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Saturday, September 14, 2013

Sections 138 and 142 of the Negotiable Instruments Act, 1881 (in short ‘the N.I. Act) by the IXth Additional Chief Metropolitan Magistrate at Bandra, Mumbai in Complaint Case Nos. 292/S/1998, 293/S/1998, 297/S/1998, 298/S/1998, 299/S/1998 and 300/S/1998.= Power of Attorney holder = the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. We also reiterate that where the payee is a proprietary concern, the complaint can be filed (i) by the proprietor of the proprietary concern, describing himself as the sole proprietor of the “payee”; (ii) the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and (iii) the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor.= While holding that there is no serious conflict between the decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the position and answer the questions in the following manner: (i) Filing of complaint petition under Section 138 of N.I Act through power of attorney is perfectly legal and competent. (ii) 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. (iii) 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. (iv) In the light of section 145 of N.I Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the N.I Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act. (v) 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.

                     published in   http://judis.nic.in/supremecourt/imgst.aspx?filename=40769             
REPORTABLE




                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION


                      1 CRIMINAL APPEAL NO. 73 OF 2007




A.C. Narayanan                                           .... Appellant(s)

            Versus

State of Maharashtra & Anr.                        .... Respondent(s)


                                    WITH


                   2 CRIMINAL APPEAL NO.          OF 2013

            (Arising out of S.L.P. (Crl.) No.2724 of 2008)



Shri G. Kamalakar                                     .... Appellant(s)

            Versus

M/s. Surana Securities Ltd. & Anr.                 .... Respondent(s)



                               J U D G M E N T



P.Sathasivam,CJI.

