Delhi District Court
By Way Of The Present Judgment vs Power Set India( P) Ltd Page No. 1 Of Pages ... on 20 October, 2012
CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 1 of Pages 13
IN THE COURT OF SH. GAJENDER SINGH NAGAR
METROPOLITAN MAGISTRATE, KKD, EAST, NEW DELHI
Complaint No.982/10
Unique ID No. 02402R0056652002
PS. Preet Vihar
M/s Vijay Power Generators Ltd
Through Its Asst. Manager(Legal),
Mr. G.K. Pachauri
S/o Late Sh. R.M. Pachauri,
R/o E290, Jagjit Nagar,
Delhi 53 ......... Complainant.
Versus
1. M/s Power Set India (P) Ltd
2627 E.C. Street, Chennai (T.N.).
2. Mr. Prakash Bhatia, Director of
M/s Power Set India (P) Ltd,
S/o Late Sh. P.C.D. Bhatia,
R/o 2627, EC Street,
Chennai (T.N.). ......... Accused.
COMPLAINT U/s 138 OF THE NEGOTIABLE INSTRUMENTS ACT
Offence complained of : U/s 138 N.I. Act
Date of commission of offence : 06.10.2002
Plea of Accused : Not guilty
Complaint filed on : 11.11.2002
Final Arguments heard & Concluded on : 24.08.2012
Date of decision of the case : 20.10.2012
Final order : Acquittal
CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 2 of Pages 13
BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By way of the present judgment, this court shall decide the complaint case U/s 138 Negotiable Instrument Act 1881 (as amended up to date) filed by the complainant M/s Vijay Power Generators Ltd. through Its Asst. Manager (Legal), Mr. G.K. Pachauri, against the accused M/s Power Set India (P) Ltd and its Director Prakash Bhatia.
2. The facts in brief necessary for the disposal of the present case are that, the complainant company is / was dealing with the Sales and Purchase of Diesel Generators Sets, Alternators etc and the accused purchased some goods from the complainant company, for which complainant raised their bills against the purchases on account. Against purchases on account, the accused issued a cheque bearing no. 350420 dated 16.08.2002 for the sum of Rs. 9,62,820/ drawn Bank of Baroda, EC Street, Madras branch to the complainant but on presentation the said cheque was returned back dishonored with the remark "PAYMENT STOPPED BY DRAWER" vide dishonour memos dated 07.09.2002. Thereafter a legal notice was sent to the accused on 20.09.2002 by way of regd AD and UPC. It is further alleged that despite service of legal notice accused has not paid any thing to the complainant till the filling of the case.
3. After the complaint was filed, the AR of the complainant led the presummoning evidence by way of an affidavit and after hearing the counsel for the complainant and considering the CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 3 of Pages 13 entire material and documents on record, summons were issued against the accused vide order dated 11.11.2002 for the offence U/s 138 Negotiable Instrument Act 1881. On appearance of the accused a separate notice U/s 251 Cr.P.C. Dated 05.06.2003 was framed upon the accused to which he pleaded not guilty and claimed trial.
4. In order to prove the case, the AR of the complainant examined himself as CW1 and reiterated the contents of the complaint on oath before this court and filed an affidavit in evidence. He also exhibited Special Power of Attorney as Ex. CW1/A, original cheque bearing No.350420 as Ex. CW1/B, the cheque returning memo as Ex. CW1/C & Ex. CW1/D, the legal notice of demand dated 20.09.2002 is exhibited as Ex. CW1/E, The original receipts of registered post is Ex. CW1/F, U.P.C. is Ex. CW1/G & returned AD card as Ex. CW1/H. Mr. Rajesh Kumar Sharma is examined as CW2. He also exhibited sales invoices bearing no. 133 dated 25.07.2000 & no. 134 dated 25.07.2000 as Ex. CW2/X1 & Ex. CW2/X2 respectively. He also exhibited excise record for the financial year 19992000 to 20012002 as Ex. CW2/X3. Thereafter, the complainant evidence was closed at request.
5. After that on 14.07.2011 the statement of accused was recorded U/s 313 Cr.P.C in which all the incriminating evidence along with exhibited documents were put to the accused. In his CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 4 of Pages 13 statement accused stated that the cheque in question was given in blank signed condition as security on which only name of payee was filled up but amount and date were blank. It is further stated by him that on 16.12.2002 he reconciled the accounts with the Manager of the complainant company Mr. Manaian who is the General Manager of Pondichery Factory and as per the reconciliation it was discovered that the complainant had not considered payment made by him to them to the extent of Rs. 10,33,123.76 and further they had not taken into the account our invoice no.92 dated 26.08.1999 amounting to Rs.2,23,300/ the amount totaling to Rs.12,56,423.76. Thereafter the case was fixed for Defence evidence. The accused examined himself as DW1. He exhibited his statement of bank account as Ex. DW1/1, he also exhibited certain bills issued by complainant and accused on each other same are exhibited as Ex. DW1/2 to Ex. DW1/7. He also exhibited copy of the record of cheques issued by him as Ex. DW1/8 and his bank statement showing encashment of same series cheques as Ex. CW1/9. He also marked certain letters sent by him to the complainant as Mark 'A' to Mark 'E' and invoice no. 92 exhibited as Ex. DW1/10. No other witness was examined and Defence Evidence was closed and the matter was fixed for final arguments.
