' and therefore not competent to file complaint under Section 138 of the NI Act. It also transpires from the averments made in the complaint that some cheques were issued in favour of the original complainant for some dues regarding the purchase of tobacco. The transactions are of 2016-17 and 2017-18 as alleged in the notice, liability of which was also disputed in the reply given to notice and the complaint, however, there are no other documents produced on the record like statement of account, any bills or any contract to show that there are as such commercial transaction between the present applicant and the complainant. The power of attorney annexed to the complaint does not meantion teh cheque and there is no specific authorization and there is no averment in complaint or affidavit of verification with regard to knowledge to power of attorney, and thus the verification is not by the `payee and holder in due course'. There is no statement of account or income tax returns produced on the record of these applications to indicate any iota of evidence to show that there is some debt existing.
Page 30 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023NEUTRAL CITATION R/CR.MA/16511/2019 CAV JUDGMENT DATED: 23/08/2023 undefined
18. In view of the above discussion, in view of above settled position of law and after considering the facts as alleged in the complaints and circumstances of the present case as, prima facie, ingredients of Section 138 as well as Section 142 of NI Act are not satisfied, the continuation of further proceedings pursuant to the said complaints will amount to abuse of process of law and will cause greater hardships to the applicant and no fruitful purpose would be served if such further proceedings are allowed to be continued. The Court must ensure that criminal proceedings is not used as instrument of harassment or for seeking private vendetta or with ulterior motive to pressurise accused or to settle the score.
19. Resultantly, all these applications are allowed.
The Criminal Case Nos.448 of 2019, 449 of 2019, 450 of 2019 and 451 of 2019 respectively pending before the learned Chief Judicial Magistrate, Umreth are hereby quashed and set aside qua the present applicant. Rule is made absolute. Direct service is permitted.
(SANDEEP N. BHATT,J) SRILATHA Page 31 of 31 Downloaded on : Sun Sep 17 02:14:30 IST 2023