Criminal Appeal No. 73 of 2007

This appeal is filed against the  final  common  judgment  and  order  dated
12.08.2005 passed by the High Court of  Judicature  at  Bombay  in  Criminal
Application Nos. 797, 798, 799, 801, 802 and 803 of 2002  whereby  the  High
Court dismissed the applications filed by the appellant herein  against  the
order of issuance of process against him for the  offence  punishable  under
Sections 138 and 142 of the Negotiable Instruments Act, 1881 (in short  ‘the
N.I. Act) by the IXth Additional Chief Metropolitan  Magistrate  at  Bandra,
Mumbai  in  Complaint  Case   Nos.   292/S/1998,   293/S/1998,   297/S/1998,
298/S/1998, 299/S/1998 and 300/S/1998.
Brief facts :
(a)   The appellant is  the  Vice-Chairman  and  Managing  Director  of  the
Company by name M/s Harvest Financials Ltd. having its registered office  at
Bombay.  Under a scheme  of  investment,  the  appellant  collected  various
amounts from various persons in the  form  of  loans  and  in  consideration
thereof issued post-dated cheques either in his personal capacity or as  the
signatory of the Company which got dishonoured.
(b)   On 16.12.1997, Mrs. Doreen Shaikh, Respondent No.2 herein,  the  Power
of Attorney Holder of six complainants, namely, Mr.  Yunus  A.  Cementwalla,
Smt. Fay Pinto, Mr. Mary Knoll Drego, Smt. Evelyn Drego,  Mr.  Shaikh  Anwar
Karim Bux and Smt.  Gwen  Piedade  filed  Complaint  Case  Nos.  292/S/1998,
293/S/1998, 297/S/1998, 298/S/1998, 299/S/1998 and  300/S/1998  respectively
against the appellant herein under Sections 138 and 142   of  the  N.I.  Act
before the  IXth Metropolitan Magistrate at Bandra, Mumbai.  On  20.02.1998,
Respondent No. 2 herein verified the complaint in each  of  these  cases  as
Power of Attorney Holder of the complainants. Vide order  dated  04.04.1998,
the Additional Chief Metropolitan Magistrate,  issued  process  against  the
appellant under Section 204 of the Code  of  Criminal  Procedure,  1973  (in
short ‘the Code’) for the offences punishable under Sections 138 and 142  of
the N.I. Act.
(c)   Being aggrieved of the issuance of the  process,  on  13.01.2000,  the
appellant herein moved an application for  discharge/recall  of  process  in
each of the complaints.  Vide common order dated 29.11.2000, the  Additional
Chief Metropolitan Magistrate, IXth  Court,  Bandra,  Mumbai  dismissed  the
applications filed by the appellant herein.
(d)   Being aggrieved of the said  order,  the  appellant  herein  preferred
applications being Criminal Application Nos. 797, 798,  799,  801,  802  and
803 of 2002 before the High  Court  for  quashing  of  the  complaints.   By
impugned order dated 12.08.2005, the said  applications  were  dismissed  by
the High Court.
(e)    Against the said order, the appellant has preferred  this  appeal  by
way of special leave before this Court.
Criminal Appeal ………./2013 @ S.L.P.(Crl.) No. 2724 of 2008:
Leave granted.
This appeal is directed against the  judgment  and  order  dated  19.09.2007
passed by the High Court of  Judicature,  Andhra  Pradesh  at  Hyderabad  in
Criminal Appeal No. 578 of 2002 whereby the High Court  allowed  the  appeal
filed  by  M/s  Surana   Securities   Ltd.-Respondent   No.1   herein   (the
complainant) against the judgment and order dated 30.10.2001 passed  by  the
Court of XVIII Metropolitan Magistrate, Hyderabad in C.C.  No.  18  of  2000
dismissing the complaint and acquitting the accused for  the  offence  under
Section 138 of the N.I. Act.
Brief facts
(a)   Respondent No.1 herein-the complainant is a limited  company  carrying
on the business of trading in shares.  The appellant herein is a  client  of
the respondent-Company and used to trade in shares.  During  the  course  of
business, the appellant became liable to pay an  amount  of  Rs.  7,21,174/-
towards the respondent-Company.  The appellant, in order  to  discharge  the
said liability, issued six  cheques  amounting  to  Rs.1,00,000/-  each  and
another cheque for Rs.1,21,174/- drawn on Andhra Bank  on  different  dates.
When the first six cheques were presented for encashment on 18.09.1997,  the
same  got  dishonoured  with  an  endorsement  ‘funds  insufficient’.   Upon
receiving the  said  information,  the  respondent-Company  issued  a  legal
notice to the appellant calling upon him to pay the amounts due but  he  did
not pay the same.
(b)   The Board of Directors of the  respondent-Company,  by  a  resolution,
authorized its Managing Director  to  appoint  an  agent  to  represent  the
Company.  Pursuant thereto, one Shri V. Shankar Prasad was appointed  as  an
agent by executing a General Power of Attorney.  Later, he  was  substituted
by one Shri Ravinder Singh under another General Power of Attorney.
(c)    Respondent-company filed a complaint under Section 138  of  the  N.I.
Act being CC No. 1098 of 1997 in the Court of XIth Metropolitan  Magistrate,
Secunderabad.   Subsequently,  vide  order  dated   03.05.2000,   the   said
complaint was transferred to the Court  of  XVIII  Metropolitan  Magistrate,
Hyderabad and was registered as  C.C.  No.  18  of  2000.   By  order  dated
30.10.2001, the Metropolitan Magistrate dismissed  the  complaint  filed  by
the respondent-Company under Section 138 of the N.I. Act.
(d)   Aggrieved by the said order, respondent-company filed an appeal  being
Criminal Appeal No. 578 of 2002 before the High Court of Judicature,  Andhra
Pradesh at Hyderabad.  By impugned order dated  10.09.2007,  learned  single
Judge of the High Court allowed the appeal and set  aside  the  order  dated
30.10.2001 passed  by  the  XVIII  Metropolitan  Magistrate,  Hyderabad  and
convicted the appellant herein under Section 138 of the N.I. Act.
(e)   Being aggrieved by the order passed by the High Court,  the  appellant
has filed this appeal by way of special leave.
(f)   By order of this Court dated 07.04.2008, this appeal was  tagged  with
the Criminal Appeal No. 73 of 2007 arising out of S.L.P. (Crl.)  Nos.  6703-
6708 of 2005.  Hence, we heard both the appeals together.
6)    Heard Ms. Indu Malhotra, learned senior counsel  and  Mr.  Annam  D.N.
Rao, learned counsel for the  appellants  and  Mr.  Shankar  Chillarge,  Mr.
Saurabh Kumar Tuteja, and  Mr.  Mayur  R.  Shah,  learned  counsel  for  the
respondents.
7)    On 04.01.2007, a Division Bench of this Court,  on  04.01.2007,  while
considering Criminal Appeal No. 73 of 2007 (arising  out  of  Special  Leave
Petition (Crl.) Nos. 6703-6708 of 2005) with regard  to  the  interpretation
of Section 142(a) of the N.I. Act observed that in view  of  the  difference
of opinion among various High Courts as also the decisions of this Court  in
M.M.T.C. Ltd. and Anr. vs. Medchl Chemicals and Pharma (P)  Ltd.  and  Anr.,
(2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. vs. Indusind Bank  Ltd.
and Ors., (2005) 2 SCC 217,  the matter should be  considered  by  a  larger
Bench in order to render an authoritative pronouncement.   In  view  of  the
same, it is desirable to extract the entire order of reference  which  reads
as under:-

      “Delay in filing counter affidavit is condoned.

      Leave granted.

       Interpretation  and/or  application  of  Section   142(a)   of   the
       Negotiable Instruments Act, 1881, ("NI Act") is in question in  this
       appeal which arises out of a  judgment  and  order  dated  12.8.2005
       passed by a learned Single Judge of the High Court of Judicature  at
       Bombay.

      The basic fact of the matter is not in dispute.

