2025 (3) TMI 558 - HC - Indian Laws

Authorized person with board resolution can file dishonor of cheque complaint, conviction upheld despite coercion claims

M/s Balajhi Designer Jewellary Versus M/s Forever Precious Jewellery and Diamond Ltd.

Karnataka HC dismissed criminal revision in dishonor of cheque case. Court held complaint was maintainable as filed by authorized person with proper board ... Dishonor of cheque - conviction of revision petitioner without examining the issue of maintainability of the complaint. Whether both the Courts have committed an error in convicting the revision petitioner without examining the issue of maintainability of the complaint, as contended and requires interference of this Court by exercising the revisional jurisdiction? - HELD THAT:- The complaint was filed by an authorized person and resolution was passed on 24.10.2008 and the said resolution was issued by the Managing Director of the Company consequent upon the resolution passed by the Board of Directors. Hence, it is clear that authorization was given to the Regional Manager of the Company to initiate the proceedings against the petitioner - No doubt, the learned counsel for the petitioner relied upon the judgment of the Apex Court in the case of A.C. Narayanan [2015 (4) TMI 847 - SUPREME COURT], wherein the Apex Court held that the complaint was not signed either by the Managing Director or Director of Company and subsequently Deputy General Manager of the Company gave evidence on behalf of the Company though he does not know anything. Nothing on record to suggest that he was authorized by Managing Director or any Director. Hence, the acquittal of the accused was held proper. But in the case on hand, the factual aspect is different and before initiating the proceedings, general body meeting was held and resolution was passed in terms of Ex.P.49 and when the person who was authorized left the Company, authorization was given to P.W.1 by the Managing Director in terms of Ex.P.50 and also powers are conferred to the Director and Managing Director in terms of Articles 163 and 164 of Ex.P.52 i.e., Memorandum and Articles of Association of the complainant Company and hence the said judgment is not applicable to the facts of the case on hand. This Court having considered the merits also, it is not in dispute that cheques Exs.P.1 to 10 have been issued. In one breath the petitioner says that those cheques are issued as security and in other breath says that the cheques were obtained by coercion in the police station. The issuance of cheques is not disputed and the same is signed by the petitioner is also not in dispute. The petitioner cannot blow hot and cold. The fact that there were business transactions between the complainant and the accused is not in dispute. It is important to note that the Trial Court relied upon Ex.P.46 reply notice issued by the accused - It is also stated that the complainant must be aware of the fact that for this type of transaction by the accused with third parties there is due consent and permission by the complainant and acknowledges the receipt of diamond jewellery articles supplied by the complainant and therefore requests the patience of the complainant by waiting for some time till all the payments are received by the accused from third parties and repay them to the complainant. Hence, this averment made in paragraph No.4 of the reply notice is clear that reply was given and notice was served and admitted the transaction. Having considered all these materials on record, both the Trial Court and the Appellate Court comes to the conclusion that the complainant has proved the case. No doubt, the revision petitioner examined himself as D.W.1 and got marked the documents at Exs.D.1 to 12, but no material is placed on record to show that the accused has repaid the amount of Rs.67 lakhs. He gave admission in the cross-examination regarding transaction is concerned, particularly admitted the memorandum of agreement in terms of Ex.P.47 with regard to the business and also categorically admits that earlier he was having good and cordial relationship with the Company and also admits that he did not take any action in respect of issuance of reply notice in terms of Ex.P.46 as against the advocate. Having taken note of all these admissions and evidence on record, it is not a case for exercising of revisional jurisdiction and no perversity is found in the findings of the Trial Court and the Appellate Court. Both the Courts have given detailed consideration and meticulously examined the documents of Exs.P.1 to 10, 46, 47, 49, 50, 51 and 52 and hence the order of both the Courts not suffers from its legality and correctness and the same is based on material on record and question of law not involved in the matter and hence it is not a case for interference by exercising the revisional jurisdiction. Conclusion - The complaint was maintainable and the conviction was justified based on the evidence and legal presumptions under the NI Act. The criminal revisional revision is dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment are:Whether the complaint filed under Section 138 of the Negotiable Instruments Act (NI Act) is maintainable, given the authorization of the complainant's representative.Whether the concurrent findings of the Trial Court and the Appellate Court in convicting the petitioner are justified, particularly concerning the issuance and dishonor of cheques.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Maintainability of the ComplaintRelevant Legal Framework and Precedents: The legal framework involves Section 138 of the NI Act, Sections 142 and 142(a) of the NI Act, and relevant provisions of the Companies Act. The precedents discussed include judgments from the Supreme Court and High Courts regarding the authorization needed for filing complaints on behalf of a company.Court's Interpretation and Reasoning: The Court examined whether the complaint was filed by a duly authorized representative of the company. It noted that the complaint was initiated by the Regional Manager, authorized by a resolution from the Board of Directors, and later, further authorization was given to another representative when the initial representative left the company.Key Evidence and Findings: The evidence included Ex.P.49, a resolution authorizing the Regional Manager to initiate proceedings, and Ex.P.50, authorizing another representative to continue the proceedings. The Articles of Association (Ex.P.52) also supported the delegation of authority.Application of Law to Facts: The Court applied the relevant legal principles to the facts, finding that the complaint was validly filed by an authorized representative, as the necessary resolutions and authorizations were in place.Treatment of Competing Arguments: The petitioner's argument that the complaint was not maintainable due to lack of proper authorization was rejected. The Court distinguished the facts of the case from the precedents cited by the petitioner, noting that the authorization was properly documented and executed.Conclusions: The Court concluded that the complaint was maintainable as it was filed by a duly authorized person, in accordance with the company's Articles of Association and the resolutions passed.Issue 2: Justification of ConvictionRelevant Legal Framework and Precedents: The legal framework involves Section 138 of the NI Act, which deals with the dishonor of cheques due to insufficient funds or stop payment instructions.Court's Interpretation and Reasoning: The Court considered the evidence of cheque issuance, dishonor, and the subsequent legal notice served to the accused. It noted the accused's failure to rebut the presumption under Section 139 of the NI Act, which assumes the cheques were issued for discharge of debt or liability.Key Evidence and Findings: The evidence included the cheques (Exs.P.1 to 10), the legal notice, and the reply notice (Ex.P.46) from the accused admitting the business transactions and liabilities.Application of Law to Facts: The Court applied the presumption under Section 139 of the NI Act, noting that the accused admitted to the transactions and liabilities in the reply notice but failed to provide evidence of repayment.Treatment of Competing Arguments: The petitioner's arguments regarding the cheques being issued as security or obtained under coercion were not substantiated with evidence. The Court emphasized the admissions in the reply notice and the lack of evidence to counter the presumption of liability.Conclusions: The Court upheld the conviction, finding no error in the concurrent findings of the Trial Court and the Appellate Court, as the complainant had successfully proved the case.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: The Court noted, 'The issuance of cheques is not disputed and the same is signed by the petitioner is also not in dispute. The petitioner cannot blow hot and cold.'Core Principles Established: The judgment reinforced the principle that a complaint under Section 138 of the NI Act can be maintained if filed by a duly authorized representative of the company, supported by proper resolutions and authorizations.Final Determinations on Each Issue: The Court determined that the complaint was maintainable and the conviction was justified based on the evidence and legal presumptions under the NI Act.