Andhra HC (Pre-Telangana)
Sagar Cements Ltd. vs P. Srinivas, Prop. Varalaxmi ... on 1 April, 2004
Equivalent citations: 2004(1)ALD(CRI)907, IV(2004)BC170, [2005]124COMPCAS541(AP)
JUDGMENT C.V. Ramulu, J.
1. This Criminal Appeal is directed against the judgment dated 23.04.1998 in C.C. No. 125 of 1994, on the file of the V Metropolitan Magistrate, Hyderabad (trial Court), wherein the complaint filed by the appellant/complainant under Section 138 of the Negotiable Instruments Act (for short "the Act"), against the respondent/accused herein, was held to be not maintainable in law, and the accused was acquitted under Section 255 (1) of the Code of Criminal Procedure (for short "Cr.P.C."), for the offence under Section 138 of the Act.
2. The case of the complainant was that the complainant, being a company, by name M/s. Sagar Cements Limited, carrying on business in cement and it supplied cement to its dealer, who is the accused herein. In the course of the said business, the accused issued cheque bearing No. 312354, dated 24.11.1993, for Rs. 99,000/-, towards the outstanding balance of Rs. 10,28,859-20 ps. When the complainant company presented the said cheque into the bank, the same was returned with an endorsement "funds insufficient". In spite of the legal notice, dated 12.1.1994, issued to the accused, the accused has not arranged for the payment, resulting which the complainant company constrained to file the present complaint by invoking the provisions under Section 138 of the Act.
3. The complainant is a limited company, representing by its Chief Commercial Manager-cum-Administrative Officer, M. Vinod Kumar S/o. Vasantha Rao. The trial Court had taken cognizance of the offence and immediately thereof, the said Vinod Kumar had resigned to his job and left the complainant company. Thereafter, there was no representation before the trial Court on behalf of the complainant company. Under those circumstances, the complainant company filed Crl. M.P. No. 2721 of 1996, seeking permission of the court to allow one Kanuri Prasad who is the General Manager of the company, to represent the matter and prosecute the case. The said application was disposed of on 3.10.1996 with the following order:-
"In the result, petition is allowed to the effect that the petitioner is only permitted to look after the proceedings of the case. But, he has no right to depose before the court on behalf of the complainant. To that effect, petition is allowed."
4. From the above order, it is clear that the said Kanuri Prasad, General Manager of the complainant company, can represent on behalf of the company and look after the proceedings of the case. However, it was made clear that he has no right to depose before the Court on behalf of the complainant. Thereafter, the said Vinod Kumar, who filed the present complaint, was examined before the trial Court as PW-1. However, the trial Court, while disposing of the case without going into the other aspects of Section 138 read with Section 139 of the Act, dealt with the aspect as to who can represent the company and whether the complaint suffers from any legal infirmity. In this regard, the trial Court held as under:-
"Now the question arises as to whether the complainant suffered from any legal infirmity. PW-1 who is the then Chief Commercial Manager deposed that he was authorized by the Managing Director to file the present complaint on the ground that the cheque in question issued by the accused towards part payment of outstanding balance to a tune of Rs. 10,28,859-20 ps but it was bounced. In his cross-examination, PW-1 categorically stated that the accused paid certain amounts towards due amount for the company, but it was not relating to the cheque in question. Ex. D-1 is FIR issued by Banjara Hills P.S. on a complaint made by the complainant herein and it is disclosing that the accused cheated the company by issuing the three cheques each for Rs. 99,000/-. In fact, the cheque in question was not figured in the said FIR. When certain payments made by the accused towards outstanding balance payable by the accused, it is not known that the said payment accounted towards which cheque issued by the accused. Ex. P-4 is the letter of authorization, dt. 8.2.94 given by the Managing Director of the complainant company. The present complaint filed on 10.2.94. The said authorization obtained by PW. 1 two days prior to the institution of the present complaint. The Managing Director, namely, Sri S. Veera Reddy issued the letter under Ex. P.4 authorizing PW. 1 to file criminal complaint against M/s. Varalaxmi Enterprises in respect of dishonour of cheque in question issued by Sri P. Srinivas, proprietor of said firm. The said authorization given to prosecute M/s. Varalaxmi Enterprises, but not the individual. Ex. P.10 is resolution passed by the Board of Directors of the complainant company on 6.2.93 authorizing Managing Director by name Sri S. Veera Reddy to prosecute an defend for and on behalf of the company in all cases before the Court of law including delegation of his powers to any of the employees of the company if necessary for the conduct of all the cases. It seems the Managing Director of the complainant company was authorized to launch criminal prosecution on behalf of the company in all cases. The said Managing Director delegated power to PW.1 as mentioned in Ex. P.4 dt. 8.2.94. It is pertinent to note that it is mentioned in the said criminal petition No. 2721 of 96 that the General Manager of the complainant company was instructed to prosecute the accused herein and in fact, the Managing Director was in abroad and undertook to produce the authorization letter. It is pertinent to note that by the time PW.1 adduced his evidence before this Court, he was no more in the service of the complainant's company. There was no evidence to show that the body of the Board of Directors revoked the earlier resolution under Ex. P.10 and authorized another person nor any evidence available that anybody authorized to proceed against the accused after exit of PW.1 with the knowledge of the Managing Director or Board of Directors of the company. In view of PW.1 left the company the authorization under Ex. P.4 become ineffective. As per Ex. P.10, the Managing Director who was authorized to launch criminal prosecution was empowered to delegate anybody for the conduct of the cases, but not representing the company. Therefore, I am of the view that the Managing Director has no powers to redelegate any power which derived from the resolution of the Board of Directors. Hence, Ex. P.4 has no relevance. For the foregoing discussions, after going through the entire evidence on record, I hold that the complaint is not free from legal infirmity and therefore even after the complainant followed the procedure as laid down in Section 138, but the complaint is not maintainable in law."