       Several cheques on different dates  were  issued  by  the  appellant
       herein which were dishonoured.  The complainant executed  a  Special
       Power of Attorney on or about 28.11.1997,  in  favour  of  one  Smt.
       Doreen Shaikh.  She  filed  complaint  petitions  in  the  Court  of
       Additional Chief   Metropolitan    Magistrate,    Bandra,    Mumbai.
       The complaint petitions were filed in the  name  of  the  respective
       payees of the cheques.  She also filed affidavits in support of  the
       averments made  in  the  said  complaint  petitions.  Cognizance  of
       offence under Section 138 of  the  NI  Act  was  taken  against  the
       appellant.  Summons were  issued.   Questioning  the  order  issuing
       summons by the learned Magistrate in exercise  of  his  power  under
       Section 204 of the Code  of  Criminal  Procedure,  appellant  herein
       filed criminal application before the High Court of Judicature    at
       Bombay, inter alia contending that the complaint    petitions  filed
       by the Power of Attorney Holder was  not  maintainable  and  relying
       thereupon or on the basis thereof the learned Magistrate  could  not
       have issued summons.  The said contention has been negatived by  the
       High Court in its impugned judgment.

       In the aforementioned premises interpretation of Section    142  (a)
       of the NI Act comes up for consideration before us.  We  may  notice
       that in M.M.T.C. and Anr. vs. Medchl Chemicals & Pharma (P) Ltd. and
       Anr. [2002 (1) SCC   234],  a  Division  Bench  of  this  Court  has
       opined:

       "This Court has, as far back as, in the case  of  Vishwa  Mitter  v.
       O.P. Poddar (1983 4 SCC 701) held that it is clear that  anyone  can
       set the criminal law in  motion  by  filing  a  complaint  of  facts
       constituting an offence  before  a    Magistrate  entitled  to  take
       cognizance.  It has been held that no  court  can  decline  to  take
       cognizance on the sole ground that the complainant was not competent
       to file the complaint.  It has been held that 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 eligibility  criterion  prescribed  by  the
       statute.  In the  present  case,    the  only  eligibility  criteria
       prescribed by Section 142 is that the complaint must be by the payee
       or the holder in due course.  This  criteria  is  satisfied  as  the
       complaint is in   the   name   and    on  behalf  of  the  appellant
       Company."

       However, in a later judgment in Janki Vashdeo Bhojwani and Anr.  vs.
       Indusind Bank Ltd.  and  Ors.  [2005  (2)  SCC  217],  albeit  in  a
       different context, another Division Bench of  this   Court overruled
       the judgment of the  Bombay  High  Court  in  Pradeep  Mohanbay  vs.
       Minguel Carlos Dias [2000 (1) Bom. L.R. 908], inter alia opining  as
       follows:

      "Order 3 Rules 1 and 2 CPC empowers the holder of power of attorney to
      'act' on behalf of the  principal.  In  our  view  the    word  'acts'
      employed in Order 3 Rules 1 and 2 CPC confines only to in  respect  of
      'acts' done by the power-of-attorney   holder  in  exercise  of  power
      granted by the instrument.  The term 'acts' would not include deposing
      in place and instead of the principal.  In other words, if  the  power
      of attorney   holder has rendered some 'acts' in pursuance of power of
      attorney, he may depose for the principal in respect of such acts, but
      he cannot depose for the principal for the acts done by the  principal
      and not by him.  Similarly, he cannot  depose  for  the  principal  in
      respect of the matter of which only the   principal is entitled to  be
      cross-examined."

      "On the question of power of attorney, the High Courts have  divergent
      views.  In the case of Shambhu   Dutt Shastri v.  State  of  Rajasthan
      (1986 2 WLN 713 (Raj.) it was held that  a  general  power-or-attorney
      holder can appear, plead and act   on  behalf  of  the  party  but  he
      cannot become a witness on behalf of the party.  He can only appear in
      his own   capacity.  No one can delegate the power to  appear  in  the
      witness box on behalf of himself.  To appear in  a  witness    box  is
      altogether a different act.  A general power-of-attorney holder cannot
      be allowed to appear as a witness on behalf   of the plaintiff in  the
      capacity of the plaintiff."

      "However, in the case of Humberto Luis v. Floriano Armado Luis (2002 2
      Bom. CR 754) on which reliance has been placed by the Tribunal in  the
      present case, the High Court took a dissenting view and held that  the
      provisions contained in Order 3 Rule 2  CPC  cannot  be  construed  to
      disentitle the power-of-attorney holder to depose  on  behalf  of  his
      principal.  The High Court further held that the word 'act'  appearing
      in Order 3 Rule 2 CPC takes  within  its    sweep  'depose'.   We  are
      unable to agree with this view taken by   the  Bombay  High  Court  in
      Floriano Armando."

