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Friday, October 3, 2014

Sec.138 of NIAct -power of attorney can present the case - cheque issued for security/ repayment of debt is to be decided first when plea was taken- complaint though signed by original complainant , it was presented through power of attorney holder her husband - trial completed - at the time of arguments objection was taken for non examining the complaint before taking cognizance - trial court rejected the plea - appeal also confirmed the same - High court reversed the finding and acquit the accused - Apex court held that the main objection is not maintainable and another objection though taken in the case , not considered by High court regarding whether the cheque was given as security for debt or for repayment of the debt and as such remanded the case to High court = CRIMINAL APPEAL Nos.2065-2066 OF 2014 [Arising out of Special Leave Petition (Crl.) Nos.4682-4683 of 2012] Vinita S. Rao … Appellant Vs. M/s. Essen Corporate Services Pvt. Ltd. & Anr. … Respondents = 2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41933

Sec.138 of NIAct - power of attorney can present the case - cheque issued for security/ repayment of debt is to be decided first when plea was taken- complaint though signed by original complainant , it was presented through power of attorney holder her husband - trial completed - at the time of arguments objection was taken for non examining the complaint before taking cognizance - trial court rejected the plea - appeal also confirmed the same - High court reversed the finding and acquit the accused - Apex court held that the main objection is not maintainable and another objection though taken in the case , not considered by High court regarding whether the cheque was given as security for debt or for repayment of the debt and as such remanded the case to High court =

On  03/03/2004  the  appellant   filed   a   complaint   before   the
jurisdictional  Magistrate  against   the   respondents   alleging   offence
punishable under Section 138 of the NI Act.   Although,  the  complaint  was
signed by the appellant, it was  presented  before  the  Magistrate  by  the
appellant’s husband Sudhir Gulvady on the strength  of  power  of  attorney.
It was stated in the complaint that the appellant was unable to come to  the
court as she  was  not  keeping  good  health  and,  hence,  she  was  being
represented in the proceedings by her husband and power of  attorney  holder
Sudhir Gulvady, who  had  personal  knowledge  of  the  entire  transaction.
According to the appellant, the power of attorney was filed along  with  the
complaint. =
 In  the  written  arguments  submitted  by  the  respondents,  it  was
contended that though the sworn statement of the power  of  attorney  holder
was recorded, he was  not  examined  by  the  complainant  and  since  sworn
statement  of  the  complainant  was  not   recorded   complaint   was   not
maintainable. =
On 09/11/2006  the  trial  court  convicted  the  respondents  of  the
offence punishable under Section 138 of the NI Act.   The  respondents  were
sentenced  to  pay  a  fine  of  Rs.30,12,000/-  out  of  which  a  sum   of
Rs.30,02,000/- was directed to be paid to the appellant as compensation  and
balance of Rs.10,000/- was directed to be paid to the State.   Respondent  2
was sentenced to six months’ simple imprisonment in the event of failure  to
pay the fine amount.

9.    The respondents filed an appeal in the Court  of  Principal  City  and
Sessions Judge,  Bangalore  being  Criminal  Appeal  No.1897  of  2006.   On
17/09/2009  the  said  appeal  was  rejected  by  the  Fast  Track  Court-V,
Bangalore.=
 By the impugned orders, the  Karnataka  High  Court  overturned  the
concurrent judgments of the courts below and acquitted the respondents  only
on the ground that the complaint  had  been  presented  by  the  appellant’s
husband as her power of attorney holder but the power of  attorney  was  not
produced and that in strict compliance with Section 200  of  the  Code,  the
appellant must be examined before cognizance can be taken of the  complaint,
which was not done.=
This Court noted the questions which had to be decided by  it  in  terms  of
the reference order as under:

“(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?”
=
On the basis of the averments made in the complaint and on  the  basis
of the above letter, it is contended by learned counsel for the  respondents
that the above cheques  were  issued  as  a  security;  that  there  was  no
crystallized liability or outstanding dues and that  there  was  no  legally
recoverable debt and, therefore, the complaint  was  not  tenable.   On  the
other hand, it is strenuously contended by the  counsel  for  the  appellant
that it is abundantly clear from the above  letter  that  the  cheques  were
issued for a crystallized liability or a legally  recoverable  debt.   Since
the High Court has not dealt  with  this  submission  at  all,  we  deem  it
appropriate to remand the  matter  to  the  High  Court  for  that  purpose.
Hence, 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, we remand the matter 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.  
Considering  the  fact  that  the  complaint  is  dated
03/03/2004, we request the High Court to decide the above question as  early
as possible and preferably within a period of eight months from the date  of
receipt of our order by it.
We make  it  clear  that  the  remand  is  only
limited to the abovestated question and the scope of  remand  shall  not  be
extended any further as we have already answered the other  questions  which
were raised before us.

