Section 138 NI Act - Prima Facie Indication That Complaint Is Filed By Authorized Person Of Company Sufficient For Magistrate To Take Cognisance : Supreme Court

The Supreme Court observed that, in a cheque bounce case, when the complainant/payee is a company, an authorized employee can represent the company.

"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. Such averment and prima facie material is sufficient for the Magistrate to take cognizance and issue process", a three judges bench headed by CJI NV Ramana observed.

The bench also comprising Justices AS Bopanna and Hima Kohli said that the issue of proper authorisation and knowledge can only be an issue for trial and in such matters entertaining a petition under Section 482 to quash the order taking cognizance by the Magistrate would be unjustified.

In this case, the General Manager (Accounting) who had filed the complaint representing the complainant company under Section 138 and 142 of Negotiable Instruments Act, 1881. The Sub­ Divisional Judicial Magistrate took cognizance of the complaint and directed summons to the ­accused. The accused filed petition under Section 482 CrPC before the High Court essentially contending that the complaint filed was by an incompetent person without the requisite averments in the complaint. This petition came to be allowed by the High Court observing that there is no averment in the complaint as to whether the General Manager (Accounting) had knowledge about the transaction or he was a witness to the transaction. The High Court relied on A.C. Narayanan vs. State of Maharashtra & Anr. (2014) 11 SCC 790 and noted that there is no mention in the complaint or affidavit as to when and in what manner the company had authorized its General Manager (Accounting) to represent the company to file the complaint. They submitted that there is no averment in the complaint as to whether the General Manager (Accounting) had any knowledge about the transaction or he was a witness to the transaction.

Before the Apex Court, the complainant company contended that the High Court has misconstrued the principle enunciated in A.C. Narayanan (supra) to non­suit it. The accused, on the other hand, contended that there should be explicit averment to the effect that the person filing the complaint is authorized by the complainant and has knowledge of the transaction in question so as to maintain the complaint.

In AC Narayanan, it was observed thus: "It is required by the complainant to make specific assertion as to the knowledge of the power­ of ­attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case".

The court noted that, in this case, the company having authorized the General Manager (Accounting) and the General Manager (Accounting) having personal knowledge had in fact been clearly averred.

"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."

While allowing the appeal, the bench explained the purport of the observations made in AC Narayanan:

17. In that view, 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. Prima ­facie, 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 (supra) 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.

All that is necessary is to demonstrate before the learned Magistrate that the complaint filed is in the name of the "payee" and if the person who is prosecuting the complaint is different from the payee, the authorisation therefor and that the contents of the complaint are within his knowledge. When, the complainant/payee is a company, an authorized employee can represent the company. Such averment and prima facie material is sufficient for the learned Magistrate to take cognizance and issue process. If at all, there is any serious dispute with regard to the person prosecuting the complaint not being authorized or if it is to be demonstrated that the person who filed the complaint has no knowledge of the transaction and, as such that person could not have instituted and prosecuted the complaint, it would be open for the accused to dispute the position and establish the same during the course of the trial.

Headnotes

Case name/ details: TRL Krosaki Refractories Ltd. vs SMS Asia Private Limited | SLP (Crl.) No.3113 of 2018 | 22 Feb 2022

Citation: 2022 LiveLaw (SC) 196 Coram: CJI NV Ramana, Justices AS Bopanna and Hima Kohli

Counsel: Sr. Adv Ashok K. Parija for appellant, Adv Santosh Kumar for respondent