      It is not in dispute that there is a conflict of opinion on this issue
        amongst various High Courts, including the decision of  Bombay  High
      Court  in   Mamatadevi   Prafullakumar     Bhansali   vs.   Pushpadevi
      Kailashkumar Agrawal & Anr.  [2005 (2) Mah.  L.J.  1003]  on  the  one
      hand and a decision of the Andhra Pradesh High Court in S.P.  Sampathy
      vs.  Manju Gupta and Anr.  (2002  Crl.L.J. 2621), on the  other.   One
      of the questions which would arise for consideration is as to  whether
      the eligibility criteria prescribed by Section 142(a) of  the  NI  Act
      would stand satisfied if the complaint petition itself is filed in the
      name of the payee or the holder in due course  of  the  cheque  and/or
      whether a complaint petition   has to be presented before the Court by
      the payee or the holder of the cheque himself.

      Another issue which would arise for consideration is as to whether the
      payee must examine himself in  support  of  the    complaint  petition
      keeping in view the insertion of Section   145 of the  said  Act  (Act
      No.55 of 2002).

      In our opinion, in view of difference of opinion amongst various  High
      Courts as also the decisions of this Court in  M.M.T.C.  Ltd.  (supra)
      and Janki Vashdeo Bhojwani (supra), particularly in view of  the  fact
      that in  the  later  case  the    earlier  one  was  not  noticed,  an
      authoritative   pronouncement is necessary to be given in this regard.
       We,  therefore,  are  of  the  opinion  that  the  matter  should  be
      considered by a larger Bench.”

Before going into the factual  details,  rival  contentions  and  the  legal
issues, it is useful to refer Sections 138 and 142(a) of the N.I. Act  which
read as under:




      “138. Dishonour of cheque for insufficiency, etc.,  of  funds  in  the
      account.- Where any cheque drawn by a person on an account  maintained
      by him with a banker for payment of any amount  of  money  to  another
      person from out of that account for the  discharge,  in  whole  or  in
      part, of any debt or other liability, is returned by the bank  unpaid,
      either because of the amount of money standing to the credit  of  that
      account is insufficient to honour the cheque or that  it  exceeds  the
      amount arranged to be paid from that account by an agreement made with
      that bank, such person shall be deemed to have  committed  an  offence
      and shall, without prejudice to any other provisions of this  Act,  be
      punished with imprisonment for a term which may  be  extended  to  two
      years, or with fine which may  extend  to  twice  the  amount  of  the
      cheque, or with both:


      Provided that nothing contained in this section shall apply unless-


      (a) the cheque has been presented to the bank within a period  of  six
      months from the date on which it is drawn or within the period of  its
      validity, whichever is earlier;


      (b) the payee or the holder in due course of the cheque, as  the  case
      may be, makes a demand for the payment of the said amount of money  by
      giving a notice in writing, to the drawer of the cheque, within thirty
      days of the receipt of information by him from the bank regarding  the
      return of the cheque as unpaid; and


      (c)  the drawer of such cheque fails to make the payment of  the  said
      amount of money to the payee or, as the case may be, to the holder  in
      due course of the cheque, within fifteen days of the  receipt  of  the
      said notice.


      Explanation.- For  the  purposes  of  this  section,  “debt  or  other
      liability” means a legally enforceable debt or other liability.”


      142.  Cognizance of offences.- Notwithstanding anything  contained  in
      the Code of Criminal Procedure, 1973 (2 of 1974) -


      (a) no court shall take cognizance of  any  offence  punishable  under
      section 138 except upon a complaint, in writing, made by the payee or,
      as the case may be, the holder in due course of the cheque;


      Xxxx xxx xxx”