5. The learned counsel for the appellant/complainant submits that since the complaint, which was filed under Section 138 of the Act, was already taken cognizance by the trial Court, the same cannot be dismissed on the sole ground that there was no authorization in favour of PW-1 at the time of giving evidence. He contends that since the complaint was filed validly and the same was taken cognizance by the trial Court and the Court had already permitted one Kanuri Prasad to represent the company, whether PW-1 left the company or not, it makes no difference. However, while delivering the judgment, the trial Court took the above view and acquitted the accused under Section 255 (1) Cr.P.C., for the offence under Section 138 of the Act.
6. I have given my anxious consideration to the points raised by the learned counsel for the appellant. It is not in dispute that as on the date of filing of the complaint, the said Vinod Kumar was representing the company, and his capacity as on that date was also not disputed. The trial Court had taken cognizance of the complaint and issued notices to the accused. After that, the said Vinod Kumar, who filed the complaint on behalf of the company, resigned from his job and joined in some other concern and was not attending the Court on the dates of hearing. Then, the trail Court came to the conclusion that the said Vinod Kumar was not able to attend the Court. Therefore, on behalf of the complainant company, one Kanuri Prasad S/o. K.V. Ranga Das, Senior General Manager filed Crl. M.P. No. 2721 of 1996, to permit him to represent the matter and proceed with the same. The trial Court while permitting the said Kanuri Prasad to represent and look after the proceedings on behalf of the company, made it clear that the said Kanuri Prasad cannot depose on behalf of the complainant company. However, the said Vinod Kumar, who represented the company at the time of filing of the complaint, gave his evidence as PW-1 before the Court. Though no objection was taken by the trial Court for the examination of PW-1-Vinod Kumar, at the time of delivering the judgment, it opined that there was no valid authorization in favour of the said Vinod Kumar after he resigned from the company, and therefore, the complaint is ineffective and the same was not maintainable under the law. In view of the resignation of the said Vinod Kumar from the complainant company, Ex. P-4-prior authorization given to him has become ineffective. Therefore, there is legal infirmity in the complaint and the same needs to be dismissed.
7. In this regard, the learned counsel for the appellant relied upon three decisions. In EENADU A DAILY NEWSPAPER, VIJAYAWADA v. J. SHIVA SHANKER, 2002(1) ALD (Crl.) 403 (AP) he drawn the attention of the Court to para 13, which reads as under:-
"Insofar as the contention of the learned Counsel for the accused that the person who filed the complaints is not authorized to do so, and as such, the complaints are liable to be dismissed, is concerned, the Apex Court in M/s. MMTC v. Medchal Chemicals and Pharma (P) Limited (2001 AIR SCW 4793), has held that if any special statute prescribes offences and make 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 the statute. The only eligibility criterion prescribed by Section 142 is that the complaint under Section 138 must be by the payee or the holder in due course of the said cheque. This criterion is satisfied as the complaint is in the name and on behalf of the appellant company who is the payee of the cheque. Merely because complaint is signed and presented by a person, who is neither an authorized agent nor a person empowered under the Articles of Association or by any resolution passed by the Board to do so, is no ground to quash the complaint. It is open to the de jure complainant company to seek permission of the Court for sending any other person to represent the company in the Court. Thus, even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect by sending a person who is competent to represent it."
8. In WATERBASE LIMITED v. K. RAVINDRA 2002(1) ALD (Crl.) 689 (AP), the learned counsel for the appellant has drawn the attention of the Court to paras 38, 39, 40, 42, 43 and 44, which read as under:-
"38. In the instant case, the complainant who is PW.1, as already noticed has been associated with the credit transactions of the company. He was the person who gave the notice referring to various transactions and he was the person who got the authorization from the Chief Executive of the company. No doubt there is nothing on record to show that the Chief Executive has got authorization to authorize PW.1 to represent the company. I am of the view that going into this question amounts to going into the root of the issue. But, from the circumstances, it can safely be inferred that he has the implied authorization to act on behalf of the company and after all he represented the company only to safeguard it's interest i.e., his acts are not to the prejudice of the company, but on the contrary they are for the benefit of the company. Most importantly the Board of the appellant - Company never expressly or impliedly, disrobed PW.1 from the capacity of the Assistant Manager - Credit Control of the company, nor has disowned his acts representing the Company. Therefore, a comprehensive look at the whole circumstances would only go to show that PW.1 had definite authorization to represent the company."