6. I have heard Ld. counsels and perused the entire record of the case file and the evidence on record. Both the counsel have referred to a number of cases, I have discussed them at the CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 5 of Pages 13 relevant place.
7. Before proceeding further let us go through the relevant provisions of law. The main ingredient of Section 138 of the Negotiable Instruments Act are as follows:
(a) The accused issued a cheque on an account maintained by him with a bank.
(b) The said cheque has been issued in discharge of any legal debt or other liability.
(c) The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.
(d) When the aforesaid cheque was presented for encashment, the same was returned unpaid/ dishonoured.
(e) The Payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the Bank regarding the return of the cheque.
(f) The Drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.
If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable u/s 138 Negotiable Instruments Act.
8. In the present matter accused have accepted the issuance of cheque, though it is submitted by him that it was issued in CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 6 of Pages 13 blank signed condition. He also accepted the dishonor of cheque due to payment stopped by drawer and has not denied the fact that the cheque was presented for encashement within six months from the date written on the cheque. He accepted the receipt of legal notice and had submitted that he duly replied the same. He also accepted that he did not made the payment after receipt of legal notice as he was not liable to make the payment.
9. In the present matter the Ld. Counsel had taken up two main defences which are as follows:
a) The case which is filed on behalf of a limited company has not been filed by a duly authorized person.
b) The cheque in question was given as security only that to in June 2001 but the same was misused by the complainant by filling an arbitrary amount in August 2002. It is further argued by the Ld. Defence counsel that in their complaint and affidavit it was submitted on behalf of the complainant that the cheque was issued as on account payment i.e. the payment made on the basis of balance in the running account but during cross examination of CW2 Rajesh Kumar Sharma it was stated that the cheque amount was reached after a compromise between the parties. It is submitted by Ld. Defence Counsel that the complainant is taking shifting stands as earlier it was submitted that the cheque was issued towards on account payment but later on when their account could not show that accused was liable to pay the cheque amount they changed their stand and fabricated this story of an oral agreement. Ld. Counsel CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 7 of Pages 13 also relied on the decision of M.S. Narayana Menon v. State of Kerala III (2006) BC 433 (SC), wherein it was held that if books of accounts maintained by the complainant does not reflect correct state of affairs the onus to rebut the presumption U/s 118 & 139 NI Act would deemed to be discharged.
10. Let us decide these defences first, It is argued by Ld. Defence Counsel that the case was filed by Mr. G.K. Pachauri who was Assistant Manager(Legal) of the complainant, who filed an SPA executed in his favour by Sh. Rajesh Kumar Sharma as Director of the complainant company to show his authority to file the present case. The objection of the Ld. Defence Counsel is that a company can act only through its board of directors and an individual Director have only such powers as may be given to him by article or Memorandum of association or a board resolution of company. It is pointed out by Ld. Defence Counsel that during his cross examination it is submitted by Mr. Rajesh Kumar Sharma, Director / Managing director of the complainant company, that it is correct that no resolution has been passed by the board of directors authorizing him (Rajesh Kumar Sharma) to further authorized G.K. Pachauri to file the present complaint. It was voluntarily deposed by Mr. Rajesh Kumar Sharma that he might have not filed his authority in the present case but he has that authority to appoint AR on behalf of the company. It is pertinent to note here that there is no such authority, article of association or Memorandum of board resolution filed on record whereby Mr. Rajesh Kumar Sharma being Director or Managing CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 8 of Pages 13 Director of the complainant company was authorized to appoint Special Power of Attorney to file case on behalf of the company. To support his argument Ld. Defence Counsel has relied on following judgments:
i) Dale & Carrington Invt.(P) Ltd. and Anr. v. P.K. Prathapan and Ors. MANU/SC/478/2004: (2005)1SCC212 wherein the Apex Court had held that the Company is a juristic person and it acts through its Directors who are collectively referred to as the Board of Directors. An individual Director has no power to act on behalf of a company of which he is a Director unless by some Resolution of the Board of Directors of the company specific power is given to him / her. Whatever decision are taken regarding running the affairs of the company, are taken by the Board of Directors. The Directors of Companies have been variously described as agents, trustees or representatives, but one thing is certain that the Directors act on behalf of a company in a fiduciary capacity and their acts and deeds have to be exercised for the benefit of the company. They are agents of the company to the extent they have been authorized to perform certain acts on behalf of the company.
ii) MMTC v. Medchl chemicals & pharma (P) Ltd 2002 (Criminal) Law Journal 2006, where in it was held that anyone can set the criminal law in motion by filling a complaint of facts constituting an offence before a Magistrate entitle to take CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 9 of Pages 13 cognizance. It has been held that no Court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint. It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case the only eligibility criterion prescribed by Section 142 is that the complaint must be by the payee or the holder in due course. This criteria is satisfied as the complaint is in the name and on behalf of the appellant Company. Further it was observed "even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent stage the company can send a person who is competent to represent the company". In Sh.