8)    In terms of  Section  142  of  the  N.I.  Act,  no  Court  shall  take
cognizance of any  offence  punishable  under  Section  138  except  upon  a
complaint, in writing, made by the payee or, as the case may be, the  holder
in due course of the cheque.   Learned  senior  counsel  appearing  for  the
appellant pointed out that with a non obstante clause, Section 142  provides
that only two categories of persons, namely, the payee or the holder in  due
course of the cheque is entitled to file a complaint under  Section  138  of
the N.I. Act.  According to learned senior counsel  for  the  appellant,  in
the first case, the verification statement of solemn  affirmation  has  been
made by the constituted attorney and not by the complainant.  It is  further
pointed  out  that  the  verification  affidavit  made  by  the  constituted
attorney is not on the basis of her personal knowledge and hence,  it  would
squarely fall within the ambit of hearsay evidence and  cannot  be  read  in
evidence in a court of law.   By  pointing  out  the  same,  learned  senior
counsel for  the  appellant  submitted  that  the  constituted  attorney  is
incompetent to depose on  behalf  of  the  complainants.   In  other  words,
according to the appellant, the Power of Attorney holder  is  not  competent
to depose about the transaction that took place between the  payee  and  the
drawer of the cheque.  Learned senior counsel also pointed out that  Section
2  of  the  Power  of  Attorney  Act,  1882  cannot  override  the  specific
provisions of the Statute which require that  a  particular  act  should  be
done in a particular manner (vide Nazir Ahmed vs. King Emperor, AIR 1936  PC
253, Rao Bahasur Ravula Subba Rao & Ors. vs.  Commissioner  of  Income  Tax,
AIR 1956 SC 604 at 612-613).  It  was  further  pointed  by  learned  senior
counsel for the appellant that the decision in Rao Bahasur Ravula Subba  Rao
(supra) was followed in Jimmy Jahangir Madan  vs.  Bolly  Cariyappa  Hindley
(dead) by LRs, (2004) 12 SCC 509.
9)    In view of the above, learned senior counsel for the appellant  relied
on a decision of this Court in Janki Vashdeo Bhojwani (supra)  wherein  this
Court held that Power of Attorney cannot depose for the  acts  done  by  the
principal.  Likewise,  it  was  further  held  that  he  cannot  depose  for
principal in respect of  matters  of  which  only  the  principal  can  have
personal knowledge and in respect of which the principal  is  liable  to  be
cross-examined.  It was further held that the Power of Attorney  can  appear
only as a witness in  respect  of  facts,  which  are  within  his  personal
knowledge.
10)   In the case on hand, it is pointed out by learned senior  counsel  for
the appellant that the constituted attorney did not even file the  Power  of
Attorney along with the complaint or with the  verifying  statement  and  in
view of the same, the Magistrate could not have issued process on the  basis
of such a complaint.  No doubt, it is true that the Power  of  Attorney  was
produced along with the reply to the application for discharge filed by  the
complainant after two years of the order  passed  by  the  Additional  Chief
Metropolitan Magistrate issuing summons.   In  other  words,  the  Power  of
Attorney holder is at best a witness  to  the  execution  of  the  Power  of
Attorney and not to the contents of the complaint.
11)   Learned senior counsel for the appellant also  pointed  out  that  the
provision under Section 200 of the Code is mandatory and obligatory  on  the
part of the Magistrate to examine the complainant.  However,  a  perusal  of
the Section makes it clear that examination of witnesses  present,  if  any,
is optional.
12)   Learned senior counsel for the appellant further  contended  that  the
object of such examination is to ascertain whether there is  a  prima  facie
case against the accused of the commission of an  offence  as  mentioned  in
the complaint and also to prevent the issuance of a process on  a  complaint
which is either false or vexatious or intended to harass a person.
13)   Learned  senior  counsel  for  the  appellant  further  contended,  by
drawing our attention to the language of Section 200 of the Code,  that  the
Magistrate taking cognizance of an offence on complaint shall  examine  upon
oath the complainant.  She further pointed out that where  the  language  of
an Act is clear and explicit, it must be given effect to,  whatever  may  be
the consequences, as has been held by this Court in  Vishwa  Mitter  of  M/s
Vijay Bharat Cigarette Stores, Dalhousie Road,  Pathankot  vs.  O.P.  Poddar
and Ors., (1983) 4 SCC 701.  In the said decision, this Court has held  that
if  a  special  enactment  provides  for  a  specific  procedure  then  that
particular procedure has to be followed and hence,  learned  senior  counsel
for the appellant contended that the provisions of Section 142 of  the  N.I.
Act regarding cognizance on the basis of a complaint filed by the  payee  or
the holder in due course will prevail.
14)   Learned counsel for the respondents met all the contentions  which  we
will discuss hereunder.
15)   In terms of the reference order, the following questions  have  to  be
decided by this Bench:
(i)   Whether a Power of Attorney holder  can  sign  and  file  a  complaint
petition on behalf of the complainant?/  Whether  the  eligibility  criteria
prescribed by Section  142(a)  of  NI  Act  would  stand  satisfied  if  the
complaint petition itself is filed in the name of the payee  or  the  holder
in due course of the cheque?
(ii)  Whether a Power of Attorney holder  can  be  verified  on  oath  under
Section 200 of the Code?
(iii) Whether specific averments  as  to  the  knowledge  of  the  Power  of
Attorney holder in the impugned transaction must be explicitly  asserted  in
the complaint?
(iv)  If the Power  of  Attorney  holder  fails  to  assert  explicitly  his
knowledge in the complaint then can the Power of Attorney holder verify  the
complaint on oath on such presumption of knowledge?
(v)   Whether the proceedings contemplated under Section  200  of  the  Code
can be dispensed with in the light of Section 145 of the N.I. Act which  was
introduced by an amendment in the year 2002?
16)   In order to find out the answers to the above and  also  to  ascertain
whether there is any conflict between the two decisions as  pointed  out  in
the referral order, let us consider the factual  details  and  the  ultimate
dictum laid down in both the decisions.

