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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.
-----------------------
25
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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