COMPLAINT BY POWER OF ATTORNEY HOLDER

[Mr. M. GOVINDARAJAN]

Order 3 Rule 1 and 2 Civil Procedure Code empowers the holders of power of attorney to ‘act’ on behalf of the Principal.  The word ‘act’ employed in Order 3 Rules 1 and 2 CPC confines only to in respect of acts done by the power of attorney holder in exercise of power granted by the instrument.  If the power of attorney holder has rendered some acts in pursuance of power of attorney, he may depose for the principal in respect of such acts but he cannot depose for the principal for the acts done by the principal and not by him.  Similarly he cannot depose for the principal in respect of the matter of which only the principal is entitled to be cross-examined.

A general power of attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party.   He can only appear in his own capacity.   No one can delegate the power to appear in the witness box on behalf of himself.   To appear in a witness box is altogether a different act.   A general power of attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.

But in criminal law anybody can set in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take cognizance.  No court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint.  If any statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute.

The issue to be discussed in this article whether the power of attorney holder can file a complaint on behalf of the complainant under the Negotiable Instruments  Act with reference to decided case laws.

In ‘A.C. Narayanan V. State of Maharastra’ – 2013 (9) TMI 948 - SUPREME COURT the Supreme Court framed the following questions:

• Whether a power of attorney holder can sign and file a complaint petition on behalf of the complainant?  Whether the eligibility criteria prescribed under Section 142(a) of the Negotiable Instruments Act, would stand satisfied if the complaint petition itself is filed in the name of the payee or holder in due course of the cheque?
• Whether a power of attorney holder can be verified on oath under Section 200 of the CrPC?
• Whether specific averments as to the knowledge of the power of attorney holder in the impugned transaction must be explicitly asserted in the complaint?
• If the power of attorney holder fails to assert explicitly his knowledge in the complaint then can the power of attorney holder verify the complaint on oath on such presumption of knowledge?
• Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the Negotiable Instruments Act which was introduced by an amendment in the year 2002?

The Supreme Court answered for the above queries as below:

• Filing of complaint petition under Section138 of the Negotiable Instruments Act through a power of attorney is perfectly legal and competent;
• 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 transactions;
• 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;
• In the light of Section 145 of the Negotiable Instruments 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 Negotiable Instruments 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 Negotiable Instruments Act;
• 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.

In ‘A.C. Narayanan V. State of Maharastra and other’ – 2015 (4) TMI 847 - SUPREME COURT OF INDIA the appellant is the Vice Chairman and Managing Director of the company M/s Harvest Financials Limited having its registered office at Bombay.  Under a scheme of investment the appellant collected  various amounts from various persons in the form of loans and in consideration thereof issued post dated cheques either his personal capacity or as the signatory of the company which got dishonored.

The respondent No. 2 is the power of attorney holder of six complainants and she filed complaints on behalf of the six complainants against the appellant under Sections 138 and 142 of the Negotiable Instruments Act, 1881 before the Trial Court.   The respondent 2 verified the complaint in each case of those cases as power of attorney holder of the complainants.  The Additional Chief Metropolitan Magistrate issued process against the appellant under Section 204 of CrPC for the offences punishable under Sections 138 and 142 of the Negotiable Instruments Act.  The appellant being aggrieved moved an application for discharge/recall of process in each of the complaints.   The trial court dismissed the applications.  Therefore he preferred criminal applications before the High Court for calling for the records of the case pending in the trial court.  The said applications were dismissed by the High Court.  The appellant contended that the complaint filed by the power of the attorney holder were not maintainable.

The Supreme Court observed that the Magistrate had taken without prima facie establishing the fact as to whether the power of attorney existed in the first place and whether it was in order.   It is not in dispute that the complaint against the appellant was not preferred by the payee or the holder in due course and the statement on oath of the person who filed the complaint has also not stated that he filed the complaint having been instructed by the payee or the holder in due course of the cheque.   Since the complaint was not filed abiding with the provisions of the Act, it was not open to Magistrate to take cognizance.  The Supreme Court perused the complaint and found that except mentioning in the cause title there is no mention of, or a reference to the power of attorney in the body of the said complaint nor was it exhibited as part of the said complaint.   Further, in the list of evidence there is a just a mere mention of the words at Serial No. 6 viz., ‘power of attorney’ however there is no date or any other particulars of the power of attorney mentioned in the complaint.  Even in the verification statement made by respondent 2 there is not even a whisper that she is filing the complaint as the power of attorney holder of the complainant.  Even the order of issue of process does not mention that the Magistrate had perused any power of attorney for issuing process.

The Supreme Court held that the Magistrate wrongly took cognizance in the matter and the court below erred in putting the onus on the appellant rather than the complainant.  The Supreme Court set aside the impugned order passed by the High Court as well as by the Additional Chief Metropolitan Magistrate.

In ‘G. Kamalakar V. Surana Securities Limited and another’ – (2015) 12 Supreme Court Cases 203 the first respondent M/s Surana Securities Limited is the complainant and is a limited company carrying on business of trading in shares.  The appellant is the client of the first respondent and used to trade in shares.  During the course of business, the appellant became liable to discharge ₹ 7,21,174 to the respondent company.   In order to discharge the said liability he issued six cheques on different dates.  All the cheques were dishonored with an endorsement ‘funds insufficient’.  The company issued a legal notice to the appellant to pay the amount but he did not pay the same. 

The Board of Directors of the first respondent company, by a resolution authorized the Managing Director to appoint an agent to represent the company.   One Shri V. Shankar Prasad was appointed as an agent by executing a general power of attorney.   Later he was substituted by Shri Ravinder Singh under another general power of attorney.   The respondent company filed a complaint against the appellant.  The Metropolitan Magistrate dismissed the complaint.  The respondent company filed appeal before the High Court which convicted the appellant under Section 138 of the Act.  Against the said order the appellant filed the present appeal before the Supreme Court.

The Supreme Court found that the complaint was filed by Shri V. Shankar Prasad claiming to be general power of attorney of the complainant company.  Subsequently Shri Ravinder Singh gave the evidence on behalf of the company under the general power of attorney given by the company.   The complaint was not signed either by the Managing Director or the Director of the Company.  The witness is only the employee of the company.  As per Resolution of the company under the first part the Managing Director and the Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for the prosecution.   Under the third part they were authorized to appoint or nominate any other person to appear on their behalf in the court and to engage lawyer etc.,  But nothing on the record suggests that an employee is empowered to file the complaint on behalf of the company.  In the present case Shri Shankar Prasad employee of the company signed the complaint and the Deputy General Manager gave evidence as if he knows everything though he does not know anything.   There is nothing on the record to suggest that he was authorized by the Managing Director or any Director.  Therefore the Supreme Court found that the Magistrate rightly acquitted the appellant. The Supreme Court set aside the order of the High Court and upheld the order passed by the Metropolitan Magistrate.

Discussions to this article

[RAJESH SANGHVI]

Excellent analysis.. Very very informative .. I have a strange question here on POA. Its a small Act ( of about 4 sections ) of 1882

If the specific powers are delegated ..Can the constituted attorney sign in the name of the Principal. I mean say if Mr. A has given POA to Mr. B and specific power to sign as A ( in the name & style of A ) is given to B ( I wonder can this be given ) and if Mr. B ( the constituted attorney ) signs as A, does it amount to forgery ??

Just an academic question. Because Sec. 1-A of POA Act 1882 states " POA includes any instrument empowering a specified person to act for and in the name of the person executing it.

[MARIAPPAN GOVINDARAJAN]

In my view Power of Attorney holder can sign on behalf of the person who gives the authority. He could not sign as if he is the person who gives power to him.