17)   In MMTC (supra), the appellant  is  a  Government  of  India  company.
Respondent No. 1 therein is also a company and Respondent Nos. 2 and 3  were
the Directors of the  respondent-Company.   The  appellant-Company  and  the
respondent-Company entered into a Memorandum of  Understanding  (MoU)  dated
01.06.1994 and the same was slightly altered  on  19.09.1994.   Pursuant  to
the MoU, two cheques were issued by the respondent-Company in favour of  the
appellant-Company. When both the cheques were  presented  for  payment,  the
same got returned with an  endorsement  “payment  stopped  by  drawer”.  Two
notices were served by the appellant-Company on the  respondent-Company.  As
the amounts under the cheques were not paid,  the  appellant-Company  lodged
two complaints through one  Lakshman  Goel,  the  Manager  of  the  Regional
Office (RO) of the appellant-Company.  Respondents therein  also  filed  two
petitions for quashing of the complaints. By the impugned  order,  both  the
complaints were quashed.  In the said case as well as  in  the  cases  filed
subsequently, the respondents took identical contentions in their  petitions
in order to quash the complaints, viz., that  the  complaints  filed  by  Mr
Lakshman Goel were not maintainable and that the cheques were not given  for
any debt or liability.  In the impugned  judgment,  it  was  held  that  the
complaints filed by Mr Lakshman Goel were not maintainable. The  High  Court
held that it is only an Executive  Director  of  the  Company  who  has  the
authority to institute legal proceedings.  While holding that the  reasoning
given by the High Court cannot be sustained, this Court  held  that  Section
142 of the N.I. Act provides that a complaint under Section 138 can be  made
by the payee or the holder in due course of the  said  cheque.   This  Court
further held that the complaints in question were by  the  appellant-company
who is the payee of the two cheques.  After finding that  the  Court  cannot
quash a complaint as stated by the High Court,  this  Court  set  aside  the
same and directed the trial Court to proceed  with  the  complaints  against
Respondent Nos. 1 and 3 therein in accordance with law.
18)   Now, let us consider  the  later  decision  of  this  Court  in  Janki
Vashdeo Bhojwani (supra).  This case relates to powers of Power of  Attorney
under the Code of  Civil  Procedure,  1908  and  it  was  concluded  that  a
complaint by a power of attorney holder on behalf of original  plaintiff  is
maintainable provided he  has  personal  knowledge  of  the  transaction  in
question.  This Court further held as under:






       “12. In the context of the directions given by this  Court,  shifting
      the burden of proving on to the appellants that they have a  share  in
      the property, it was obligatory on the appellants to have entered  the
      box and discharged the burden by themselves. The question whether  the
      appellants have any independent source of income and have  contributed
      towards the purchase of the property from their own independent income
      can be only answered by the appellants themselves and not  by  a  mere
      holder of power of attorney from them.  The  power-of-attorney  holder
      does not have personal knowledge of the matter of the  appellants  and
      therefore he can neither depose on his personal knowledge nor  can  he
      be cross-examined on those facts which are to the  personal  knowledge
      of the principal.


      13. Order 3 Rules 1 and 2 CPC empower the holder of power of  attorney
      to “act” on behalf of the principal.  In  our  view  the  word  “acts”
      employed in Order 3 Rules 1 and 2 CPC confines only to in  respect  of
      “acts” done by the  power-of-attorney  holder  in  exercise  of  power
      granted by the instrument. The term “acts” would not include  deposing
      in place and instead of the principal. In other words, if the power-of-
      attorney holder has rendered some “acts”  in  pursuance  of  power  of
      attorney, he may depose for the principal in respect of such acts, but
      he cannot depose for the principal for the acts done by the  principal
      and not by him. Similarly, he  cannot  depose  for  the  principal  in
      respect of the matter of which only the principal can have a  personal
      knowledge and in respect of which the  principal  is  entitled  to  be
      cross-examined.”


This Court further held thus:
      “17. On the question of  power  of  attorney,  the  High  Courts  have
      divergent views. In the case of  Shambhu  Dutt  Shastri  v.  State  of
      Rajasthan it was held that  a  general  power-of-attorney  holder  can
      appear, plead and act on behalf of the party but he  cannot  become  a
      witness on behalf of  the  party.  He  can  only  appear  in  his  own
      capacity. No one can delegate the power to appear in the  witness  box
      on behalf of himself. To appear in  a  witness  box  is  altogether  a
      different act. A general power-of-attorney holder cannot be allowed to
      appear as a witness on behalf of the plaintiff in the capacity of  the
      plaintiff.


      18. The aforesaid judgment was quoted with approval in the case of Ram
      Prasad v. Hari Narain. It was held that the word “acts” used in Rule 2
      of Order 3 CPC does not include the act of power-of-attorney holder to
      appear as a witness on behalf of a party. Power-of-attorney holder  of
      a party can appear only as a witness  in  his  personal  capacity  and
      whatever knowledge he has about the case he can state on oath  but  he
      cannot appear as a witness on behalf of the party in the  capacity  of
      that party. If the plaintiff is unable  to  appear  in  the  court,  a
      commission for recording his evidence may be issued under the relevant
      provisions of CPC.