"39. Further Section 196 of the Indian Contract Act provides for the ratification of the acts by the agents."
"40. In the present case, since the company never expressly objected to the acts of PW.1, such silence on the part of the company amounts to implied ratification or consent."
"42. The Courts shall not be too technical in application of law to the set of facts in dispensing justice and any deviation in interpretation of law laid down by the Supreme Court in the above cited decisions (supra) would only result in travesty of justice."
"43. Therefore, in the light of judgment of the apex Court in M.M.T.C.'s case (supra), which reiterated the principle in Associated Cement Company Limited's case (supra) and also in view of the provisions of the Indian Contract Act, I hold that the judgments of this Court (supra) cannot be made applicable to the present case."
"44. For the foregoing reasons, I hold that the accused is guilty of the offence punishable under Section 138 of the N.I. Act and he is convicted for the said offence. Consequently the impugned judgment is set aside."
9. In, M.M.T.C. LTD. v. MEDCHL CHEMICALS & PHARMA (P) LTD., the learned counsel for the appellant drawn the attention of the Court to paras 11 and 12, which read as under:-
"11. This Court has, as far back as, in the case of Vishwa Mitter V. O.P. Poddar held that it is clear that any one can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take 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 criteria 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."
"12. In the case of Associated Cement Co. Ltd., v. Keshvanand , it has been held by this Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the Court. It has been held that if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complainant to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court. Thus, 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. The complaints could thus not have been quashed on this ground."
10. On the basis of the above three decisions, the learned counsel for the appellant submits that at the initial stage of filing of the complaint under Section 138 of the Act before the trial Court, the said Vinod Kumar, the then Chief Commercial Manager-cum-Administrative Officer of the complainant company, was having authorization and he was the person that signed the complaint and got issued legal notices to the accused, and thereafter, he resigned from the complainant company. Therefore, absolutely there was no legal flaw, which prohibits a person who resigned from the job to depose before the Court of law as to the things happened in the course of his official position held in the company.
11. I am of the opinion that once initially the said Vinod Kumar represented the company under proper authorization and the cognizance of the offence was taken by the trial Court by issuing notices to the respondent and that after resignation of Vinod Kumar from the job one Kanuri Prasad was permitted to represent the company and proceed with the case, the question of invalidating the complaint filed under Section 138 of the Act on the ground that there was legal infirmity, cannot be accepted and there is no legal flaw as to the maintainability of the complaint. It cannot be expected that the said Vinod Kumar could not have spoken on behalf of the company after his resignation. Since the said Vinod Kumar initiated the complaint on behalf of the company, whether he was there in the company, or not, there is no bar under the law that the said person is not authorized to depose on behalf of the company. The trial Court found that the present complaint was filed on 10.2.1994 and the authorization obtained by PW-1-Vinod Kumar was two days prior to the institution of the complaint and the Managing Director of the company issued the letter under Ex. P.4, authorizing PW.1 to file criminal complaint against the respondent, in respect of dishonour of cheque in question issued by P. Srinivas, Proprietor of the said firm. The said authorization was given to prosecute the respondent firm, but not to the individual. Ex. P-10 is the resolution, dated 6.2.1993, passed by the Board of Directors of the complainant company, authorizing the Managing Director by name Sri Veera Reddy to prosecute and defend for and on behalf of the company before the Court of law, including delegation of his power to any of the employees of the company, if necessary, for conduct of all the cases. The said Managing Director delegated power to PW-1 under Ex. P.4 dated 8.2.1994. The Court further found that the complainant company filed Crl. M.P. No. 2721 of 1996 and was instructed to prosecute the accused. In fact, the Managing Director of the company was abroad and undertook to produce the authorization letter. PW-1, who is no more in the service of the complainant company, adduced evidence before the Court and there was no evidence to show that the Board of Directors revoked Ex. P-10-resolution, authorizing another person nor any evidence available to show that anybody authorized to proceed against the accused after exit of PW-1. In fact, the Court below permitted Kanuri Prasad to represent the matter. If that is so, the complainant company was rightly represented by the person who was permitted by the Court itself. Further, the Court found that the Managing Director has no power to redelegate any power, which derived from the resolution of the Board of Directors. The trial Court misled the power of delegation conferred on the Managing Director and has not understood the purport of the same.
12. In the above circumstances and in view of the case law discussed above, I am of the considered opinion that the course of action adopted by the trial Court in negating the complaint filed by the complainant on the ground of legal infirmity that as no authorized person represented the company, the same is not maintainable, is not supported by any provision of law under Cr.P.C. Therefore, I am of the view that the judgment of the trial Court does not stand the scrutiny of law and it requires to be set aside, and accordingly, the same is set aside.
13. In the result, the Criminal Appeal is allowed and the judgment of the trial Court is set aside. However, since the matter needs to be decided on the merits of the case, I am of the opinion that it requires to be remanded back to the trial Court for fresh consideration on the basis of evidence already recorded. The trial Court, after hearing the arguments of the learned counsel for both sides, shall dispose of the matter within a period of one month from the date of receipt of a copy of this order. Office is directed to dispatch the records along with the copy of order.