CRIMINAL COMPLAINT BY A COMPANY

[Mr. M. GOVINDARAJAN]

A company, incorporated under any of the provisions of the existing company law or previous company law is a legal person.  The company is capable of being sued and sues the others.   Being the company is not an existing person, the company cannot itself file a suit before the Court of law.  A natural person can file a suit on behalf of the company, for which authorization of the company is required.

The company is liable to prosecution under some of the provisions of the Companies Act if there is a violation or contravention of the provision of the Companies Act and allied law.

Whether a company can file a criminal complaint against others?  Yes.  A company can file a criminal complaint against any person.  In ‘Associated Cement Co. Limited V. Keshvanand’ – 1997 (12) TMI 629 - SUPREME COURT it was held that a criminal complaint can be filed by a company but it must be represented by a natural person.  It is not necessary that the same person should act as a representative throughout.  The complaint by a company is liable to be dismissed because of the absence of the representative in the same way in which an individual complaint is liable to be dismissed for absence of the complainant.

In ‘Nayagam Lourd Prakash V. Standard Chartered bank’ – 2000 (10) TMI 968 - ANDHRA PRADESH HIGH COURT the High Court held that the authority to file a criminal complaint on behalf of a payee company should be conferred on some person by the Board of Directors or under the Articles of Association or Rules governing the management of the company.  The complaint was filed in this case by the manager.  There was no material to show that the manager was authorized for the purposes.  The complaint was held to be non maintainable.

In ‘Danday Knit Garments V. Subiksha Spinners P Limited’- 1999 (3) TMI 647 - MADRAS HIGH COURT  the High court held that a complaint was filed by the power of attorney holder authorized by a director.  The holder of the power of attorney was examined and evidence was closed.  Subsequent to this, the company’s application to examine the director who authorized the power of attorney was not allowed.  The director was not listed as a witness.  He could not be examined.

In ‘N.K. Ramaswamy Iyengar v. Bangalore District and Bangalore Rural District cooperative central bank Limited’ 2002 (5) TMI 870 - KARNATAKA HIGH COURT it was held that a complaint can be filed by a person whose actions would bind the company.  Where a cooperative bank was the payee of the cheque and a complaint was filed by the manager on authorization of the managing director, the court refused to quash the complaint.

In ‘The Waterbase Limited V. K. Ravindra’ – 2002 (2) TMI 1341 - ANDHRA PRADESH HIGH COURT the High court held that where a complaint was filed in respect of a dishonored cheque by the Assistant Manager (Credit control) who was authorized by the chief executive of the company, the complaint was held to be valid.  The authorization had the effect of implied ratification.

In ‘Credential Finance Limited V. State of Maharastra’ – 1998 (10) TMI 541 - BOMBAY HIGH COURT it was held that a complaint filed by the manager of the company was not allowed to be quashed for absence of authorization because manager or managing director are ordinarily in charge of the company’s affairs.  The Court said that instead of quashing the complaint the company should be allowed to show that the complaint was filed by a competent person.

In ‘Standard Chartered Bank V. Ravi Bhandari’- 2002 (5) TMI 871 - DELHI HIGH COURT a complaint was filed by a company for dishonor of a cheque.  The filing was done by a principal officer who was not authorized by a resolution of the Board of Directors.  The High Court held that even so the complaint was held to be maintainable.

In ‘Sagar Cements Limited V. Srinivas’ – 2004 (4) TMI 626 - ANDHRA PRADESH HIGH COURT the High Court held that once initially the said Vinod Kumar represented the company under proper authorization and the cognizance of the offence was taken by the trial Court by issuing notices to the respondent and that after resignation of Vinod Kumar from the job one Kanuri Prasad was permitted to represent the company and proceed with the case, the question of invalidating the complaint filed under Section 138 of the Act on the ground that there was legal infirmity, cannot be accepted and there is no legal flaw as to the maintainability of the complaint. It cannot be expected that the said Vinod Kumar could not have spoken on behalf of the company after his resignation. Since the said Vinod Kumar initiated the complaint on behalf of the company, whether he was there in the company, or not, there is no bar under the law that the said person is not authorized to depose on behalf of the company. The trial Court found that the present complaint was filed on 10.2.1994 and the authorization obtained by PW-1-Vinod Kumar was two days prior to the institution of the complaint and the Managing Director of the company issued the letter under Ex. P.4, authorizing PW.1 to file criminal complaint against the respondent, in respect of dishonor of cheque in question issued by P. Srinivas, Proprietor of the said firm. The said authorization was given to prosecute the respondent firm, but not to the individual. Ex. P-10 is the resolution, dated 6.2.1993, passed by the Board of Directors of the complainant company, authorizing the Managing Director by name Sri Veera Reddy to prosecute and defend for and on behalf of the company before the Court of law, including delegation of his power to any of the employees of the company, if necessary, for conduct of all the cases. The said Managing Director delegated power to PW-1 under Ex. P.4 dated 8.2.1994. The Court further found that the complainant company filed Crl. M.P. No. 2721 of 1996 and was instructed to prosecute the accused. In fact, the Managing Director of the company was abroad and undertook to produce the authorization letter. PW-1, who is no more in the service of the complainant company, adduced evidence before the Court and there was no evidence to show that the Board of Directors revoked Ex. P-10-resolution, authorizing another person nor any evidence available to show that anybody authorized to proceed against the accused after exit of PW-1. In fact, the Court below permitted Kanuri Prasad to represent the matter. If that is so, the complainant company was rightly represented by the person who was permitted by the Court itself. Further, the Court found that the Managing Director has no power to redelegate any power, which derived from the resolution of the Board of Directors. The trial Court misled the power of delegation conferred on the Managing Director and has not understood the purport of the same.

The course of action adopted by the trial Court in negating the complaint filed by the complainant on the ground of legal infirmity that as no authorized person represented the company, the same is not maintainable, is not supported by any provision of law under Cr.P.C. Therefore, I am of the view that the judgment of the trial Court does not stand the scrutiny of law and it requires to be set aside, and accordingly, the same is set aside.

In ‘A.C. Narayanan V. State of Maharashtra and another’ – 2015 (4) TMI 847 - SUPREME COURT OF INDIA, the Supreme Court held that filing of complaint petition under Section 138 of N.I 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.    The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.