2013 (9) TMI 948 - SC - Indian Laws

Power of Attorney Holder Can File Section 138 Complaints; Personal Knowledge Required

The Supreme Court held that a Power of Attorney holder can file complaints under Section 138 of the N.I. Act, acting as an agent of the principal. The ... Power of Attorney holder filing complaint - Eligibility for cognizance under Section 142 of the Negotiable Instruments Act - Personal knowledge requirement of attorney-holder as witness - Magistrate's discretion under Section 200 CrPC to examine complainant - Verification by affidavit and effect of Section 145 of the Negotiable Instruments Act - Validity of sub-delegation under a general power of attorneyPower of Attorney holder filing complaint - Eligibility for cognizance under Section 142 of the Negotiable Instruments Act - Power of Attorney holder may file and sign a complaint on behalf of the payee/holder in due course but cannot file in his own name as complainant. - HELD THAT: - The Court held that Section 142 does not prohibit a complainant from initiating proceedings through an agent. Where the grantor (payee/holder in due course) authorizes an attorney to institute proceedings, the attorney acts as agent and the complaint is effectively by the principal. Thus a complaint filed and verified for and on behalf of the payee satisfies the eligibility criterion under Section 142, provided the filing is not in the attorney's personal name as if he were the complainant. The decision in M.M.T.C. was affirmed to the extent that a complaint in the name of the payee/holder in due course is good compliance with Section 142, subject to the qualifications set out regarding knowledge of the attorney-holder. [Paras 21, 24, 26]Filing of a complaint petition under Section 138 through a Power of Attorney is legally competent provided the attorney acts on behalf of the principal and not in his personal capacity.Personal knowledge requirement of attorney-holder as witness - Power of Attorney holder filing complaint - A Power of Attorney holder may depose and verify on oath to prove the complaint only if he has personal knowledge of the transactions or has, as agent, been entrusted with charge of the business and knowledge of the transactions. - HELD THAT: - Drawing on Janki Vashdeo Bhojwani and related authorities, the Court recognised the exception that a Power of Attorney holder who personally witnessed or possesses direct knowledge of the transaction may be examined. Conversely, an attorney without personal knowledge cannot be examined to establish primary facts which only the principal can truthfully depose to. The judgment emphasises that the attorney-holder must have witnessed the transaction as agent or possess due knowledge in order to depose. [Paras 19, 23, 26]The Power of Attorney holder can depose and verify on oath only if he has personal knowledge of the transaction; otherwise he cannot be examined as the complainant's witness.Specific assertion as to knowledge of the Power of Attorney holder - Personal knowledge requirement of attorney-holder as witness - The complaint must explicitly assert the Power of Attorney holder's knowledge of the transaction in the complaint itself. - HELD THAT: - The Court required that the complaint contain a specific assertion that the attorney-holder possesses the requisite knowledge of the transactions alleged, so that the Magistrate can evaluate whether the attorney may properly be examined or the affidavit relied upon. Failure to make such explicit averments about the attorney's knowledge renders the attorney incompetent to be examined; where such assertion is absent the related question of verification by presumption was rendered infructuous. [Paras 23, 24, 26]Specific averments about the Power of Attorney holder's knowledge must be made in the complaint; absent such assertion the attorney-holder cannot be examined.Magistrate's discretion under Section 200 CrPC to examine complainant - Verification by affidavit and effect of Section 145 of the Negotiable Instruments Act - For issuance of process under Section 138, the Magistrate may rely on the complaint, supporting documents and the verification affidavit; examination of the complainant under Section 200 CrPC is discretionary and not mandatory, particularly in light of Section 145 of the N.I. Act. - HELD THAT: - The Court explained that once a complaint is supported by an affidavit and documents, the Magistrate need not mechanically examine the complainant; examination of the complainant or witnesses is a discretionary step to be taken only if the Magistrate deems it necessary after perusal of the material. Section 145 (inserted in 2002) permits the Magistrate to rely on verification by affidavit for the purpose of issuing process; thus the procedural requirement of personal examination is not absolute. [Paras 22, 24, 26]The Magistrate is entitled to rely on the affidavit verification and supporting documents and is not obliged to examine the complainant in every case; examination under Section 200 CrPC is discretionary.Validity of sub-delegation under a general power of attorney - Power of Attorney holder filing complaint - Sub-delegation of functions under a general power of attorney is valid only if the power of attorney expressly permits