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of <h1>Supreme Court restores dishonor of cheque case after High Court wrongly quashed cognizance under Section 482</h1> <h3>M/s TRL Krosaki Refractories Ltd. Versus M/s SMS Asia Private Limited & Anr.</h3> M/s TRL Krosaki Refractories Ltd. Versus M/s SMS Asia Private Limited & Anr. - (2022) 7 SCC 612 Issues Involved:1. Validity of the complaint under Section 138 and 142 of the Negotiable Instruments Act, 1881.2. Authorization of the General Manager (Accounting) to file the complaint.3. Knowledge of the General Manager (Accounting) about the transaction in question.4. Interpretation and application of the judgment in A.C. Narayanan vs. State of Maharashtra & Anr. (2014) 11 SCC 790.5. Justifiability of the High Court's quashing of the cognizance order.Issue-wise Detailed Analysis:1. Validity of the Complaint under Section 138 and 142 of the Negotiable Instruments Act, 1881:The appellant filed a complaint under Section 138 and 142 of the N.I. Act after the respondent's cheques, amounting to Rs. 1,10,00,000, were dishonored. The Sub-Divisional Judicial Magistrate (SDJM) took cognizance and issued summons. The High Court quashed this order, questioning the authorization and knowledge of the General Manager (Accounting) who filed the complaint.2. Authorization of the General Manager (Accounting) to File the Complaint:The High Court quashed the SDJM's order, citing the absence of explicit authorization from the company’s Board of Directors to the General Manager (Accounting) to file the complaint. However, the Supreme Court noted that the Managing Director had authorized the General Manager (Accounting), and the Managing Director himself was authorized by the Board of Directors. The documents (Annexure P16 and P17) demonstrated that the General Manager (Accounting) was duly authorized to represent the company in legal proceedings.3. Knowledge of the General Manager (Accounting) about the Transaction in Question:The High Court found no averment in the complaint regarding the General Manager (Accounting)'s knowledge of the transaction. However, the Supreme Court observed that the General Manager (Accounting) was a witness to the agreement dated 18.07.2014 and had signed the reconciliation statement. Additionally, he issued notices when the cheques were dishonored, indicating his knowledge of the transaction. The complaint and supporting affidavit explicitly stated his authorization and knowledge.4. Interpretation and Application of the Judgment in A.C. Narayanan vs. State of Maharashtra & Anr.:The High Court relied on A.C. Narayanan to quash the complaint, but the Supreme Court clarified that the requirements in A.C. Narayanan were met. The complaint was filed in the name of the company (the payee) through an authorized representative with knowledge of the transaction. The Supreme Court emphasized that the assertion of authorization and knowledge need not follow a specific format but should be clear from the context and supporting documents.5. Justifiability of the High Court's Quashing of the Cognizance Order:The Supreme Court held that the High Court was not justified in quashing the SDJM's order at the threshold. It emphasized that the issue of authorization and knowledge could be disputed and established during the trial. The dismissal of the complaint at the threshold was deemed premature and unjustified.Conclusion:The Supreme Court set aside the High Court's judgment, restored the complaint to the file of SDJM, Jharsuguda, and directed expeditious trial proceedings. The respondent was ordered to appear before the Magistrate without expecting fresh summons. The appeal was allowed with costs of Rs. 1,00,000 payable by the respondent to the appellant.
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