Company prosecution under cheque dishonour law requires board-sanctioned authority when a power of attorney holder's mandate is challenged.

A company prosecution for dishonour of cheque must be instituted through a person whose authority is traceable to the company's governing organ. Where the authority of a power of attorney holder is specifically challenged, the complainant must establish valid empowerment by the company, and a later ratification may cure defects only if authority is ultimately shown. A mere authorization by the Chairman, without a Board resolution delegating the power to prosecute, was treated as insufficient where company law and the articles required board-sanctioned delegation. On that reasoning, the prosecution was held invalid for want of proper authority.

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Issues: (i) Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed on behalf of a company, could be presented and prosecuted by a power of attorney holder appointed by the Chairman of the Board of Directors. (ii) Whether a specific resolution of the Board of Directors was necessary to authorize execution of such power of attorney.

Issue (i): Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed on behalf of a company, could be presented and prosecuted by a power of attorney holder appointed by the Chairman of the Board of Directors.

Analysis: A complaint on behalf of a company must satisfy the eligibility requirement under Section 142 of the Negotiable Instruments Act, 1881, namely that it is by the payee or holder in due course. A company, being a juristic person, may act through a natural person, and the defect of representation can be cured if the company later ratifies or regularizes the prosecution. However, once the authority to prosecute is specifically questioned, the complainant must show that the person conducting the case is duly empowered by the company.

Conclusion: The complaint could not be maintained merely on the basis of the power of attorney holder's conduct of the case, since valid authority had to be established when challenged.

Issue (ii): Whether a specific resolution of the Board of Directors was necessary to authorize execution of such power of attorney.

Analysis: The directors, as the governing body of the company, exercise the company's powers subject to the Companies Act, 1956 and the Articles of Association. Where the power to institute or prosecute proceedings is vested in the directors, its delegation must emanate from the Board of Directors by resolution. A mere letter of authorization or power of attorney executed by the Chairman, without Board delegation, was insufficient to sustain the prosecution once the authority was disputed.

Conclusion: A Board resolution was necessary, and its absence vitiated the prosecution.

Final Conclusion: The proceedings were invalid for want of proper authority to prosecute the complaint on behalf of the company, and the accused were entitled to acquittal.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881 by a company, the person conducting the complaint must have authority traceable to the company through its governing organ, and when such authority is challenged, a Board-sanctioned delegation is required if the Articles of Association or company law so demand.

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