2025 (1) TMI 132 - SC - Indian Laws

Dishonour of Cheque - cognizance of offences - whether the complaint filed by the appellant herein under Section 138 of the NI Act is in accordance with the requirement under Section 142 of the NI Act? - Power of attorney holder - HELD THAT - A perusal of the complaint (Annexure P-18) would reveal that Complaint No. 701 of 2021 has been filed in the name of M/s Naresh Potteries through Neeraj Kumar (Manager and Authority-letter holder). Further, a perusal of the cheque which is the subject-matter of the complaint would reveal that it has been issued in the name of Naresh Potteries. As aforementioned, Section 142 of the NI Act contemplates that the complaint filed under Section 138 of the NI Act should be in writing and should be filed by the payee or the holder of the cheque. Therefore, it is abundantly clear that the complaint in the present matter satisfies the requirements of Section 142 of the NI Act. Since the High Court has quashed the summoning order on a categorical finding that the power of attorney holder did not have personal knowledge of the facts giving rise to the criminal proceedings as there was no specific pleading to that effect in the letter of authority and the affidavit of the power of attorney holder under Section 200 of the Cr.P.C., we find it apposite to reproduce the relevant portions of the aforesaid documents which contain averments regarding authorisation in favour of and knowledge on the part of Sh. Neeraj Kumar. This Court in M/S TRL KROSAKI REFRACTORIES LTD. VERSUS M/S SMS ASIA PRIVATE LIMITED ANR. 2022 (2) TMI 1112 - SUPREME COURT had come to a categorical finding that what can be treated as an explicit averment, cannot be put in a straightjacket but will have to be gathered from the circumstance and manner in which it has been averred and conveyed, based on the facts of each case. The relevant portion of the said decision has already been extracted above. In the instant matter, the averments made in the documents referred to above, make it wholly clear that Sh. Neeraj Kumar possessed personal knowledge of the facts of the matter at hand and was well-equipped and duly authorised to initiate criminal proceedings against Respondent No.1. That beside the fact that it would always be open for the trial court to call upon the complainant for examination and crossexamination, if and when necessary, during the course of the trial. As such, a peremptory quashing of the complaint case by the High Court is completely unwarranted and that too on an incorrect factual basis. Conclusion - The complaint under Section 138 of the NI Act must be filed by the payee or holder in due course, and a power of attorney holder must have personal knowledge and authorization to file the complaint. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) by the appellant is in accordance with the requirement under Section 142 of the NI Act?
Whether the power of attorney holder, Sh. Neeraj Kumar, had the requisite knowledge and authorization to file the complaint on behalf of the appellant firm?
Whether the High Court was justified in quashing the summoning order and the complaint proceedings under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.)?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Section 142 of the NI Act

Relevant legal framework and precedents: Section 142 of the NI Act requires that a complaint under Section 138 be made by the payee or holder in due course. The Supreme Court has previously addressed the requirements in cases such as National Small Industries Corporation Limited v. State (NCT of Delhi) and Others, and TRL Krosaki Refractories Limited v. SMS Asia Private Limited.
Court's interpretation and reasoning: The Court noted that the complaint was filed in the name of the payee, M/s Naresh Potteries, and thus met the requirements of Section 142.
Key evidence and findings: The complaint and supporting documents indicated that the complaint was filed by the payee through an authorized representative.
Application of law to facts: The Court found that the complaint satisfied the requirements of Section 142 as it was filed by the payee.
Treatment of competing arguments: The Court dismissed the argument that the complaint was defective due to lack of specific averment of knowledge by the power of attorney holder.
Conclusions: The complaint complied with Section 142 of the NI Act.

Issue 2: Authorization and Knowledge of the Power of Attorney Holder

Relevant legal framework and precedents: The Court considered precedents such as A.C. Narayanan v. State of Maharashtra and TRL Krosaki Refractories Limited, which discuss the role and requirements for a power of attorney holder in filing complaints under the NI Act.
Court's interpretation and reasoning: The Court emphasized that the power of attorney holder must have personal knowledge of the transaction and be explicitly authorized to act on behalf of the payee.
Key evidence and findings: The Letter of Authority and affidavits indicated that Sh. Neeraj Kumar was well-conversant with the facts and was authorized to file the complaint.
Application of law to facts: The Court found that the documents provided sufficient evidence of Sh. Neeraj Kumar's knowledge and authorization.
Treatment of competing arguments: The Court rejected the High Court's finding that there was no specific averment of knowledge, noting the explicit statements in the affidavits and Letter of Authority.
Conclusions: The Court concluded that Sh. Neeraj Kumar was duly authorized and knowledgeable about the facts of the case.

Issue 3: Justification for Quashing the Complaint

Relevant legal framework and precedents: The Court considered the principles for exercising inherent powers under Section 482 of the Cr.P.C., emphasizing restraint and caution.
Court's interpretation and reasoning: The Court criticized the High Court for quashing the complaint without sufficient basis, noting that issues of authorization and knowledge should be determined during the trial.
Key evidence and findings: The Court found that the High Court's decision was based on an erroneous interpretation of the facts and law.
Application of law to facts: The Court held that the High Court's interference was unwarranted and premature.
Treatment of competing arguments: The Court emphasized the need for a trial to resolve disputes regarding authorization and knowledge.
Conclusions: The High Court's order was unjustified, and the complaint should proceed to trial.

3. SIGNIFICANT HOLDINGS

Verbatim quotes of crucial legal reasoning: "The requirement of Section 142 of the NI Act that the payee should be the complainant would be met if the complaint is in the name of the payee."
Core principles established: The complaint under Section 138 of the NI Act must be filed by the payee or holder in due course, and a power of attorney holder must have personal knowledge and authorization to file the complaint. Issues of authorization and knowledge should be addressed during the trial, not at the threshold.
Final determinations on each issue: The complaint complied with Section 142 of the NI Act; Sh. Neeraj Kumar was authorized and knowledgeable; and the High Court's quashing of the complaint was unjustified.

Conclusion: The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the complaint to be heard on its merits by the trial court.

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