2022 (2) TMI 1112 - SC - Indian Laws

Supreme Court restores dishonor of cheque case after High Court wrongly quashed cognizance under Section 482

M/s TRL Krosaki Refractories Ltd. Versus M/s SMS Asia Private Limited & Anr.

SC allowed appeal in dishonor of cheque case where HC had quashed cognizance order under Section 482 Cr.PC. Court held Section 142 N.I. Act requirements ... Dishonor of Cheque - cognizance of offences - requirement under Section 142 of the N.I. Act complied with or not - HELD THAT:- What can be treated as an explicit averment, cannot be put in a straitjacket but will have to be gathered from the circumstance and the manner in which it has been averred and conveyed, based on the facts of each case. The manner in which a complaint is drafted may vary from case to case and would also depend on the skills of the person drafting the same which by itself, cannot defeat a substantive right. However, what is necessary to be taken note of is as to whether the contents as available in the pleading would convey the meaning to the effect that the person who has filed the complaint, is stated to be authorized and claims to have knowledge of the same. In addition, the supporting documents which were available on the record by themselves demonstrate the fact that an authorized person, being a witness to the transaction and having knowledge of the case had instituted the complaint on behalf of the “payee” company and therefore, the requirement of Section 142 of N.I. Act was satisfied. Despite the conclusion that the documents available on record would on facts satisfy the requirement relating to delegation of power and also knowledge of the transaction by the person representing the Company in the instant case, it is also necessary for us to keep in perspective that though the case in AC NARAYANAN AND ANOTHER VERSUS STATE OF MAHARASHTRA & ANOTHER [2013 (9) TMI 948 - SUPREME COURT] has taken the center stage of consideration, the facts involved therein were in the background of the complainant being an individual and the complaint filed was based on the power of attorney issued by the “payee” who was also an individual. In such an event, the manner in which the power was being exercised was to be explicitly stated so as to establish the right of the person prosecuting the complaint, to represent the payee i.e., the complainant. The position that would emerge when the complainant is a company or a corporate entity will have to be viewed from a different standpoint. The position that would emerge is that when a company is the payee of the cheque based on which a complaint is filed under Section 138 of N.I. Act, the complainant necessarily should be the Company which would be represented by an employee who is authorized. Primafacie, in such a situation the indication in the complaint and the sworn statement (either orally or by affidavit) to the effect that the complainant (Company) is represented by an authorized person who has knowledge, would be sufficient. The employment of the terms “specific assertion as to the knowledge of the power of attorney holder” and such assertion about knowledge should be “said explicitly” as stated in A.C. Narayanan cannot be understood to mean that the assertion should be in any particular manner, much less only in the manner understood by the accused in the case. The High Court was not justified in entertaining the petition filed under Section 482 of Cr.PC and quashing the order dated 05.11.2015, taking cognizance of the complaint filed by the appellant - Appeal allowed - decided in favor of appellant. 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.