25.   The appeals are disposed of in the aforestated terms.

    2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41933              

                                            NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                    CRIMINAL APPEAL Nos.2065-2066 OF 2014
[Arising out of Special Leave Petition (Crl.) Nos.4682-4683 of 2012]


Vinita S. Rao                                …           Appellant

Vs.

M/s. Essen Corporate Services
Pvt. Ltd. & Anr.                                …      Respondents


                               J U D G M E N T


(SMT.) RANJANA PRAKASH DESAI, J.


1.    Leave granted.


2.    The challenge in this appeal is  to  the  orders  dated  7/3/2012  and
12/3/2012 passed by a learned Single  Judge  of  the  Karnataka  High  Court
allowing the criminal revision  petition  filed  by  the  respondents  under
Section 397(1) of the Code of Criminal Procedure,  1973  (“the  Code”).  The
prayer made by the respondents in the criminal  revision  petition  was  for
setting  aside  order  dated  17/9/2009  passed  by  the  Fast  Track  Court
(Sessions)-V, Bangalore in Criminal Appeal No.1897 of 2006  and  also  order
dated 9/11/2006 passed by the Court of the XVth   Addl.  Chief  Metropolitan
Magistrate, Bangalore in C.C. No.4116 of 2004.

3.    The appellant  is  the  original  complainant.   The  respondents  are
original accused 1 and 2 respectively.  Respondent 1 is  a  private  limited
company and respondent 2 is its Managing Director who looks after  the  day-
to-day affairs of respondent  1  company.   The  respondents  are  financial
consultants and sub-brokers who are  engaged  in  the  business  of  trading
inter alia on the National Stock Exchange, the  Bombay  Stock  Exchange  and
the Bangalore Stock Exchange.

4.    The appellant filed a  complaint  for  the  offence  punishable  under
Section 138 of the Negotiable Instruments Act, 1881 (‘the NI  Act’)  against
the respondents.  Gist of the complaint needs to be shortly stated.

      The appellant and  her  husband  had  discussions  with  respondent  2
regarding trading in 10000   shares of Hindustan Lever Limited belonging  to
the appellant.  The respondents advised the appellant to  entrust  the  said
10000 shares to them and it was represented that those shares would  not  be
sold outright; that  the  respondents  would  utilize  their  expertise  and
knowledge of the markets to sell and buy back the shares regularly and  they
would thereby earn profits for the appellant.  The shares were  to  be  held
in trust and any dividends and benefits accruing on the 10000 shares to  the
appellant were  to  be  made  over  to  her  and,  at  the  same  time,  the
respondents undertook to trade in  the  shares  when  time  was  favourable,
after studying market trends to make  profit  for  the  appellant.   It  was
asserted that the appellant could, at any time, cease trading and take  back
the said 10000 shares. On this understanding, the  appellant  entrusted  the
said  10000  shares  of  Hindustan  Lever  Limited  to  the  respondents  by
transferring the shares from her Demat Account to that of  the  respondents.
On 05/03/2002 the respondents addressed a letter  acknowledging  receipt  of
the said 10000 shares.  In the month of April, 2002,  the  appellant  had  a
doubt about the intention of the respondents.  On 25/04/2002  the  appellant
addressed a letter to the respondents requesting them  to  return  the  said
10000 shares.  On 20/05/2002 the respondents replied, undertaking to  return
the said shares in lots of 500/10000 citing difficulties  between  them  and
their main broker as reason for delay.  Another letter was addressed by  the
respondents undertaking that the first lot of 500 shares would  be  returned
by 24/05/2002 and all 10000 shares  would  be  returned  by  30/06/2002.   A
separate letter  was  addressed  in  relation  to  the  monies  due  to  the
appellant on account of dividends accruing and profits from transactions  in
the shares.  On 25/06/2002 the  respondents  sought  extension  of  time  to
return the shares and confirmed that a sum of Rs.1,54,000/- was due  to  the
appellant on account of dividends and profits from share  transactions.   By
August, 2002, the respondents returned only  1460  shares  instead  of  6000
shares as agreed by them.  The appellant addressed a  letter  demanding  the
balance 8540 shares.  The respondents sought time till 31/12/2002 to  return
the shares and, in return for extension of time, offered to give cheques  as
surety for the value of shares being Rs.20,75,220/- as well as Rs.1,79,500/-
 being the amounts due towards dividends and profits  from  transactions  in
shares.  The appellant agreed to and  extended  time  till  31/12/2002.   On
26/12/2002, the respondents returned another 1040 shares to  the  appellant.
 Thus, in all, 2500 shares were returned to the  appellant.   However,  7500
shares remained with the respondents.   The  respondents  sought  time  upto
30/06/2003.  To secure  the  interest  of  the  appellant,  the  respondents
offered to replace the previous cheques dated 30/09/2002 with fresh  cheques
securing the value of 7500 shares and the money due to the  appellant.   The
appellant acceded to this request in the  hope  of  recovering  her  shares.
The respondents addressed two letters  dated  22/02/2003  reiterating  their
commitment to return the shares as well as amounts due to the appellant  and
recording the deposit of two cheques totalling  Rs.18,22,500/-  towards  the
value of shares as well as  a  separate  cheque  for  Rs.1,79,500/-  towards
dividends and profits due from the transactions in the said shares.

