Section 138 N.I. Act; M.K. Basheer Vs. State [Kerala High Court, 21-11-2015]

Negotiable Instruments Act, 1881 – Section 138 – Power of Attorney – Filing of a complaint through power of attorney for offence under Section 138 of N.I Act is perfectly valid and the power of attorney can depose and verify on oath before the Court in order to prove the contents of the complaint. If the power of attorney holder had witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions, he has to make specific assertion in the complaint about his knowledge. If the power of attorney holder has no direct knowledge about the transactions, he cannot be examined as a witness to prove the transaction in a case.

Power of Attorney

Negotiable Instruments Act, 1881 – Section 138 – Power of attorney – Sub Delegation – Whether the power of attorney holder has any power to sub delegate the power to another person, without specific authorisation in the power of attorney – Held, As per the terms of the general power of attorney, if the power to further delegate is mentioned in the general power of attorney, then such delegation is valid. If the authority to delegate the function to the power of attorney is silent about sub delegation, then such sub delegation must be inconsistent with the terms of the power of attorney.


IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.D. RAJAN, J.

Crl.R.P.No.1206 of 2003

Dated this the 21st day of November, 2015

AGAINST THE JUDGMENT IN CRL.APPEAL NO.75/2000 of ADDITIONAL SESSIONS JUDGE (ADHOC) FAST TRACK COURT NO.1, THRISSUR DATED 09-12-2002 AGAINST THE JUDGMENT IN ST 4391/1996 of JUDICIAL FIRST CLASS MAGISTRATE,IRINJALAKUDA DATED 29-01-2000

REVISION PETITIONER(S) / APPELLANT / ACCUSED

M.K. BASHEER

BY ADV. SRI.P.K.RAVISANKAR

RESPONDENT(S) /STATE & COMPLAINANT:

1. STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

2. APPOLO TYRES LTD., PERAMBRA REPRESENTED BY K.V. NAVANEETHAN (OFFICER LEGAL & EXCISE), APPOLO TYRES LTD., PERAMBRA.

R2 BY ADV. SRI.K.DIVAKARAN BY PUBLIC PROSECUTOR SRI. N. SURESH. BY ADV. SRIP.S.SUJETH BY ADV. SMT.M.R.REENA

ORDER

The revision petitioner was accused in S.T.No.4391/1996 before Judicial Magistrate of First Class, Irinjalakuda

U/s. 138 of the Negotiable Instruments Act

(hereinafter referred to as the N.I. Act). The case against him is that in discharge of a debt, on 30.4.96 the accused issued a cheque for 5,49,283/- drawn on Corporation Bank, Kunnamkulam branch to the complainant. When the cheque was presented for encashment through SBT, Chalakudy, it was dishonoured for the reason of funds insufficient. He demanded the amount by giving a notice in writing to the accused, but there was no repayment, hence the complaint.

2. On the side of the complainant, PW1 and PW2 were examined and Exts.P1 to P13 were marked as his documents. The incriminating circumstances brought out in evidence were denied by the accused while questioning him under Section 313 Cr.P.C. Accused examined DW1 and marked Exts.D1 to D3 in support of his defence. Learned Magistrate convicted the accused and sentenced to imprisonment for six months and fine of 2500/- with a default sentence for one month. The accused was directed to pay sum of 5,49,283/- to the complainant as compensation, in default imprisonment for two months. Against that, he filed Criminal Appeal No.75/2000 before II Additional Sessions Judge (Adhoc), Fast Track Court-I, where the sentence was modified. Being aggrieved by that, the accused preferred this revision petition.

3. The main contention advanced by the revision petitioner is that the power of attorney holder is one Sreekumar and he delegated authorisation to one Jose by another power of attorney. This was done without proper authorisation to represent the Company, therefore the institution of the complaint itself is invalid. The second ground is that the appellate Court received additional evidence without giving opportunity to the revision petitioner which is illegal. These illegalities were not considered by both courts.

4. In reply to the contention, the 2nd respondent contended that as per Ext.P1, Sreekumar, Vice Chairman of the Company was authorised to represent the Company, the resolution was also not filed along with the power of attorney. As per Ext.P2, one Jose J.P. was authorised to represent the Company but that resolution was not produced before Court. Subsequently, on 24.6.1996 by virtue of Ext.P1, Sreekumar delegated his authorisation to one Navaneethan, however, that authorisation was not produced in the trial Court. Moreover, Jose J.P. and Joseph, who represented the Company as PW1, is one and the same person.

5. The second respondent company is the original complaint and is a juristic person and all acts through its directors who are collectively responsible for its acts. A director, as an individual director has no power to act on behalf of the Company. He is only one of the body of directors, as an individual and he has no power to act unless the board of directors empowers him or given to him by the articles of association of a Company. If one person is an agent of the company, there needs specific authorisation to act on behalf of the company. In this case one Sreekumar filed a complaint as the Vice Chairman of the Company as per the authorisation of the Board of Directors. The resolution of the Board of Directors was not filed but he filed the power of attorney along with the complaint. Subsequently power of attorney holder delegated his power to another person, but the document with regard to that delegation of power was not produced along with the power of attorney. The consistent view I hold is that in a complaint filed by a Company u/s.138of the N.I. Act it has to comply the statutory requirement under S.142 (a) of the N.I. Act. Therefore, autorisation, specific delegation and sub delegation has to be mentinoed in the resolution of the Board of Directors or from the power of attorney. Apex court in

Dale and Canington Invt (P) Ltd and another V. P.K.Prathapan and others; (2005) 1 SCC 212 : AIR 2005 SC 1624

explained the position as follows:

“……..A company is a juristic person and it acts through its Directors who are collectively referred to as the Board of Directors. An individual Director has no power to act on behalf of a company of which he is a Director unless by some resolution of the Board of Directors of the Company specific power is given to him/her. Whatever decisions are taken regarding running the affairs of the company, they are taken by the Board of Directors. The Directors of companies have been variously described as agents, trustees or representatives, but one thing is certain that the Directors action behalf of a company in a fiduciary capacity and their acts and deeds have to be exercised for the benefit of the company. They are agents of the company to the extent they have been authorized to perform certain acts on behalf of the company. In a limited sense they are also trustees for the shareholders of the company.”

Here, the complainant company is a juristic person, it can act through its directors and the company can delegate its function to a power of attorney holder. If an individual director acts on behalf of the company and the company by a resolution has to specify such power, and if such delegation by way of power of attorney is given, he has to explain the extent of the power given to the power of attorney holder in the power of attorney.

6. Normally Court will not non suit a person on the ground of technicalities. However, the question of competency to institute a prosecution under S.138 of the N.I. Act on behalf of the company is not a technical matter, but it has to satisfy the condition under S.142 (a) of the Act. The complainant here is a Company incorporated under the Companies Act and the complaint was filed by its power of attorney holder. Subsequently, the power of attorney holder delegated the power given to him to another person and the resolution from the company was not produced in the trial Court. Now that sub delegation was challenged by the revision petitioner in this case. It is true that a power of the attorney holder can sign a complaint and file a complaint on behalf of the payee or holder in due course, but he has no power to delegate such power to another person without proper authorisation. This position was discussed by the larger Bench of the Supreme Court in