Complainant U/S 138 NI Act Must Specifically Assert That Power Of Attorney Holder Has Knowledge Of Impugned Transaction: Kerala High Court

The Kerala High Court on Friday observed that a complaint filed under Section 138 of the Negotiable Instruments Act through power of attorney holder is perfectly legal and competent. However, the power of attorney holder can depose and verify on oath before the Court in order to prove the contents of a complaint, only when he has witnessed the transaction as an agent of the payee/ holder in due course or possess due knowledge regarding the said transactions. 

Justice A. Badharudeen further observed that the complainant has to make specific assertions as to the knowledge of the power of attorney in the said transaction explicitly in the complaint. 

It is true that as per the ratio in A.C Narayanan first case (A.C.Narayanan v. State of Maharashtra &anr), the complaint filed under Section 138 of the Negotiable Instruments Act through power of attorney holder is perfectly legal and competent. But the power of attorney holder could depose and verify on oath before the court in order to prove the contents of the complaint, only when 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 and also 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. If the above stipulations are not satisfied, the power of attorney could not depose and verify on oath before the court.

If the aforesaid stipulations are not satisfied the power of attorney cannot depose and verify on oath before the Court.

The Petition was filed under Section 482 of the CrPC seeking to quash an order passed by Special Judicial First Class Magistrate (NI Act Cases) dismissing the petition filed and the complaint filed, pointing out that in the address portion of the complaint, it has been averred that the complainant was represented by his power of attorney holder, but there is no mention of this fact in the body of the complaint. Further, the power of attorney holder had to verify the complaint as if he was the complainant. 

The Counsel appearing for the petitioner argued that the complaint was filed ignoring the statutory mandates as laid down by the Apex Court in A.C. Narayanan v. State of Maharashtra & anr. The Counsel also argued that the Affidavit filed along with the complaint does not include anything regarding the direct knowledge of the power of attorney holder regarding the transaction and that he had witnessed the transaction.

The Counsel appearing for the 2nd Respondent averred that there are no truth in the contentions raised by the petitioner and argued that certain relevant documents produced before the Trial Court were suppressed. It was also argued that the complainant himself had filed a proof affidavit under Section 145 of the Negotiable Instruments Act, as he proposed to give evidence regarding the transaction that led to the execution of the cheque. 

The Court after considering the contentions raised observed that even though the complaint filed under Section 138 of the Negotiable Instruments Act through the power of attorney holder 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, only when 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 and also it is required by the complainant to make a specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint.

The Court also observed that the Lower Court took cognizance in this matter and registered the case with the intention to follow the procedure of summary trial and section 264 of Cr.P.C deals with judgment in cases tried summarily and it has been provided that in every case tried summarily in which the accused does not plead guilty, the Magistrate shall record the substance of the evidence and a judgment containing a brief statement of the reasons for the finding. 

In fact, Section 264 does not provide for the acquittal of the accused before trial. Therefore, the petition was found to be defective at the very inception, the Court added. 

However, looking into the way in which the complaint was filed the Court observed that the Lower Court took cognizance of the matter acting on the affidavit filed by the power of attorney holder under Section 145 of the NI Act. However, the Court pointed out that there are no averments in the complaint that the power of attorney had witnessed transactions as an agent of payee in due course or possess due knowledge regarding the said transaction and also there is no specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint.

In view of the above, the cognizance taken by the Magistrate acting on the affidavit of the power of attorney holder is found to be illegal and the same shall stand set aside, the Court observed. 

The Court thereby allowed the Criminal Miscellaneous Case by reverting the complaint back to the pre-cognizance stage, with liberty to the original complainant to file an affidavit under Section 145 of the N.I Act in his capacity. 

Advocate Rajiv Nambisan appeared for the Petitioner.

Advocates Jagan Abraham M George, Jaison Antony and Public Prosecutor G. Sudheer appeared for the Respondents. 

Case Title: Razak Mether v. State of Kerala and Anr. 

Citation: 2023 LiveLaw (Ker) 24

Click Here To Read/Download The Order