      As the extension of time was expiring, the  respondents  again  sought
further extension of time till 31/12/2003 vide letter  dated  30/6/2003  and
for replacement of earlier  cheques,  enclosed  two  cheques;  being  cheque
No.392942 dated 01/08/2003 for a sum of Rs.8,50,000/- and cheque No.  392943
dated 01/08/2003 for a sum of Rs.9,72,000/- both drawn on Corporation  Bank,
M.G. Road Branch, Bangalore, towards the value of 7500 shares  in  Hindustan
Lever Limited.  The respondents addressed  another  letter  dated  30/6/2003
enclosing another cheque bearing No. 392944 dated 01/08/2003 for  a  sum  of
Rs.1,79,500/- towards  the  value  of  profits  and  dividends  received  in
respect of the said shares.  It was stated in the said letter  that  if  the
respondents fail to return the shares by  31/12/2003,  the  appellant  could
deposit the said cheques to recover their  dues.   As  the  respondents  had
failed to return the 7500 shares or make over the amounts due  as  promised,
the appellant presented the three cheques bearing Nos.  392942,  392943  and
392944 to her banker – the Shamrao  Vithal  Co-operative  Bank  Limited  for
collection on 2/1/2004.  On  03/01/2004  the  three  cheques  were  returned
unpaid by the respondents’  bank,  under  two  cheque  return  memos  citing
‘insufficient funds’.  On  receipt  of  the  intimation  of  dishonour,  the
appellant issued a legal notice to the respondents  demanding  payment.   As
the respondents failed to pay, the appellant,  not  being  in  good  health,
executed a power  of  attorney  dated  03/03/2004  authorising  her  husband
Sudhir Gulvady to file and prosecute the complaint against the respondents.

5.     On  03/03/2004  the  appellant   filed   a   complaint   before   the
jurisdictional  Magistrate  against   the   respondents   alleging   offence
punishable under Section 138 of the NI Act.   Although,  the  complaint  was
signed by the appellant, it was  presented  before  the  Magistrate  by  the
appellant’s husband Sudhir Gulvady on the strength  of  power  of  attorney.
It was stated in the complaint that the appellant was unable to come to  the
court as she  was  not  keeping  good  health  and,  hence,  she  was  being
represented in the proceedings by her husband and power of  attorney  holder
Sudhir Gulvady, who  had  personal  knowledge  of  the  entire  transaction.
According to the appellant, the power of attorney was filed along  with  the
complaint.

