Branch manager with proper authorization can file Section 138 complaint for dishonoured cheque cases

Kerala HC allowed appeal in dishonour of cheque case. Trial court erroneously found complainant firm's branch manager incompetent to file complaint despite proper authorization. Court held complainant discharged initial burden under Section 138 Negotiable Instruments Act by proving cheque dishonour due to insufficient funds. Accused failed to discharge reverse onus under Section 139 despite producing payment receipts. HC convicted accused under Section 138, sentenced to one day imprisonment with compensation to complainant, emphasizing compensatory over punitive aspect. Trial court's acquittal order set aside.

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Issues Involved:
1. Applicability of the directions in Narayanan A.C v. State of Maharashtra and others.
2. Competence of the complainant's representative to file and prosecute the complaint under Section 138 of the Negotiable Instruments Act.
3. Requirement of specific assertion of knowledge by the power of attorney holder in the complaint.
4. Whether the accused is guilty of the offence under Section 138 of the Negotiable Instruments Act.
5. Appropriate sentencing and compensation for the offence under Section 138 of the Negotiable Instruments Act.

Issue 1: Applicability of the Directions in Narayanan A.C v. State of Maharashtra and others

The court examined whether the directions in Narayanan A.C v. State of Maharashtra [2013 (3) KHC 885] and Shibu L.P v. Neelakantan [2022 KHC 548] apply to a complaint filed by a power of attorney of a company/firm. The court noted that in TRL Krosaki Refractories Ltd. v. SMS Asia Private Limited [2022 (2) KHC 157], the Supreme Court distinguished Narayanan A.C in the context of complaints filed by companies/firms, indicating that the requirement of a specific assertion of knowledge by the power of attorney holder does not apply in the same manner to companies/firms.

Issue 2: Competence of the Complainant's Representative to File and Prosecute the Complaint

The complainant, a firm, was represented by its Branch Manager, who was authorized by a resolution (Ext.P10). The court emphasized that the complaint explicitly stated the complainant's status as a firm and the Branch Manager's competence to represent it. The court found the Magistrate's conclusion that PW1 was incompetent to file the complaint erroneous and unsustainable in law.

Issue 3: Requirement of Specific Assertion of Knowledge by the Power of Attorney Holder

The court referred to TRL Krosaki Refractories Ltd., which clarified that in complaints filed by companies/firms, a specific assertion regarding the knowledge of the power of attorney holder need not be in a particular manner. The court concluded that the assertion in the complaint and the authorization of the Branch Manager were sufficient for the Magistrate to take cognizance and issue process.

Issue 4: Whether the Accused is Guilty of the Offence under Section 138 of the Negotiable Instruments Act

The complainant provided evidence, including Ext.P1 and Ext.P2 cheques, Ext.P11 statement of accounts, and testimonies of PWs 1 and 2, establishing the accused's liability. The accused failed to rebut the presumption under Section 139 of the Act. The court found that the accused did not discharge the reverse onus of proof and was therefore guilty of the offence under Section 138.

Issue 5: Appropriate Sentencing and Compensation for the Offence under Section 138 of the Negotiable Instruments Act

The court referred to Damodar S. Prabhu v. Sayed Babalal H [2010 (2) KHC 428], emphasizing the compensatory aspect over punitive measures. The court sentenced the accused to imprisonment for one day (till the rising of the court) and to pay compensation of Rs. 2,00,000/- to the complainant within two months. The court directed the accused to appear before the Trial Court to undergo the sentence and pay the compensation, with provisions for execution of the sentence and recovery of the compensation if the accused fails to comply.

Conclusion:

(i) The appeal is allowed, and the impugned order is set aside.

(ii) The accused is found guilty and convicted for the offence under Section 138 of the Negotiable Instruments Act.

(iii) The accused is sentenced to undergo imprisonment for one day and pay a compensation of Rs. 2,00,000/- to the complainant within two months.

(iv) The accused is directed to appear before the Trial Court on 17.12.2023 to undergo the sentence and pay the compensation amount.

(v) The Trial Court is directed to execute the sentence and recover the compensation if the accused fails to appear.

(vi) The compensation amount, if recovered, shall be paid to the appellant/complainant under Section 357(3) of the Code.

(vii) The execution of the sentence is deferred till 17.12.2023.

(viii) The Registry is directed to forward a copy of this order to the Trial Court for compliance.

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