sub-delegation; otherwise sub-delegation is invalid though the general power itself can be revoked and re-granted. - HELD THAT: - The Court observed that whether an attorney-holder can further delegate authority depends solely on the terms of the general power of attorney. Absent an explicit clause authorising sub-delegation, any attempt to delegate further is inconsistent with the original instrument and therefore invalid. The Court added that the grantor may cancel and reissue the general power to another person if desired. [Paras 25, 26]Sub-delegation is permissible only when the general power of attorney expressly authorises it; otherwise it is invalid.Final Conclusion: The reference was answered: (i) filing of complaints through a Power of Attorney holder is permissible when made on behalf of the payee/holder in due course; (ii) the attorney-holder may verify and depose only if possessed of personal knowledge which must be specifically averred in the complaint; (iii) the Magistrate may rely on affidavit verification and need not mandatorily examine the complainant in every case; and (iv) sub-delegation is valid only if expressly authorised. The matter is remitted to the appropriate Bench for decision on merits. Issues Involved:1. Filing of complaint petitions under Section 138 of the N.I. Act through a Power of Attorney.2. Verification of complaint petitions by a Power of Attorney holder under Section 200 of the Code.3. Requirement of specific averments regarding the knowledge of the Power of Attorney holder in the complaint.4. Examination of the Power of Attorney holder based on presumed knowledge.5. Applicability of Section 145 of the N.I. Act in dispensing with proceedings under Section 200 of the Code.6. Validity of sub-delegation of functions by a Power of Attorney holder.Detailed Analysis:1. Filing of Complaint Petitions under Section 138 of the N.I. Act through a Power of Attorney:The Supreme Court clarified that filing of complaint petitions under Section 138 of the Negotiable Instruments Act (N.I. Act) through a Power of Attorney holder is legal and competent. The Power of Attorney holder acts as an agent of the principal, and the initiation of legal proceedings by the attorney holder is considered as initiation by the principal represented by the attorney holder, not in the personal capacity of the attorney holder. The Power of Attorney holder cannot file a complaint in their own name as if they were the complainant.2. Verification of Complaint Petitions by a Power of Attorney Holder under Section 200 of the Code:The Court held that a Power of Attorney holder can depose and verify on oath before the Court to prove the contents of the complaint. However, it is essential that 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. This ensures that the verification is based on personal knowledge and not hearsay.3. Requirement of Specific Averments Regarding the Knowledge of the Power of Attorney Holder in the Complaint:The Court emphasized that it is required by the complainant to make specific assertions regarding the knowledge of the Power of Attorney holder in the said transaction explicitly in the complaint. This ensures that the Power of Attorney holder has the necessary knowledge to verify the complaint and testify about the transaction.4. Examination of the Power of Attorney Holder Based on Presumed Knowledge:If the Power of Attorney holder fails to assert explicitly their knowledge in the complaint, they cannot verify the complaint on oath based on presumed knowledge. The Court clarified that the Power of Attorney holder must have actual knowledge of the transaction to be competent to verify the complaint and testify.5. Applicability of Section 145 of the N.I. Act in Dispensing with Proceedings under Section 200 of the Code:The Court noted that in light of Section 145 of the N.I. Act, it is open to the Magistrate to rely upon the verification in the form of an affidavit filed by the complainant in support of the complaint under Section 138 of the N.I. Act. The Magistrate is not mandatorily obliged to call upon the complainant to remain present before the Court or to examine the complainant or their witness upon oath for deciding whether or not to issue process on the complaint under Section 138 of the N.I. Act.6. Validity of Sub-Delegation of Functions by a Power of Attorney Holder:The Court clarified that the functions under the general Power of Attorney cannot be delegated to another person without a specific clause permitting the same in the Power of Attorney. However, the general Power of Attorney itself can be canceled and given to another person. This ensures that the delegation of authority is consistent with the terms of the original Power of Attorney.Conclusion:The Supreme Court answered the reference by affirming that a Power of Attorney holder can file, appear, and depose for the purpose of issuing process for the offence punishable under Section 138 of the N.I. Act, provided they have personal knowledge of the transaction. The Court also clarified the conditions under which the Power of Attorney holder can act and the necessity of explicit assertions regarding their knowledge in the complaint. The matter was remitted to the appropriate Bench for deciding the case on merits.