6.    On 05/03/2004 the statement of the appellant’s  husband,  who  is  her
power of attorney holder was recorded.   Cognizance  of  the  complaint  was
taken and  summonses  were  issued  to  the  respondents.   The  respondents
entered appearance and  pleaded  not  guilty.   On  01/09/2005,  20/09/2005,
22/02/2006, 16/03/2006 and 02/05/2006 the  appellant  was  examined-in-chief
and cross-examined by the respondents’ counsel.  Respondent 2  was  examined
and cross-examined on various dates.

7.    In  the  written  arguments  submitted  by  the  respondents,  it  was
contended that though the sworn statement of the power  of  attorney  holder
was recorded, he was  not  examined  by  the  complainant  and  since  sworn
statement  of  the  complainant  was  not   recorded   complaint   was   not
maintainable.

8.    On 09/11/2006  the  trial  court  convicted  the  respondents  of  the
offence punishable under Section 138 of the NI Act.   The  respondents  were
sentenced  to  pay  a  fine  of  Rs.30,12,000/-  out  of  which  a  sum   of
Rs.30,02,000/- was directed to be paid to the appellant as compensation  and
balance of Rs.10,000/- was directed to be paid to the State.   Respondent  2
was sentenced to six months’ simple imprisonment in the event of failure  to
pay the fine amount.

9.    The respondents filed an appeal in the Court  of  Principal  City  and
Sessions Judge,  Bangalore  being  Criminal  Appeal  No.1897  of  2006.   On
17/09/2009  the  said  appeal  was  rejected  by  the  Fast  Track  Court-V,
Bangalore.

10.    Aggrieved  by  the  order  of  Fast  Track  Court-V,  Bangalore,  the
respondents preferred a criminal revision petition  in  the  Karnataka  High
Court.  By the impugned orders, the  Karnataka  High  Court  overturned  the
concurrent judgments of the courts below and acquitted the respondents  only
on the ground that the complaint  had  been  presented  by  the  appellant’s
husband as her power of attorney holder but the power of  attorney  was  not
produced and that in strict compliance with Section 200  of  the  Code,  the
appellant must be examined before cognizance can be taken of the  complaint,
which was not done.

11.   We have heard learned  counsel  for  the  parties  and  perused  their
written submissions.  Learned counsel for the appellant submitted that  when
the statement of the appellant was recorded on oath, the power  of  attorney
was produced.  The High Court erroneously held that  it  was  not  produced.
It was part of the trial court’s record.  This is clear from the  fact  that
it bears PCR number as well as CC number.  Counsel submitted that only  plea
raised by the respondents before the courts below was that  the  appellant’s
husband who  is  her  power  of  attorney  holder  was  not  examined.   The
respondents never raised any  plea  that  the  power  of  attorney  was  not
produced.   Counsel  submitted  that  reliance  of   Chandrashekarappa    v.
Sharanabasappa[1] is erroneous because it is contrary to the view  taken  by
this  Court  in  A.C.  Narayanan   v.   State  of  Maharashtra[2].   Counsel
submitted that the submission that cheques were issued as a security has  no
basis.  They were issued in respect of a  crystallized  liability  and  this
was acknowledged by respondent 1 in his letters.  Counsel submitted that  in
the circumstances, the impugned order deserves to be set aside.

12.   Learned counsel for the respondents,  on  the  other  hand,  submitted
that the copy of power of attorney which is filed in this  Court  and  which
is certified by the High Court does  not  bear  any  exhibit  numbers  which
proves that it was never filed before the trial  court.   The  statement  of
power of attorney holder establishes that the power of attorney was  neither
filed nor exhibited.  Counsel pointed out that the sworn  statement  of  the
appellant is silent on the power of attorney.  Counsel  submitted  that  the
objection qua the power of attorney  was  duly  raised  by  the  respondents
before the trial court.  Pertinently the list of  exhibited  documents  does
not mention any power of attorney.  In this connection,  counsel  relied  on
A.C. Narayanan.  He submitted that in this case, it is held  by  this  Court
that  the  power  of  attorney  holder  may  file  the  complaint  but   the
complainant ought to file pre-summoning evidence  affidavit  in  support  of
the complaint.  Since this is not done, the complaint must be  dismissed  on
that ground.    Counsel further submitted that the cheques were  not  issued
in discharge of legally  recoverable  debt.   Letters  dated  1/10/2002  and
22/2/2003, exchanged between the appellant and the respondents mention  that
the cheques have  been  issued  as  security.   This  is  reflected  in  the
complaint and cross-examination of the  complainant.   In  support  of  this
submission, the  counsel  relied  on  M.S.  Narayana  Menon   v.   State  of
Kerala[3], Sudhir Kumar Bhalla  v.   Jagdish  Chand[4]  and  Kamala  S.   v.
Vidhyadharan[5].

