2004 (4) TMI 626 - HC - Indian Laws

Appellate Court Rules on Complaint Maintainability Under Section 138

Sagar Cements Ltd. Versus P. Srinivas

The appellate court overturned the trial court's decision regarding the maintainability of a complaint under Section 138 of the Negotiable Instruments Act ... - Issues Involved:1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act.2. Authorization to represent the complainant company.3. Legal infirmity due to the resignation of the initial authorized representative.4. Validity of the trial court's judgment based on the above grounds.Detailed Analysis:1. Maintainability of the Complaint under Section 138 of the Negotiable Instruments Act:The complaint was filed under Section 138 of the Negotiable Instruments Act, which pertains to the dishonor of cheques due to insufficient funds. The trial court initially took cognizance of the complaint but later dismissed it on the grounds of legal infirmity, stating that the complaint was not maintainable in law.2. Authorization to Represent the Complainant Company:The complainant company was represented by its Chief Commercial Manager-cum-Administrative Officer, who had the authorization to file the complaint. However, after the resignation of the said officer, the trial court allowed another representative, Kanuri Prasad, to look after the proceedings but not to depose on behalf of the company.3. Legal Infirmity Due to the Resignation of the Initial Authorized Representative:The trial court held that the complaint suffered from legal infirmity as the initial representative, Vinod Kumar, had resigned, and there was no valid authorization for him to continue representing the company. The court found that the prior authorization (Ex. P-4) became ineffective after his resignation, and there was no evidence of a new authorization by the Board of Directors.4. Validity of the Trial Court's Judgment:The appellate court disagreed with the trial court's view, citing several precedents. It emphasized that once the complaint is validly filed and taken cognizance of, the resignation of the initial representative does not invalidate the complaint. The appellate court referred to decisions such as *EENADU A DAILY NEWSPAPER, VIJAYAWADA v. J. SHIVA SHANKER* and *M.M.T.C. LTD. v. MEDCHL CHEMICALS & PHARMA (P) LTD.*, which held that a company can rectify any defect in representation at any stage and that the complaint remains valid even if the initial representative resigns.Conclusion:The appellate court concluded that the trial court's judgment did not stand the scrutiny of law and set it aside. The case was remanded back to the trial court for fresh consideration based on the evidence already recorded. The trial court was directed to dispose of the matter within one month from the date of receipt of the appellate court's order.