2013 (9) TMI 948 - SC - Indian Laws

Complaint under Section 138 of the N.I. Act - Dishonour of cheques - Case instituted by power of attorney holder - Held that - the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. We also reiterate that where the payee is a proprietary concern, the complaint can be filed (i) by the proprietor of the proprietary concern, describing himself as the sole proprietor of the payee ; (ii) the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and (iii) the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor. Whether power of attorney holder can delegate the powers further - Held that - whether the power of attorney holder will have the power to further delegate the functions to another person will completely depend on the terms of the general power of attorney. As a result, the authority to sub-delegate the functions must be explicitly mentioned in the general power of attorney. Otherwise, the sub-delegation will be inconsistent with the general power of attorney and thereby will be invalid in law. Nevertheless, the general power of attorney itself can be cancelled and be given to another person. In the light of section 145 of N.I 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 N.I 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 N.I. Act.

Issues Involved:
1. Filing of complaint petitions under Section 138 of the N.I. Act through a Power of Attorney.
2. Verification of complaint petitions by a Power of Attorney holder under Section 200 of the Code.
3. Requirement of specific averments regarding the knowledge of the Power of Attorney holder in the complaint.
4. Examination of the Power of Attorney holder based on presumed knowledge.
5. Applicability of Section 145 of the N.I. Act in dispensing with proceedings under Section 200 of the Code.
6. Validity of sub-delegation of functions by a Power of Attorney holder.

Detailed Analysis:

1. Filing of Complaint Petitions under Section 138 of the N.I. Act through a Power of Attorney:
The Supreme Court clarified that filing of complaint petitions under Section 138 of the Negotiable Instruments Act (N.I. Act) through a Power of Attorney holder is legal and competent. The Power of Attorney holder acts as an agent of the principal, and the initiation of legal proceedings by the attorney holder is considered as initiation by the principal represented by the attorney holder, not in the personal capacity of the attorney holder. The Power of Attorney holder cannot file a complaint in their own name as if they were the complainant.

2. Verification of Complaint Petitions by a Power of Attorney Holder under Section 200 of the Code:
The Court held that a Power of Attorney holder can depose and verify on oath before the Court to prove the contents of the complaint. However, it is essential that 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 said transactions. This ensures that the verification is based on personal knowledge and not hearsay.

3. Requirement of Specific Averments Regarding the Knowledge of the Power of Attorney Holder in the Complaint:
The Court emphasized that it is required by the complainant to make specific assertions regarding the knowledge of the Power of Attorney holder in the said transaction explicitly in the complaint. This ensures that the Power of Attorney holder has the necessary knowledge to verify the complaint and testify about the transaction.

4. Examination of the Power of Attorney Holder Based on Presumed Knowledge:
If the Power of Attorney holder fails to assert explicitly their knowledge in the complaint, they cannot verify the complaint on oath based on presumed knowledge. The Court clarified that the Power of Attorney holder must have actual knowledge of the transaction to be competent to verify the complaint and testify.

5. Applicability of Section 145 of the N.I. Act in Dispensing with Proceedings under Section 200 of the Code:
The Court noted that in light of Section 145 of the N.I. Act, it is open to the Magistrate to rely upon the verification in the form of an affidavit filed by the complainant in support of the complaint under Section 138 of the N.I. Act. The Magistrate is not mandatorily obliged to call upon the complainant to remain present before the Court or to examine the complainant or their witness upon oath for deciding whether or not to issue process on the complaint under Section 138 of the N.I. Act.

6. Validity of Sub-Delegation of Functions by a Power of Attorney Holder:
The Court clarified that the functions under the general Power of Attorney cannot be delegated to another person without a specific clause permitting the same in the Power of Attorney. However, the general Power of Attorney itself can be canceled and given to another person. This ensures that the delegation of authority is consistent with the terms of the original Power of Attorney.

Conclusion:
The Supreme Court answered the reference by affirming that a Power of Attorney holder can file, appear, and depose for the purpose of issuing process for the offence punishable under Section 138 of the N.I. Act, provided they have personal knowledge of the transaction. The Court also clarified the conditions under which the Power of Attorney holder can act and the necessity of explicit assertions regarding their knowledge in the complaint. The matter was remitted to the appropriate Bench for deciding the case on merits.

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