Section 138 notice, authority, and territorial jurisdiction defects can render cheque complaint proceedings unsustainable.

A complaint under the Negotiable Instruments Act filed through a company's power of attorney holder was held unsustainable where the authorised representative could not further delegate authority for instituting criminal proceedings. Mandatory service of the statutory notice under Section 138 was also not established, as the notice was returned unserved and was not sent to the correct address, defeating cognizance. The proceedings were further found to lack territorial jurisdiction because the cheque was issued and dishonour occurred in Orissa, not Daman. The writ petition was held maintainable to challenge proceedings initiated outside the territorial cause of action, and the complaint was quashed.

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Issues: (i) whether a complaint under the Negotiable Instruments Act could be maintained through a power of attorney holder of the company payee; (ii) whether non-service of the statutory notice defeated cognizance under Section 138 of the Negotiable Instruments Act, 1881; and (iii) whether the complaint instituted at Daman was without territorial jurisdiction and liable to be quashed in writ proceedings.

Issue (i): whether a complaint under the Negotiable Instruments Act could be maintained through a power of attorney holder of the company payee.

Analysis: The complaint was presented by a power of attorney holder claiming authority from the Managing Director of the company. The challenge was that a delegate cannot further delegate authority to institute criminal proceedings on behalf of the company. The Court accepted the settled position that the principal officer or authorised representative of a company cannot re-delegate his power to another person for filing the complaint in the manner asserted in the case.

Conclusion: The complaint as instituted through the power of attorney holder was not treated as legally sustainable on this ground.

Issue (ii): whether non-service of the statutory notice defeated cognizance under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: Service of notice on the drawer within the statutory period is a mandatory ingredient of the offence. The notice relied upon had been returned unserved with an endorsement that the addressee was absent, and it was also found that it had not been sent to the correct address. The Court held that such facts did not establish deemed service and that the mandatory requirement of notice was not satisfied.

Conclusion: Non-service of the statutory notice was fatal, and cognizance under Section 138 could not be sustained.

Issue (iii): whether the complaint instituted at Daman was without territorial jurisdiction and liable to be quashed in writ proceedings.

Analysis: The cheque was issued at Balasore and dishonour occurred at Bhubaneswar, so the cause of action arose within Orissa and not at Daman. The Court also held that the writ petition was maintainable under Article 226 of the Constitution of India to challenge proceedings initiated outside the State when the cause of action arose within its territorial limits.

Conclusion: The complaint at Daman lacked territorial jurisdiction and the writ petition was maintainable.

Final Conclusion: The proceedings initiated against the petitioner were unsustainable on the grounds of defective institution, failure of mandatory notice, and absence of territorial jurisdiction, and were therefore quashed.

Ratio Decidendi: For an offence under Section 138 of the Negotiable Instruments Act, 1881, statutory notice must be duly served on the drawer and territorial jurisdiction must lie where the legally relevant cause of action arises; proceedings instituted without satisfying these requirements cannot be sustained.

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