S.142 NI Act | Improper To Dismiss/Quash Cheque Dishonour Complaint Of Company At Threshold On Question Of Authorisation : Supreme Court
The issue of proper authorisation and knowledge can only be an issue for trial, the Court stated.
The Supreme Court today (on January 02), reiterated that in the dishonour of cheque cases, where complainant is a company, it is necessary to show during the trial that the complaint, if not filed by the payee, is filed by someone having knowledge of complainant's contents. Apart from this, the same person should also be duly authorised to pursue the complaint.The Bench of Justice B.R. Gavai...
The Supreme Court today (on January 02), reiterated that in the dishonour of cheque cases, where complainant is a company, it is necessary to show during the trial that the complaint, if not filed by the payee, is filed by someone having knowledge of complainant's contents. Apart from this, the same person should also be duly authorised to pursue the complaint.
The Bench of Justice B.R. Gavai and Justice K.V. Viswanathan further highlighted that the accused can raise dispute regarding the authorisation of the complainant and knowledge of the relevant transaction during the course of trial. However, dismissal or quashing of the complaint at the threshold would not be justified. Reliance was placed on several cases including A.C. Narayanan v. State of Maharashtra and Another.
"When the company is the payee of the cheque based on which a complaint is filed under Section 138 of the NI Act, the complainant should necessarily be the company which is to be represented by an authorised employee and in such a situation, the indication in the complaint and the sworn statement, oral or by affidavit, to the effect that complainant is represented by an authorised person who has knowledge, would be sufficient."
The Court also drew its strength from the recent case of TRL Krosaki Refractories Limited v. SMS Asia Private Limited and Another to further the following reasoning:
“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.”
In the present case, the appellant firm M/s Naresh Properties that dealt with the manufacture as well as sale of hardware fittings. The respondent firm (M/S Aarti Industries) had purchased certain material from the appellant in lieu of a cheque. This was the cheque that came to be dishonoured because of 'exceeds arrangement'.
Following this, the appellant-firm issued a Letter of Authority authorizing one Neeraj Kumar, manager and caretaker, to file the complaint and pursue the matter. Before the High Court, Kumar in his affidavit, filed under Section 200 of CrPC (Examination of complainant) affirmed that he was well-conversant with the facts and circumstances of the case. Pursuant to this, the trial court issued summons to the respondent firm. Challenging this, respondent approached the High Court requesting the quashing of the summons. Pertinently, the respondent had assailed the complaint on the ground that Kumar had no knowledge about the relevant transaction. The same was allowed by the High Court and the case thus travelled to the Apex Court.
At the outset, the Division Bench noted that unlike the procedure given in CrPC, section 142 of the NI Act restricts the Court from taking cognizance unless the complaint is made in writing by the payee or holder in due course.
The Court cited the case of National Small Industries Corporation Limited v. State (NCT of Delhi) and Others. In this case, it was marked that in cases where the payee is the company, complaint will be filed in its name. Further, “for the purposes of Section 200 of the Cr.P.C., its employee who represents the company, will be the de facto complainant while the company will remain the de jure complainant, regardless of any change in the de facto complainant.”
Apart from the above mentioned precedents, the Court also relied on M.M.T.C. Ltd. and Another v. Medchl Chemicals & Pharma P. Limited and Another and Janki Vashdeo Bhojwani and Another v. IndusInd Bank Limited and Others. The Apex Court had clarified in these decisions that if the power of the attorney holder is in charge of complainant's business and is personally aware of the transactions then he/she can dispose of as a witness.
“Filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent. The power-of-attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint. However, the power-of-attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.”
Against this backdrop, the Court concluded that the present complaint fulfilled the requirement of Section 142 and that Kumar had personal knowledge of the matter. To bolster its decision, the Court also reproduced the portions of the relevant documents demonstrating authorisation in favour of and knowledge on the part of Kumar.
The Court added that it shall be open for the Trial Court to call the complainant for examination and remarked the quashing of the case by the High Court as “completely unwarranted”.
While cautioning against the exercise of inherent powers by the High Court, it opined “In that view of the matter, we are of the considered view that the High Court has passed the impugned judgment and order on a completely perfunctory and erroneous reasoning which depicts absence of careful consideration.”
Thus, the impugned judgment was set aside and the case was directed to be heard on merits.
Case Name: M/S NARESH POTTERIES v. M/S AARTI INDUSTRIES AND ANOTHER., SLP(Crl) No-008659-2023
Citation : 2025 LiveLaw (SC) 1
Click here to read the judgment