2020 (2) TMI 539 - HC - Indian Laws

Dishonor of Cheque - Maintainability of complaint - primordial contention of the petitioner is that the complainant Firm is an unregistered Firm, and under Section 69(2) of the Indian Partnership Act, 1932, the unregistered Firm cannot maintain a complaint - HELD THAT - Admittedly, both the complaints have been filed through a power of attorney, by name G.Veeraputhiran, who was the Internal Auditor of the complainant Firms. Now, the contention of the petitioner is that, the power of attorney did not spell out whether he has any personal knowledge about the transaction between the parties and in the absence of any personal knowledge, he is not competent to file the complaint - It is a settled law that a power of attorney holder can file a complaint, appear and depose for the purpose of issuance of process for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The only restriction is that the power of attorney should have a personal knowledge about the transaction between the parties, and in the absence of any personal knowledge, he cannot depose. The proceedings initiated under Section 14 of the Code noway affects the continuation of the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. Petition dismissed - decided against petitioner.

Issues Involved:
1. Maintainability of complaints under Section 138 of the Negotiable Instruments Act, 1881, by an unregistered partnership firm.
2. Validity of the power of attorney used to file the complaints.
3. Legally enforceable liability of M/s. Bhima Jewellery, Madurai.
4. Impact of liquidation and insolvency proceedings on the criminal complaints.
5. Responsibility of the Managing Director under Section 141 of the Negotiable Instruments Act, 1881.

Detailed Analysis:

1. Maintainability of Complaints by an Unregistered Partnership Firm:
The petitioner argued that the complainant is an unregistered partnership firm and, under Section 69(2) of the Indian Partnership Act, 1932, cannot maintain a private complaint. The respondent countered by producing xerox copies of the registration certificates, showing that both firms were registered. The court noted that it could not decide the registration status at this stage and left it open for the petitioner to raise the issue during the trial. The court referenced the judgment in *Meters and Instruments (P) Ltd. v. Kanchan Mehta* to support that the issue of registration cannot be decided at this stage.

2. Validity of the Power of Attorney:
The petitioner contended that the power of attorney was invalid as it was not authorized by all managing partners, and the attorney lacked personal knowledge of the transactions. The court examined the partnership deeds and found that the managing partners are empowered to initiate legal proceedings and appoint authorized representatives. It concluded that authorization by one managing partner is sufficient. The court cited *A.C. Narayanan v. State of Maharashtra* to affirm that a power of attorney holder can file a complaint if they have personal knowledge of the transactions. The court found that the power of attorney holder had filed an affidavit asserting personal knowledge, and thus, the complaints could not be quashed on this ground.

3. Legally Enforceable Liability of M/s. Bhima Jewellery, Madurai:
The petitioner argued that the cheques were issued to M/s. Bhima Jewellery, Nagercoil, and hence, M/s. Bhima Jewellery, Madurai, could not maintain the complaint. The respondent maintained that the petitioner had liabilities towards both firms. The court held that whether there was a legally enforceable liability against M/s. Bhima Jewellery, Madurai, is a matter to be decided during the trial. The court emphasized that the issue involves disputed facts that cannot be resolved in quash proceedings.

4. Impact of Liquidation and Insolvency Proceedings:
The petitioner argued that due to the liquidation and insolvency proceedings against the first accused company, the criminal complaints should be quashed under Section 14 of the Insolvency and Bankruptcy Code, 2016. The court clarified that Section 14(1)(a) of the Code restricts its operation to civil proceedings and does not bar criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. The court referenced judgments from the Bombay High Court to support this interpretation, concluding that the insolvency proceedings do not affect the continuation of the criminal complaints.

5. Responsibility of the Managing Director:
The petitioner contended that there was no specific averment in the complaints that he was responsible for the day-to-day affairs of the company. The court referred to the judgment in *National Small Industries Corporation Limited v. Harmeet Singh Paintal* to state that a Managing Director is presumed to be responsible for the company's affairs by virtue of their position. The court noted that the petitioner had previously filed unsuccessful petitions to discharge himself from the proceedings on the grounds of resignation. Therefore, the court concluded that the petitioner, as the Managing Director, could not escape liability.

Conclusion:
The court found no merit in the contentions of the petitioner and dismissed both Criminal Original Petitions. The trial was directed to proceed and be completed within three months. The connected miscellaneous petitions were also closed.

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