13.   We shall first  deal  with  the  submission  that  copy  of  power  of
attorney was not produced by the appellant.  We have carefully  perused  the
written submissions filed by the  respondents  in  the  trial  court.   This
submission was not raised and  consequently  not  considered  by  the  trial
court.  In fact, since this submission pertains  to  documents  produced  in
the trial court, it ought to have been raised there.   It  could  have  been
more appropriately dealt with by the trial court.  But it  was  not  raised.
The respondents filed appeal in the Sessions Court.  In the appeal memo,  no
contention was raised that copy of power of attorney  was  not  produced  in
the trial court.  Not only was this submission  not  raised  in  the  appeal
memo, it appears to have not been raised in the Sessions Court at the  stage
of arguments.  The Sessions Court has, therefore, not dealt with  it.   This
submission was raised for the first time only in the High Court.   The  fact
that this submission was not raised in the trial  court  and  in  the  lower
appellate court weakens its force.  The High Court, in  our  opinion,  erred
in entertaining such a belated argument.  Having entertained  the  argument,
the High Court dealt with it in a very perfunctory manner.  The  High  Court
observed that Sudhir Gulvady, the power of attorney holder did  not  produce
the power of attorney and, hence, he could not have been examined on  behalf
of the complainant.  The High Court further observed  that  the  complainant
who examined herself also did not say why the  power  of  attorney  was  not
produced.  Significantly, the appellant has  not  been  questioned  on  this
aspect.  Not even a suggestion was made to her that she had  not  given  any
power of attorney to her husband and that it was not produced on record.

14.   It was submitted by the counsel for the appellant that  the  power  of
attorney was very much a part of the trial court’s record and, in  fact,  it
bears the PCR number as well as the CC number, which shows  that  it  was  a
part of the record.  A photocopy of the said power of attorney is on  record
at Annexure-21 to the appeal memo.   A  true  typed  copy  thereof  is  also
annexed to the present appeal.  It is stated in the rejoinder filed  by  the
appellant in this Court that the power of  attorney  was  available  on  the
record of the High Court and a certified copy was issued by the  High  Court
itself.  It is stated that a true  copy  of  the  certified  copy  has  been
produced as Annexure P-21 to the special  leave  petition.   It  is  further
stated that as a matter of practice, the power of attorney  is  filed  along
with the vakalat filed in the matter and not  with  the  list  of  documents
listing other exhibits pertaining  to  the  merits  of  the  case.   In  the
circumstances, non-mentioning of the power of attorney is  not  unusual  and
on this basis, no conclusion can be drawn that the said document was not  on
record.  This assertion is not traversed by the respondents.

15.   The power of attorney is specifically  given  to  Sudhir  Gulvady  for
court cases.  The relevant clauses of the said power  of  attorney  read  as
under:
 “1.  To represent me before the said Court to all intents and  purposes  in
connection with the said criminal case to be filed,  prosecuted  before  the
Criminal Court under Section 138 of the Negotiable Instruments Act.

2.     And  to  appear  for  and  prosecute  and  defend  all  actions   and
proceedings, to sign and verify all plaints, written  statements  and  other
pleadings, applications, petitions or documents to the  court,  to  deposit,
withdraw and receive documents and any money or moneys  from  the  court  or
from the opposite party, either in execution  of  the  decree  or  otherwise
and, on receipt of payment thereof, to sign and deliver proper receipts  and
discharge the same for and on my behalf.

3.    To engage and appoint any solicitor, advocate or advocates or  counsel
to act and plead and otherwise  conduct  the  said  case  whenever  my  said
attorney thinks proper to do so.”

16.   Having perused the copy of the power of  attorney,  we  are  satisfied
about its authenticity.  We view 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.  We reject this submission.


