2014 (9) TMI 1236 - SC - Indian Laws

Dishonor of Cheque - Signing of power of Attorney holder - eligibility criteria prescribed by Section 142(a) of NI Act - verification of Power of Attorney holder on oath Under Section 200 of the Code - knowledge of the Power of Attorney holder in the impugned transaction - presumption of knowledge - proceedings contemplated Under Section 200 of the Code can be dispensed with in the light of Section 145 of the N.I. Act or not - HELD THAT - This power of attorney in light of the statement made by the Appellant in the complaint that because she was not keeping good health and was unable to come to the court and because the whole transaction was within the knowledge of her husband who is her power of attorney holder her husband represented her. We have no reason to doubt the submission of learned Counsel for the Appellant that it was very much on record. In any case the fact that this submission which is factual in nature was first time raised in the High Court casts a shadow of doubt on its truthfulness. The complaint Under Section 138 of the NI Act can be filed through the power of attorney holder. In this case Sudhir Gulvady is the power of attorney holder of the Appellant and he has filed the complaint on her behalf. The learned Magistrate recorded the statement of the power of attorney holder Under Section 200 of the Code on 5/3/2004 and issued summons - There can be no dispute about the fact that in this case the power of attorney holder being the husband of the Appellant has witnessed all transactions and he possesses due knowledge about them. While holding in favour of the Appellant that the complaint can be filed by a power of attorney holder and on that ground complaint cannot be held not maintainable and that the power of attorney was very much on record the matter is remanded to the High Court with a request that the High Court should hear both sides and decide whether the cheques in question were issued as a security or for the purpose of repayment of legally recoverable debt. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Whether the power of attorney was produced before the trial court.
2. Whether the complaint under Section 138 of the NI Act can be filed by a power of attorney holder.
3. Whether the cheques in question were issued as a security or for the purpose of repayment of a legally recoverable debt.

Issue-Wise Detailed Analysis:

1. Whether the power of attorney was produced before the trial court:
The High Court acquitted the Respondents on the ground that the power of attorney was not produced, and the Appellant must be examined as per Section 200 of the Code. The Appellant contended that the power of attorney was indeed produced and was part of the trial court's record, bearing PCR and CC numbers. The Respondents did not raise this issue at the trial court or the Sessions Court, weakening its force. The High Court entertained this argument belatedly and dealt with it perfunctorily. The Supreme Court found the power of attorney to be authentic and part of the trial court record, rejecting the Respondents' submission.

2. Whether the complaint under Section 138 of the NI Act can be filed by a power of attorney holder:
The Supreme Court referenced the case A.C. Narayanan v. State of Maharashtra, which clarified that filing a complaint under Section 138 of the NI Act through a power of attorney is legal and competent. The power of attorney holder must have witnessed the transaction or possess due knowledge of it. In this case, the Appellant's husband, as her power of attorney holder, had full knowledge of the transactions and was involved at all crucial stages. The Appellant had explicitly stated in her complaint that her husband had knowledge of the transactions. The Supreme Court rejected the submission that the complaint could not be filed through a power of attorney holder and upheld the legality of the complaint filed by the Appellant's husband.

3. Whether the cheques in question were issued as a security or for the purpose of repayment of a legally recoverable debt:
The High Court did not address this issue, although it was raised in the appeal memo. The trial court and the lower appellate court had rejected the Respondents' plea that the cheques were issued as security and not for a legally recoverable debt. The Supreme Court noted the letter dated 30/6/2003 from the Respondents to the Appellant, which indicated a commitment to return the shares and provided cheques to recover dues if the shares were not returned by a specified date. This suggested that the cheques were issued for a crystallized liability. The Supreme Court remanded the matter to the High Court to decide whether the cheques were issued as security or for repayment of a legally recoverable debt, requesting a decision within eight months.

Conclusion:
The Supreme Court upheld that the complaint under Section 138 of the NI Act could be filed by a power of attorney holder and that the power of attorney was part of the trial court's record. The matter was remanded to the High Court to determine whether the cheques were issued as security or for a legally recoverable debt, with a request for an expedited decision.