2015 (4) TMI 847 - SC - Companies Law

Power of Attorney Holder Can File Complaint under N.I. Act & Cr.P.C.

AC. Narayanan and Another Versus State of Maharashtra & Anr.

The Supreme Court affirmed that a Power of Attorney holder can file a complaint under Section 138 of the N.I. Act if the holder has personal knowledge of ... Offence u/s 138 & 142 of the Negotiable Instrument Act - Dishonour of cheques - Compliant filed without power of attorney - Complaint filed with out proper authorization - Held that:- Appeal No.73 of 2007 - Case of A.C. Narayanan - In this case Magistrate had taken cognizance of the complaint without prima facie establishing the fact as to whether the Power of Attorney existed in first place and whether it was in order. It is not in dispute that the complaint against the appellant was not preferred by the payee or the holder in due course and the statement on oath of the person who filed the complaint has also not stated that he filed the complaint having been instructed by the payee or holder in due course of the cheque. Since the complaint was not filed abiding with the provisions of the Act, it was not open to the Magistrate to take cognizance. From the bare perusal of the said complaint, it can be seen that except mentioning in the cause title there is no mention of, or a reference to the Power of Attorney in the body of the said complaint nor was it exhibited as part of the said complaint. Further, in the list of evidence there is just a mere mention of the words at serial no.6 viz. 'Power of Attorney', however there is no date or any other particulars of the Power of Attorney mentioned in the complaint. Even in the verification statement made by the respondent no.2, there is not even a whisper that she is filing the complaint as the Power of Attorney holder of the complainant. Even the order of issue of process dated 20th February, 1998 does not mention that the Magistrate had perused any Power of Attorney for issuing process.The appellant has stated that his Advocate conducted search and inspection of the papers and proceedings of the criminal complaint and found that no Power of Attorney was found to be a part of that record. This has not been disputed by the respondents. In that view of the matter and in light of decision of the larger Bench in the case of AC Narayanan And Another [2013 (9) TMI 948 - SUPREME COURT], as referred above, we hold that the Magistrate wrongly took cognizance in the matter and the Court below erred in putting the onus on the appellant rather than the complainant Criminal Appeal No.1437 - Case of G. Kamalakar - In this case it is not in dispute that the complaint was filed by one Shri v. Shankar Prasad claiming to be General Power of Attorney of the complainant company. Subsequently PW-1 Shri Ravinder Singh gave the evidence on behalf of the Company under the General Power of Attorney given by the complainant Company. The complaint was not signed either by Managing Director or Director of the Company. It is also not in dispute that PW-1 is only the employee of the Company. As per Resolution of the Company i.e. Ex.P3 under first part Managing Director and Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for prosecution. Under third part of the said Resolution they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. But nothing on the record suggest that an employee is empowered to file the complaint on behalf of the Company. This apart, Managing Director and Director are authorized persons of the Company to file the complaint by signing and by giving evidence. At best the said persons can nominate any person to represent themselves or the Company before the Court. In the present case one Shri Shankar Prasad employee of the Company signed the complaint and the Deputy General Manager of the Company i.e. PW-1 gave evidence as if he knows everything though he does not know anything. There is nothing on the record to suggest that he was authorized by the Managing Director or any Director. Therefore, Magistrate by judgment dated 30th October, 2001 rightly acquitted the appellant. In such a situation, the case of the appellant is fully covered by decision by the larger bench AC Narayanan And Another [2013 (9) TMI 948 - SUPREME COURT] of this Court passed in the present appeal. - Decided in favour of appellants. Issues Involved:1. Legality of filing a complaint under Section 138 of the N.I. Act by a Power of Attorney holder.2. Verification of Power of Attorney holder on oath under Section 200 of the Cr.P.C.3. Specific averments of the knowledge of the Power of Attorney holder in the complaint.4. Examination of the Power of Attorney holder in support of the complaint.5. Sub-delegation of functions by the Power of Attorney holder.Issue-wise Detailed Analysis:1. Legality of Filing a Complaint Under Section 138 of the N.I. Act by a Power of Attorney Holder:The Supreme Court addressed whether a Power of Attorney holder can sign and file a complaint on behalf of the complainant. The larger Bench affirmed that filing a complaint under Section 138 of the N.I. Act through a Power of Attorney holder is legal and competent. It was noted that if the complaint is filed in the name of the payee or holder in due course, it satisfies the eligibility criteria prescribed by Section 142(a) of the N.I. Act. The Court emphasized that the Power of Attorney holder must have personal knowledge of the transaction to bring forth the grievance effectively.2. Verification of Power of Attorney Holder on Oath Under Section 200 of the Cr.P.C.:The Court clarified that Section 200 of the Cr.P.C. does not preclude a Power of Attorney holder from being a complainant. It is permissible for the Magistrate to issue process based on the affidavit submitted by the complainant in support of the complaint. The Magistrate has the discretion to call upon the complainant to be present and examine him if necessary. However, the Magistrate is not bound to do so and can rely on the affidavit for issuing the process under Section 138 of the N.I. Act.3. Specific Averments of the Knowledge of the Power of Attorney Holder in the Complaint:The Court held that the complaint must explicitly assert the knowledge of the Power of Attorney holder regarding the transaction. If the Power of Attorney holder does not have personal knowledge of the transaction, he cannot be examined as a witness. The complaint must specify the Power of Attorney holder's knowledge to ensure the authenticity and reliability of the complaint.4. Examination of the Power of Attorney Holder in Support of the Complaint:The larger Bench concluded that the Power of Attorney holder can depose and verify on oath to prove the contents of the complaint if he has witnessed the transaction or possesses due knowledge about it. The verification in the form of an affidavit is sufficient for the Magistrate to issue the process unless further examination of the complainant or his witnesses is deemed necessary by the Magistrate.5. Sub-delegation of Functions by the Power of Attorney Holder:The Court stated that the Power of Attorney holder cannot delegate his functions to another person unless explicitly authorized by the terms of the general Power of Attorney. Sub-delegation without such authorization is invalid. However, the general Power of Attorney can be canceled and reissued to another person if required.Case of A.C. Narayanan:The Supreme Court found that the complaint against A.C. Narayanan did not comply with the provisions of the N.I. Act as it lacked proper mention and verification of the Power of Attorney. The Magistrate had wrongly taken cognizance without verifying the existence and validity of the Power of Attorney. Consequently, the Court set aside the judgments of the High Court and the Trial Court, quashing the proceedings against A.C. Narayanan.Case of G. Kamalakar:In the case of G. Kamalakar, the complaint was filed by an employee of the complainant company without proper authorization from the Managing Director or Director. The Court upheld the acquittal by the Metropolitan Magistrate, finding that the employee was not empowered to file the complaint. The High Court's judgment convicting G. Kamalakar was set aside, and the acquittal was reinstated.Conclusion:The appeals were allowed, and the judgments of the High Court in both cases were set aside. The Supreme Court provided clarity on the role and limitations of Power of Attorney holders in filing and verifying complaints under the N.I. Act, ensuring that due process is followed in such matters.