17.   The second submission of the respondents is that the complaint  cannot
be filed by a power of attorney  holder.   This  question  is  no  more  res
integra.  A Division Bench  of  this  Court  while  considering  a  criminal
appeal arising out of conviction under Section 138 of  the  NI  Act  noticed
diversion of opinion between different High Courts on the  question  whether
the eligibility criteria prescribed by Section 142(a) of the  NI  Act  would
stand satisfied if the complaint itself is filed in the name  of  the  payee
or the holder in the due course of the cheque and/or whether  the  complaint
has to be presented before the Court by the  payee  or  the  holder  of  the
cheques himself.  The Division Bench felt that  another  issue  which  would
arise for consideration  is  whether  the  payee  must  examine  himself  in
support of the complaint keeping in view the insertion  of  Section  145  in
the NI Act (Act No.5 of 2002).  The Division Bench was of the view that  the
matter should be  considered  by  a  larger  Bench  so  that  there  can  be
authoritative pronouncement of this Court on  the  above  issues.   In  A.C.
Narayanan, the three-Judge Bench of this Court dealt  with  this  reference.
This Court noted the questions which had to be decided by  it  in  terms  of
the reference order as under:

“(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?”


18.   After considering the relevant  provisions  of  the  NI  Act  and  the
relevant judgments on the point, this Court  clarified  the  legal  position
and answered the questions in the following manner.

 “(i)       Filing of  complaint  petition  under  Section  138  of  NI  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 NI 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 NI Act  and
the Magistrate is neither mandatorily obliged to call upon  the  complainant
to remain present before the Court, nor to examine the  complainant  or  his
witness upon oath for taking the decision whether or not  to  issue  process
on the complaint under Section 138 of the NI 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.”


19.   Thus, it is clear that 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.  We have perused the said statement.  It  is  signed  by
the power of attorney holder and  by  learned  Magistrate.   A.C.  Narayanan
states that power of attorney holder must have knowledge about the  relevant
transactions.  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.   He
is associated with all transactions at all crucial  stages.   The  appellant
has placed this fact in  the  forefront  in  her  complaint.   The  relevant
paragraph of the complaint reads as under:

“3.   The complainant is represented by her Power  of  Attorney  Holder  Mr.
Sudhir Gulvady, her husband as the complainant is  unable  to  come  to  the
Court due to her not keeping good health and the whole transaction  is  also
within the knowledge of her Power of Attorney holder who is her husband”.

20.   The appellant has examined herself on oath.  In her evidence, she  has
stated that the office of the respondents is in the same building  in  which
her husband’s office is situated  and  her  husband  being  acquainted  with
respondent 2, who is the Managing Director of respondent  1,  he  was  aware
that respondent 2 was functioning as a broker and,  hence,  she  along  with
her husband had initial discussion with respondent  2  for  transactions  in
10000 shares.  Her evidence substantiates her  case  that  her  husband  had
knowledge about the entire transaction.   Hence,  the  submission  that  the
complaint could not have been filed through power of  attorney  holder  must
fail.

21.   It is then submitted that  the  pre-summoning  evidence  of  power  of
attorney holder should have been filed.  We have no hesitation in  rejecting
this submission.  We have already reproduced the relevant paragraph  of  the
appellant’s evidence where she has stated that due to  her  ill-health,  she
was unable to come to the court, hence, the complaint  was  being  filed  by
her power of attorney holder who had knowledge  of  the  transactions.   The
power of attorney holder’s sworn statement  was  recorded  and  summons  was
issued.  This exercise cannot be faulted and  is  in  complete  accord  with
Section 200 of the Code.  At that stage, the power of  attorney  holder  had
stepped in the shoes of the appellant.  Otherwise, there  was  no  point  in
the appellant giving power of  attorney  to  her  husband.   A.C.  Narayanan
nowhere states that if the complaint is filed  by  the  complainant  through
power of attorney holder, the complainant must file affidavit in support  of
the complaint prior to issuance of summons.

