2021 (11) TMI 648 - HC - Indian Laws

Dishonor of Cheque - respondent accused was acquitted principally on the ground that the company was not properly represented before the court and also on the ground that the complaint could not have been maintained at Kayamkulam - HELD THAT - It is settled law that in so far as a company is concerned, it is a distinct juristic personality and it can be represented by persons who may be authorised terms of provisions contained in the Articles of Association of the company or in terms of a resolution duly passed by the Board of Directors of the Company. It is clear from a reading of the impugned judgment that the person who executed the power of attorney was not described in any manner to be the person authorised either by the Articles of Association of the company or by a valid resolution to represent the company. The judgment of this Court in BASHEER M.K. VERSUS STATE OF KERALA AND ORS. 2015 (11) TMI 1853 - KERALA HIGH COURT also takes the view (though in slightly facts and circumstances) that the power of attorney holder has to clearly establish the delegation of authority to represent the company. The power of attorney holder representing the company in the proceedings before the court below had failed to establish that he was duly authorised to represent the company. This is because the person who executed the power of attorney himself did not disclose any authority given either by the Articles of Association of the company or by resolution of the company to represent the company - Appeal dismissed.

Summary

Issues:
1. Acquittal of the accused under Section 138 of the Negotiable Instruments Act.
2. Maintainability of the complaint at Kayamkulam.
3. Validity of the power of attorney to represent the company.
4. Substantiation of consideration for the issuance of the cheque.

Analysis:
1. The appeal challenged the acquittal of the accused under Section 138 of the Negotiable Instruments Act. The court found that the acquittal was based on the grounds that the company was not properly represented before the court and that the cheque in question was not issued in discharge of a legally enforceable debt due to the lack of substantiated consideration.

2. The appellant argued that the complaint was maintainable at Kayamkulam, citing Section 85 of the Indian Evidence Act and the contents of the power of attorney. However, the court clarified that Section 85 does not automatically confer authority to represent a company based on a power of attorney, emphasizing the need for explicit authorization as per the company's Articles of Association or a valid resolution.

3. The respondent contended that the complaint was not maintainable through the power of attorney holder, referencing legal precedents. The court upheld the requirement for evidence demonstrating the authority of the person executing the power of attorney to represent the company, which was lacking in this case.

4. Regarding the issue of consideration for the cheque, the court emphasized that the maintainability of the complaint must be established first. It reiterated the necessity for clear authorization for representation in cases involving companies, as highlighted in previous judgments and legal principles.

In conclusion, the court dismissed the appeal, stating that the power of attorney holder had failed to prove authorization to represent the company, thereby rendering the complaint not maintainable. The judgment underscored the importance of explicit delegation of authority in representing a company in legal proceedings, as mandated by the company's internal governance documents or valid resolutions.