Ashok Bampto Pagui v. Agencia Real Canacona (P) Ltd 2007 Crilj 4645 (Decided by High Court of Bombay at Goa), it was observed that The Apex Court in M/s MMTC Ltd and Anr, v. M/s Medchl Chemicals & Pharma (P) Ltd and Anr. (supra) was dealing with the case at the initial stage of quashing the proceedings and considering that the Apex Court observed that even presuming that initially there was no authority, still the Company can, at any stage, rectify that defect. As far as the present case is concerned the defect has never been rectified by the Complainant company by passing any resolution in favour of CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 10 of Pages 13 the person who had filed the complaint on behalf of the complainant.
11. From the above stated judgments its very much clear that a case can be filed on behalf of a company U/s 138 NI Act by its duly authorized representative only and even if such representative was not duly authorized at the time of filling the complaint he can be duly authorized at a later stage also. Further an individual director of a company can do only such acts on behalf of the company for which he has been authorized/ empowered by Article or Memorandum of Association or by any board resolution.
12. On the other hand Ld. Counsel for the complainant had cited a case decided by Hon'ble Division bench of Delhi High Court i.e Kingston Computers (I) P. Ltd v. State Bank of TravenCore 153(2008) DLT 239 (DB), Wherein it was held that in law, secretary, director or principal officer of company would be duly authorized to institute suit on behalf of the company. The following paragraphs of this Judgment are relevant:
24. Order 29 Rule 1 of the Civil Procedure reads as under:
"1. Subscription and verification of pleading.In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary of by any director or other principal officer of the corporation who is able to depose to the facts of CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 11 of Pages 13 the case."
25. Discussing Order 29 Rule 1 of the Code of Civil Procedure, in the decision in United Bank of India's case(supra), in para 10, Hon'ble Supreme Court held as under:
"Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and de hors Order 29 Rule 1 of the code of Civil Procedure, as a company is a juristic entity, it can duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 of the Code of Civil Procedure."
26. Suffice would it be to state that in law, the Secretary, Director or a Principal Officer of a company would be treated as duly authorized to institute suit on behalf of a company. This flows out from a bare reading of Order 29 Rule 1 of the Code of Civil Procedure and as further explained in the decision in CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 12 of Pages 13 United Bank of India's case.
13. On the basis of above stated decision it was argued by the Ld. Defence Counsel that since the case was filed by Assistant Manager(Legal) of the complainant company thus the case was duly instituted. The above stated judgment was passed in a civil case wherein Hon'ble High Court of Delhi has based its decision on Order 29 Rule 1 of Code of Civil Procedure. Code of civil Procedure is not applicable to a Criminal proceeding or a proceeding U/s 138 NI Act.
14. Since the director of complainant company Mr. Rajesh Kuamr Sharma has failed to show his authority to execute a special power of attorney in favour of Mr. G.K. Pachouri to file and proceed with the present case and this lacuna has not been cured during the entire trial. It is thus proved that Mr. G.K. Pachori failed to prove his authority to lodged the present complaint. It follows there from that on a complaint filed by a person on behalf of the company without a resolution to that effect can not result in to conviction of the accused. Therefore it could not be said that the complaint was filed by the payee or holder in due course of the cheque in question, hence the present case is liable to be dismissed. Since the case of the complainant is dismissed on this short issue there is no requirement to go into the other ingredients of section 138 NI Act.
15. In view of the aforesaid discussion, I am of the CC No.982/10 VIJAY POWER GENERATORS LTD V. POWER SET INDIA( P) LTD page no. 13 of Pages 13 considered opinion that the complainant has miserably failed to prove any case against the accused. Accordingly, accused M/s Power Set India (P) Ltd & Mr. Prakash Bhatia, Director of M/s Power Set India (P) Ltd, stands acquitted of the offence U/s 138 Negotiable Instruments Act in respect of cheque bearing no. 350420.
Announced in the open court today i.e. 20.10.2012 (GAJENDER SINGH NAGAR) MM:KKD:DELHI:20.10.2012 Containing 13 pages all signed by the presiding officer.
(GAJENDER SINGH NAGAR) MM:KKD:DELHI:20.10.2012