      19. In the case of Pradeep Mohanbay (Dr.) v. Minguel Carlos  Dias  the
      Goa Bench of the Bombay High Court held that a power of  attorney  can
      file a complaint under Section 138 but cannot depose on behalf of  the
      complainant. He can only appear as a witness.


      20. However, in the case of Humberto Luis v. Floriano Armando Luis  on
      which reliance has been placed by the Tribunal in  the  present  case,
      the High Court took a dissenting view and  held  that  the  provisions
      contained in Order 3 Rule 2 CPC cannot be construed to disentitle  the
      power-of-attorney holder to depose on behalf  of  his  principal.  The
      High Court further held that the word “act” appearing in Order 3  Rule
      2 CPC takes within its sweep “depose”. We are  unable  to  agree  with
      this view taken by the Bombay High Court in Floriano Armando.


      21. We hold that the view taken by the Rajasthan  High  Court  in  the
      case of Shambhu Dutt Shastri followed and reiterated in  the  case  of
      Ram Prasad is the correct view. The view taken in the case of Floriano
      Armando Luis cannot be said to have laid down a  correct  law  and  is
      accordingly overruled.”

19)    As  noticed  hereinabove,  though  Janki  Vashdeo  Bhojwani  (supra),
relates to powers  of  Power  of  Attorney  holder  under  CPC  but  it  was
concluded therein that a plaint by a Power of Attorney holder on  behalf  of
the original plaintiff is maintainable provided he  has  personal  knowledge
of the transaction in question.  In a way, it is  an  exception  to  a  well
settled position that criminal law can be put  in  motion  by  anyone  [vide
Vishwa Mitter  (supra)] and under the Statute, one stranger  to  transaction
in question, namely, legal heir etc., can also  carry  forward  the  pending
criminal  complaint  or  initiate  the  criminal  action  if  the   original
complainant dies [Vide Ashwin Nanubhai Vyas vs. State of Maharashtra  (1967)
1 SCR 807].  Keeping in mind various situations like inability as  a  result
of sickness, old age or death or staying abroad of the payee  or  holder  in
due course to appear and depose before the  Court  in  order  to  prove  the
complaint, it is permissible for the Power of Attorney  holder  or  for  the
legal representative(s)  to  file  a  complaint  and/or  continue  with  the
pending criminal complaint for and on behalf  of  payee  or  holder  in  due
course.  However, it is expected that  such  power  of  attorney  holder  or
legal representative(s) should  have  knowledge  about  the  transaction  in
question  so  as  to  able  to  bring   on   record   the   truth   of   the
grievance/offence, otherwise, no criminal justice could be achieved in  case
payee or holder in due course, is  unable  to  sign,  appear  or  depose  as
complainant due to above quoted reasons.  Keeping these aspects in mind,  in
MMTC (supra), this Court had taken the view that if complaint is  filed  for
and on behalf of payee  or  holder  in  due  course,  that  is  good  enough
compliance with Section 142 of N.I. Act.

