A POWER OF ATTORNEY HOLDER CAN FILE A COMPLAINT OF DISHONOR OF CHEQUE UNDER NEGOTIABLE INSTRUMENTS ACT, 1881

[Mr. M. GOVINDARAJAN]

Sec. 138 of the Negotiable Instruments Act, 1881 ('Act' for short) deals with the dishonor of cheque for insufficiency, etc., of funds in the account.   Sec. 138 provides punishment for the dishonor of cheque with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque or with both.  Sec. 142 of the Act deals with the cognizance of offences.   This section provides notwithstanding anything contained in the Code of Criminal Procedure, 1973 ('Code' for short) no court shall take cognizance of any offence punishable under Sec. 138 except upon a complaint in writing, made by the payee or as the case may be, the holder in due course.   Thus it requires that the complaint-

·  Should be in writing;

·  Should be made by the payee or the holder in due course.

A Company is a juristic person; it cannot approach a Court of Law and make a complaint on its own as the complainant has to be a corporeal person who is capable of making a physical appearance in the court.   It must definitely be represented by an authorized person.

                        In 'Associated Cement Company Ltd., V. Keshavanand' (1998) 1 SCC 687 the Supreme Court held that the Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance alone can continue to represent the complaint till the end of the proceedings.  It has been held that there may be occasions when different persons can represent the company.   It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court.  Thus, even presuming that initially there was no authority, still the company can at any state, rectify that defect.   At a subsequent stage the company can send a person who is competent to represent the company.

                        No Court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint.   If any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligible criterion prescribed by the statute.   Sec. 142 of the Act prescribes that the complaint must be in writing and by the payee or the holder in due course.   This criterion is satisfied if the complaint is in the name and on behalf of the company.

                        When the sole proprietorship concern was the payee, under Sec. 142 of the Act it could validly institute the complaint but it cannot act its own and has to sue through the proprietor.   If the complaint is filed by the proprietary through one of its authorized representatives, the complaint was maintainable as held in 'Eita India Ltd., V. NCT of Delhi (2003) 114 Comp Cas 32 (Del.)

                        The conspectus of judicial opinion establishes a principle that complaint in respect of the offence punishable under Sec. 138 of the Act need not be personally filed by the payer or holder in due course.   It can be filed by a natural person to act as a de facto complainant.

                        In the case 'Shankar Finance Investments V. State of Andhra Pradesh and others' (2008) 24 CLA-BL Supp 62 (SC) the appeal was filed against the order passed by the Andhra Pradesh High Court in a criminal petition holding that the complaint signed by a power of attorney holder was not maintainable.   The payee of the cheque is 'Shankar Finance & Investments, a proprietary concern of  Shri Atmakumari Sankara Rao, represented by its power of attorney holder of Shri Thamada Satyanarayana.   The Supreme Court observed the requirements of Sec. 142 of the Act are that the complaint should be in writing and the complaint should be made by the payee or holder in due course.   The payee in this case is Shanker & Finance Investments.   Once the complaint is in the name of the 'payee' and is in writing, the requirements of Sec. 142 are fulfilled.  How the payee should be represented where payee is a sole proprietary concern is not a matter that is governed by Sec. 142 of the Act, buy by the general law.   It is permissible to lodge the complaint in the name of the proprietary concern itself.

                        The next question the Supreme Court considered is where a proprietary concern carries on business through an attorney holder whether the attorney holder can lodge the complaint.  The attorney holder is the agent of the grantor.  When the grantor authorizes the attorney holder to initiate legal proceedings and the attorney holder accordingly initial legal proceedings he does so as to the agent of the grantor and the initiation is by the grantor represented by his attorney holder, and not by the attorney holder in his personal capacity.   Therefore where the payee is a proprietary concern the complaint can be filed by-

·  the proprietor of the proprietary concern describing himself as the sole proprietor of the 'payee';

·  the proprietary concern describing itself as a proprietary concern, represented by its sole proprietor; and

·  the proprietor or the proprietary concerned represented by the attorney holder under a power of attorney executed by the sole proprietor.

In this case the description of the complaint is as under-

"M/s Shankar Finance and Investments (a proprietary concern of Shri Atmakumari Sankara Rao, S/o late Shri A.B. Ramamurthy, Hindu, aged about 65 years) having its office at Flat No.3B III Floor, Maharaja Towers, Vishakapatnam-3 represented by it s power of attorney holder Shri Thamada Satyanarayana, S/o Late Adinarayana, Hindu, aged 50 years Service, residing at MIG-B-230, Sagarnagar, VUDA Layout, Vishakapatnam - 43"

                        The Supreme Court held that the said description is proper and therefore the complaint has been duly filed by the payee.  The Supreme Court further held that if the authorized agent or power of attorney holder has signed the complaint it will be absurd to say that he should not be examined under Sec. 200 of the code and only the Secretary of the Company or the partner or the firm or the proprietor of a proprietary concern who did not have personal knowledge of the transaction, should be examined.

                        The said judgment reveals that a power of attorney holder can file complaint of dishonor of cheque under Negotiable Instruments Act, 1881.