2015 (11) TMI 1853 - HC - Indian Laws

Dishonor of Cheque - insuficiency of funds - authorisation given by another power of attorney, without proper authorisation to represent the Company - additional evidence obtained without giving opportunity to the revision petitioner - violation of principles of natural justice - HELD THAT - Normally Court will not non-suit a person on the ground of technicalities. However, the question of competency to institute a prosecution under Section 138 of the NI Act on behalf of the company is not a technical matter, but it has to satisfy the condition under Section 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. The evidence of PW 1 shows that the cheque was dishonoured for the reason of funds insufficient and he demanded the amount by giving a notice in writing. Ext. P1 is the power of attorney given by Apollo tyres to one Sreekumar who filed the complaint. Ext. P2 is the power of attorney executed by Sreekumar in favour of one Jose. But, these two persons were not examined as witnesses in this case - no documents were produced in the Trial Court to show that Joseph and Jose J. P. are one and the same person and not examined the validity of the power delegated by Sreekumar. The power of attorney holder can depose and verify on oath before Court in order to prove the content of the complaint. However, he has to prove the nature of delegation in the power of attorney. The object of taking additional evidence under Section 391 of the Code is to ensure that justice is done between the prosecution and the accused. Additional evidence cannot be permitted at the appellate stage as of right and Appellate Court has to exercise its discretion on sound judicial principle alone. It is not an arbitrary discretion, while giving opportunity to take additional evidence at the appellate stage, the Court has to record its reason - 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. The Courts below failed to verify the nature of delegation and sub-delegation of power in Exts. P1, P2 power of attorney. The nature of sub-delegation was not answered by the Courts below. Moreover, additional evidence has been admitted without giving opportunity to the revision petitioner. Hence, these infirmities warrant me to invoke the revisional jurisdiction in this case. The conviction and sentence passed by the Judicial First Class Magistrate under Section 138 of the NI Act are set aside. The matter is remitted to the Trial Court for fresh consideration - Application disposed off.

Summary

Issues Involved:
1. Validity of the complaint filed by the power of attorney holder.
2. Legality of sub-delegation of power by the power of attorney holder.
3. Admission of additional evidence by the Appellate Court without providing an opportunity to the revision petitioner.
4. Compliance with statutory requirements under Section 138 and Section 142(a) of the NI Act.

Detailed Analysis:

1. Validity of the Complaint Filed by the Power of Attorney Holder:
The revision petitioner was accused under Section 138 of the Negotiable Instruments Act (NI Act) for issuing a dishonored cheque. The primary contention was that the power of attorney holder, Sreekumar, delegated his authorization to Jose without proper authorization to represent the company. The court observed that a company, being a juristic person, acts through its directors, who require specific authorization from the Board of Directors to act on behalf of the company. The complaint filed by Sreekumar, as per the authorization of the Board, lacked the necessary resolution, making the institution of the complaint questionable.

2. Legality of Sub-delegation of Power by the Power of Attorney Holder:
The court noted that the power of attorney holder can sign and file a complaint on behalf of the payee or holder in due course but cannot delegate such power to another person without explicit authorization. The Supreme Court in A.C. Narayanan v. State of Maharashtra clarified that sub-delegation must be explicitly mentioned in the general power of attorney, otherwise, it is invalid. In this case, the sub-delegation by Sreekumar to Jose was not supported by the necessary documents, making it inconsistent with the terms of the power of attorney.

3. Admission of Additional Evidence by the Appellate Court:
The Appellate Court admitted additional evidence (Ext. P6, an unclaimed demand notice) without providing an opportunity to the revision petitioner, which was deemed illegal. Section 391 CrPC allows the Appellate Court to take additional evidence if necessary, but it must record reasons and ensure the accused has the right to be present. The court held that the Appellate Court's action caused prejudice to the accused, as it filled a lacuna in the prosecution's case without due process.

4. Compliance with Statutory Requirements under Section 138 and Section 142(a) of the NI Act:
The court emphasized that the competency to institute a prosecution under Section 138 of the NI Act is not a technical matter but must satisfy the conditions under Section 142(a). The complainant, a company, must ensure that the power of attorney holder has proper authorization and that any sub-delegation is explicitly mentioned. The courts below failed to verify the nature of delegation and sub-delegation of power, leading to the conclusion that the statutory requirements were not met.

Conclusion:
The conviction and sentence passed by the Judicial First Class Magistrate under Section 138 of the NI Act were set aside due to the noted infirmities. The matter was remitted to the Trial Court for fresh consideration, allowing both parties to adduce fresh evidence. The Judicial First Class Magistrate, Irinjalakuda, was directed to dispose of the matter as per law at the earliest.