20)   The stand of the appellant in Criminal Appeal No. 73 of 2007  is  that
no complaint can be filed and no cognizance of the complaint  can  be  taken
if the complaint is by the power of attorney holder,  since  it  is  against
Section 200 of the Code and deserves to be rejected.  There  is  no  dispute
that complaint has to  be  filed  by  the  complainant  as  contemplated  by
Section 200 of the Code, but the said Section does not  create  any  embargo
that  the  attorney  holder  or  legal   representative(s)   cannot   be   a
complainant.
21)   The power of attorney holder is the agent of the  grantor.   When  the
grantor authorizes the attorney holder to  initiate  legal  proceedings  and
the attorney holder accordingly initiates such legal  proceedings,  he  does
so as 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 sole  proprietary  concern,  represented  by
its  sole  proprietor,  and  the  proprietor  or  the  proprietary   concern
represented by the attorney holder under a power  of  attorney  executed  by
the sole proprietor.  However, we make it clear that the power  of  attorney
holder  cannot  file  a  complaint  in  his  own  name  as  if  he  was  the
complainant. In other words, he can initiate criminal proceedings on  behalf
of the principal.
22)   From a conjoint reading of Sections 138, 142 and 145 of the  N.I.  Act
as well as Section 200 of the Code, it is clear  that  it  is  open  to  the
Magistrate to issue process on the basis of the contents of  the  complaint,
documents in support thereof and the affidavit submitted by the  complainant
in support of the complaint.  Once the complainant  files  an  affidavit  in
support of the complaint before issuance of the process  under  Section  200
of the Code, it is thereafter open to the Magistrate, if he thinks  fit,  to
call upon the complainant to remain present and to examine  him  as  to  the
facts contained in the affidavit submitted by the complainant in support  of
his complaint.  However, it is a matter of discretion and the Magistrate  is
not bound to call upon the complainant to remain present  before  the  Court
and to examine him upon oath for taking decision whether  or  not  to  issue
process on the complaint under  Section  138  of  the  N.I.  Act.   For  the
purpose of issuing process under Section 200 of the Code, it is open to  the
Magistrate to rely upon the verification in the form of affidavit  filed  by
the complainant in support of the complaint under Section 138  of  the  N.I.
Act. It  is  only  if  and  where  the  Magistrate,  after  considering  the
complaint under Section 138 of the N.I. Act, documents produced  in  support
thereof and the verification in the form of affidavit  of  the  complainant,
is of the view that examination of the  complainant  or  his  witness(s)  is
required, the Magistrate may call upon the  complainant  to  remain  present
before the Court and examine the complainant and/or his  witness  upon  oath
for taking a decision whether or not  to  issue  process  on  the  complaint
under Section 138 of the N.I. Act.
23)   In the light of the discussion, we are of the view that
the  power  of
attorney holder may be allowed to file, appear and depose  for  the  purpose
of issue of process for the offence punishable  under  Section  138  of  the
N.I. Act. An exception to the above is when the power of attorney holder  of
the complainant does not have a personal knowledge  about  the  transactions
then he cannot be examined.  However,  where  the  attorney  holder  of  the
complainant is in charge of the business of the  complainant-payee  and  the
attorney holder alone is personally aware of the transactions, there  is  no
reason why the attorney holder cannot depose as  a  witness.   
Nevertheless,
an explicit assertion as to the knowledge of the Power  of  Attorney  holder
about the transaction in question must be specified  in  the  complaint.  On
this count, the fourth question becomes infructuous.
24)   In view of the discussion, we are of the  opinion  that
the  attorney
holder  cannot  file  a  complaint  in  his  own  name  as  if  he  was  the
complainant, but he can initiate  criminal  proceedings  on  behalf  of  his
principal.   
We also  reiterate  that  where  the  payee  is  a  proprietary
concern,  the  complaint  can  be  filed  
(i)  by  the  proprietor  of   the
proprietary concern, describing  himself  as  the  sole  proprietor  of  the
“payee”;  
(ii)  the  proprietary  concern,  describing  itself  as  a   sole
proprietary concern, represented by  its  sole  proprietor;  and  
(iii)  the
proprietor or the proprietary concern represented  by  the  attorney  holder
under a power of attorney executed by the sole proprietor.
25)   Similar substantial questions were raised in the  appeal  arising  out
of S.L.P (Crl.) No. 2724 of 2008, which stand answered as above. Apart  from
the above questions, one distinct query was raised as to  whether  a  person
authorized by a Company or Statute or Institution  can  delegate  powers  to
their subordinate/others for filing a criminal complaint? The  issue  raised
is in reference to validity of sub-delegation of functions of the  power  of
attorney. We have already clarified to the extent that the  attorney  holder
can sign and file a complaint on behalf of the  complainant-payee.  However,
whether the power  of  attorney  holder  will  have  the  power  to  further
delegate the functions to another  person  will  completely  depend  on  the
terms of the general power of attorney. As a result, the authority  to  sub-
delegate the functions must be explicitly mentioned in the general power  of
attorney. Otherwise,  the  sub-delegation  will  be  inconsistent  with  the
general power of attorney and thereby will be invalid in law.  Nevertheless,
the general power of attorney itself  can  be  cancelled  and  be  given  to
another person.

26)   While holding that there is no serious conflict between the  decisions
in 
MMTC (supra) and Janki Vashdeo Bhojwani (supra)
we clarify the  position
and answer the questions in the following manner:
(i)   Filing of complaint petition under Section  138  of  N.I  Act  through
power of attorney is perfectly legal and competent.
(ii)  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.
(iii) 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.
(iv)  In the light of section 145 of N.I Act, it is open to  the  Magistrate
to rely upon the  verification  in  the  form  of  affidavit  filed  by  the
complainant in support of the complaint under Section 138  of  the  N.I  Act
and  the  Magistrate  is  neither  mandatorily  obliged  to  call  upon  the
complainant  to  remain  present  before  the  Court,  nor  to  examine  the
complainant of his witness upon oath for taking the decision whether or  not
to issue process on the complaint under Section 138 of the N.I. Act.
(v)   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.


27)   We answer the reference on the above terms and  remit  the  matter  to
the appropriate Bench for deciding the case on merits.

                                  ………….………………………CJI.


                                       (P. SATHASIVAM)
























                                    ………….…………………………J.
                                     (RANJANA PRAKASH DESAI)








                                    ………….…………………………J.
                                    (RANJAN GOGOI)










NEW DELHI;
SEPTEMBER 13, 2013.

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