22.   It is pertinent to note that in this case, the appellant has  examined
herself as PW-1 and subjected herself to cross-examination.   In  the  facts
of this case, where the sworn statement of her power of attorney  holder  is
recorded at the pre-summoning stage, the argument that she should have  also
filed a pre-summoning affidavit cannot be entertained.  In this  connection,
we may refer to the judgment of this Court  in  Indian  Bank  Association  &
Ors.  v.  Union of India & Ors.[6] where this Court has  given  a  direction
to the Metropolitan Magistrate/Judicial Magistrate to adopt a pragmatic  and
realistic approach while issuing summons.  It is also urged that  the  power
of attorney holder should have also been examined on oath.  This  submission
must also be rejected as apart from being devoid of substance it is  clearly
aimed at frustrating the prosecution.   When  the  complainant  herself  has
stepped in the witness box, we  do  not  see  the  need  for  the  power  of
attorney holder to examine himself as a witness.  Law cannot be  reduced  to
such absurdity.  The purport of NI Act will be frustrated if  such  approach
is adopted by the courts.  We, therefore, reject this submission.

23.   Lastly it was urged that the cheques in question were  not  given  for
any legally recoverable dues.  The cheques were given as a  security.    The
trial court has considered this plea and rejected it.  This  submission  was
also advanced before the lower appellate court.  But it was rejected by  it.
 The High Court has, however, not dealt with this submission at  all  though
it was raised in the appeal memo.  In  this  connection,  we  may  reproduce
relevant portion of letter dated 30/6/2003 addressed by the  respondents  to
the appellant.

“This is further to our letter dated 22/2/2003, I had sought time till  30th
June 2003 to return the balance of 7500 shares of Hindustan  Lever  Limited.
However, despite my best efforts I was not  in  a  position  to  return  the
shares.

I would earnestly request you to bear with me and allow  me  to  fulfill  my
commitment to you.  I would once again assure  you  that  the  full  lot  of
shares due to you would be credited to your account  and  also  the  amounts
due to you paid in full.  As put forth before you personally,  I  am  making
every effort to set right the problems that had  occurred  in  my  business.
This has taken longer than expected.

I would be most grateful if you can consider  granting  me  time  till  31st
December 2003 to return the 7500 shares to you.  I  would  in  the  meantime
ensure that smaller lots are credited to your account.

I  am  replacing  the  cheques  issued  to  you  earlier  by  the  following
instruments:

a) Cheque No.392942 dt. 1.8.2003  Rs.850,000.00

b) Cheque No.392943 dt. 1.8.2003  Rs.972,000.00

      If I fail to return the shares by 31st  December,  2003,  I  agree  to
your depositing the cheques to recover your dues.

      In the case of any eventualities to  you,  I  agree  to  return  these
shares to your husband Mr.  Sudhir  Gulvady  or  your  children  Ms.  Aparna
Gulvady and/or Mr. Gautam Gulvady.  I  request  you  to  kindly  return  the
cheques issued to you earlier.”


24.   On the basis of the averments made in the complaint and on  the  basis
of the above letter, it is contended by learned counsel for the  respondents
that the above cheques  were  issued  as  a  security;  that  there  was  no
crystallized liability or outstanding dues and that  there  was  no  legally
recoverable debt and, therefore, the complaint  was  not  tenable.   On  the
other hand, it is strenuously contended by the  counsel  for  the  appellant
that it is abundantly clear from the above  letter  that  the  cheques  were
issued for a crystallized liability or a legally  recoverable  debt.   Since
the High Court has not dealt  with  this  submission  at  all,  we  deem  it
appropriate to remand the  matter  to  the  High  Court  for  that  purpose.
Hence, 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, we remand the matter 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.   Considering  the  fact  that  the  complaint  is  dated
03/03/2004, we request the High Court to decide the above question as  early
as possible and preferably within a period of eight months from the date  of
receipt of our order by it.  We make  it  clear  that  the  remand  is  only
limited to the abovestated question and the scope of  remand  shall  not  be
extended any further as we have already answered the other  questions  which
were raised before us.

25.   The appeals are disposed of in the aforestated terms.


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


                                                       ……………………………………………..J.
                                (N.V. RAMANA)

New Delhi;
September 17, 2014.

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[1]    2011 (1)  Kar. L.J. 444
[2]    AIR 2014 SC 630
[3]    (2006) 6 SCC39
[4]    (2008) 7 SCC 137
[5]    (2007) 5 SCC 264
[6]    (2014) 5 SCC 590


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