2007 (6) TMI 572 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the complaint filed by one of the Directors of the Complainant-Company u/s 142(a) of the Negotiable Instruments Act, 1881.
2. Authorization requirement for filing a complaint on behalf of a company.

Summary:

Issue 1: Maintainability of the Complaint u/s 142(a) of the Negotiable Instruments Act, 1881
The primary issue for consideration was whether a complaint filed by one of the Directors of the Complainant-Company was maintainable under Section 142(a) of the Negotiable Instruments Act, 1881. The Court examined whether the complaint met the eligibility criterion prescribed by Section 142, which mandates that the complaint must be by the payee or the holder in due course. The Court noted that the complaint was filed by Shri Prashant Shirodkar, a Director of the Complainant-Company, without any resolution or power of attorney authorizing him to do so.

Issue 2: Authorization Requirement for Filing a Complaint on Behalf of a Company
The Court referred to various judgments to determine the necessity of authorization for a Director to file a complaint on behalf of a company. It was highlighted that a company, being a juristic person, acts through its Directors, who must be authorized by a resolution of the Board of Directors. The Court cited the Apex Court's decision in Dale & Carrington Invt.(P) Ltd. and Anr. v. P. K. Prathapan and Ors., which held that an individual Director has no power to act on behalf of a company unless authorized by a Board resolution.

The Court also referred to the Apex Court's decision in M/s. M.M.T.C. Ltd. and Anr. v. M/s. Medchl Chemicals & Pharma(P) Ltd. and Anr., which allowed for the rectification of the defect of lack of authorization at any stage. However, in the present case, no such rectification was made by the Complainant-Company in favor of Shri Prashant Shirodkar.

The Court concluded that the complaint was not filed by the payee or the holder in due course as required by Section 142(a) of the Act. Consequently, no cognizance could have been taken on a complaint filed by a Director without proper authorization, and the accused could not be convicted based on such a complaint.

Conclusion:
The revision petition was allowed, and the judgments of both the lower courts were set aside. The accused was acquitted under Section 138 of the Negotiable Instruments Act, 1881. The amounts deposited by the accused were ordered to be refunded along with accrued interest, and the bail bonds were canceled.