Friday, September 13, 2013

Section 138, Negotiable Instruments Act: An Agent can file a Criminal Petition

A three-judge bench of the Supreme Court of India (“Supreme Court”) has clarified the position regarding the filing of criminal petition through the holder of power of attorney for an offence under Section 138 of Negotiable Instruments Act, 1881 (A.C. Narayanan v. State of Maharashtra & Anr). The present case, which consisted of a set of two criminal appeals,  involved the issue whether, under Section 138 and 142 of NI Act, a criminal petition can be filed by a person through a power of attorney. While section 138 of NI Act makes one liable for dishonour of cheque, section 142 of NI Act provides for the conditions before a court can take cognizance of the offence under Section 138.

(Image Source: Queensland Family Law Practice)
The present matter was heard by the Full Bench of the Supreme Court when a reference was made by a division bench of the Court. According to the division bench, there was a difference of opinion amongst various High Courts as also the decisions of the division benches of the Supreme Court in M.M.T.C. and Anr. vs. Medchl Chemicals & 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]. In M.M.T.C. case (supra), it was held by the Supreme Court that no court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint. On other hand, in Janki Vashdeo case (supra), it was held by the Court that under Order 3, Rules 1 and 2 of the Code of Civil Procedure, 1908 (“CPC”), the holder of power of attorney cannot depose for the principal for the acts done by the principal.


In the present appeals, the respective actions were brought by the the holders of power of attorney to represent the affected parties. The courts below had decreed in favour of them, and hence, the appellant-accused approached the Supreme Court. It had been contended on behalf of the appellants that only two categories of persons, i.e., the payee or the holder in due course of the cheque, are entitled to make a complaint under Section 138. Since this has not been done in the present cases, court could not take cognizance. It was further contended that in matters where complainants have personal knowledge, the holders of power of attorney are incompetent to depose on behalf of them. According to them, 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. In their next contention, it was submitted on behalf of the appellants that, under Section 200 of the Code of Criminal Procedure (“CrPC”), the Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant. Section 200, according to the appellants, is mandatory in nature and is meant to ascertain whether there is a prima facie case against the accused. It was submitted that this requires the presence of complainants.

Observing that there is no pertinent conflict between judgments in M.M.C.T (supra) and Janki Vashdeo (supra), Supreme Court was of the opinion that Section 200 of CrPC does not create any embargo that the attorney holder cannot be a complainant. As these are only the legal proceedings which are initiated by the holder of a power of attorney, there is no mandate that same should be initiated by the complainant himself. In other words, though attorney cannot file a complaint in his own name as if he was the complainant, he can surely initiate the proceedings on behalf of the principal. Court held that:

“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.....”

That is, it is a matter of discretion for magistrate to call upon the complainant before issuing of the process. The issuing of the process can be done by the magistrate 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. This, according to the court, leads to the conclusion that the holder of a power of attorney ‘may’ also be allowed to file, appear and depose the complaint if he is personally aware of the transactions. It was held that:

“...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.”

Yet another question had arisen in the present case (second appeal) – “whether a person authorized by a Company or Statute or Institution can delegate powers to their subordinate/others for filing a criminal complaint?” Answering the question, the court was of the opinion that the same would depend on the terms of the general power of attorney, i.e., it must be explicitly mentioned in the general power of attorney.

In conclusion, the Court summed the position of law regarding the issues raised as follows:

(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

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