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TMI Blog2024 (2) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Products Pvt. Ltd. Vs. M/s. Trimurti Concast Pvt. Ltd. and others), under Section 138 of N.I. Act, Police Station New Mandi, District Muzaffarnagar, pending in the Court of Additional Chief Judicial Magistrate, Court No. 1, Muzaffarnagar. 3. Brief facts of the case are that Uttarakhand Engineering Products Private Limited (here-in-after for the sake of brevity has been referred to as "Complainant") is engaged in the business of Sponge Iron and Silicon Manganese. M/s Trimurti Concast Pvt. Ltd. placed an order for supply of Sponge Iron and Silicon Manganese, the complainant supplied the product, thereafter, M/s Trimurti Concast Pvt. Ltd gave a cheque of Rs. 1,07,05,318.00 on 16.07.2015 bearing cheque no. 000441 drawn in HDFC Bank, 53/4-A, Bagh Kambalwala, Jansath Road, New Mandi Muzaffarnagar. This cheque was presented on 12.10.2015 and the same was bounced because of insufficiency of funds, thereafter, the complainant gave a legal notice on 23.10.2015 within stipulated time. When, M/s Trimurti Concast Pvt. Ltd did not pay the said amount the complainant was left with no option but to file a complaint under Section 138 of Negotiable Instruments Act before Chief Judicial Magis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the complainant is in charge of the business of the complainant payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorney holder cannot depose as a witness. Nevertheless, an explicit assertion as to the knowledge of the Power of Attorney holder about the transaction in question must be specified in the complaint. On this count, the fourth question becomes infructuous. In view of the discussion, we are of the opinion 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 Page 13 13 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." 8. Learned counsel for the applicant further placed reliance on the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive director of the company he is sleeping director of the company and not actively involved in the day to day affairs of the company and not authorized to conduct day to day affairs of the company, nor had the authority to sign or issue the cheque. ARGUMENT ON BEHALF OF OPPOSITE PARTY NO. 2 12. Per contra, Mr. Shwetashwa Agarwal, learned counsel for the opposite party no. 2 submits that averment made by the applicant that the applicant, Ashok Sharma was a sleeping director is just a fig of imagination. He cannot be a sleeping director when he himself is signing the cheque. As regard to, whether he has no authority to sign the cheque, Mr. Agarwal states, if he has no authority to sign the cheque then signing a cheque amounts to a criminal breach of trust. It that was a situation why the other directors have not initiate any criminal proceedings against him. 13. In response to the first submission, learned counsel for opposite party no. 2 submits that the law cited by counsel for the applicant has been watered down and clarified in the latest judgement of Hon'ble Supreme Court in the case of M/s TRL Krosaki Reractories Ltd. Vs. M/s SMS Asia Private Limited and another (Criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat A.C. Narayanan case was between two individuals and the Hon'ble Supreme Court was appreciating the facts of that particular case vis a vis the powers of a principal and an agent inter se and now that law has been clarified because in the cases of company, a company is a corporeal personality it is a dejure complainant and the person, who is representing the company is a defacto complainant, so those parameters of specific assertions, specific words cannot be put into a strait-jacket formula and those specific words are not required to be mentioned. The only thing, which has to be appreciated by the Court at the time of summoning of accused is as to whether the complaint has been filed by a payee or a holder in due course, which in the case is a company so obviously the company has filed the complaint but through a defacto complainant, who is authorized signatory duly authorized by the resolution of the Board of Directors of the company. He further submits that it is a sufficient requirement to meet out the ingredients of Section 141 of N.I. Act. He further submits that it has also been held by the Hon'ble Supreme Court that these arguments as to whether he had the authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure. 19. He further submits that scope of judicial enquiry is limited at this stage would be very limited, moreover, there are catina of judgements, which says that the inherent power of Section 482 Cr.P.C. should sparingly be used. CASE NO. 12652 OF 2016 (NARENDRA SINGH PAWAR) 20. Learned counsel for the applicant submits that the applicant, Narendra Singh Pawar is not signatory of the cheque and there was no allegation that he was looking after day to day affairs of the company. 21. Per contra Mr. Shwetashwa Agarwal, learned counsel for opposite party no. 2 submits that as per provisions of Section 141 of N.I. Act the vicarious liability flows from the company to the directors, who are involved in the transaction in question. Here in the facts of the present case their involvement in the transaction has been shown in the complaint right from the very inception. The complaint and the statement on oath submitted by the complainant undisputedly discloses specific allegations of participation and the specific acts attributed to all the directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Iron and Silicon Manganese, which the complainant company had supplied against which a cheque was given on behalf of M/s. Trimurti Concast Pvt. Ltd. and the signatory of the cheque was one of its directors of the company, Mr. Ashok Sharma. 27. The cheque was presented on 12.10.2015 and the same was returned back due to insufficiency of funds. A legal notice as contemplated under Negotiable Instruments Act was issued on 23.10.2015 within time. When no payment was made to the complainant, he filed a complaint under Section 138 of Negotiable Instruments Act before the Chief Judicial Magistrate, Muzaffarnagar, who being satisfied had issued summons vide order dated 05.07.2016. 28. The counsel for the applicant has argued that the proceedings under Section 138 of Negotiable Instruments is not maintainable as the complaint has been filed by a power of attorney holder and the power of attorney was not placed before the trial court neither the power of attorney holder had averred in the complaint that he had a personal knowledge about the alleged transactions. 29. To buttress his argument, the counsel for the applicant has relied on a decision passed by Hon'ble Supreme Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of evidence when the accused disputed the authority of the said individual to present the complaint, opportunity should have been given to the complainant to prove the same, but that opportunity need be given only when the trial commences. The dismissal of the complaint at the threshold on the premise that the individual has not produced certified copy of the resolution appears to be too hasty an action. We, therefore, set aside the impugned orders and direct the trial court to proceed with the trial and dispose it off in accordance with law. Parties are directed to appear before the trial court on 31.01.2000. 33. The Hon'ble Supreme Court in the matter of National Small Industries Corporation Limited vs. State (NCT of Delhi) (2009) 1 SCC has held as follows:- "The term `complainant' is not defined under the Code. Section 142 NI Act requires a complaint under section 138 of that Act, to be made by the payee (or by the holder in due course). It is thus evident that in a complaint relating to dishonour of a cheque (which has not been endorsed by the payee in favour of anyone), it is the payee alone who can be the complainant. The NI Act only provides that dishonour of a ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resultantly, when in a complaint in regard to dishonour of a cheque issued in favour of a company or corporation, for the purpose of section 142 NI Act, the company will be the complainant, and for purposes of section 200 of the Code, its employee who represents the company or corporation, will be the de facto complainant. In such a complaint, the dejure complainant, namely, the company or corporation will remain the same but the defacto complainant (employee) representing such de jure complainant can change, from time to time. And if the de facto complainant is a public servant, the benefit of exemption under clause (a) of proviso to section 200 of the Code will be available, even though the complaint is made in the name of a company or corporation. 34. The Hon'ble Supreme Court in the matter of Sunil Bharti Mittal Vs. Central Bureau of Investigation (2015) 4 SCC 609 has held as follows:- In the present case, however, this principle is applied in an exactly reverse scenario. Here, company is the accused person and the learned Special Magistrate has observed in the impugned order that since the appellants represent the directing mind and will of each company, their state of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company." 35. In view of the aforesaid facts and circumstances and the ratio laid down by the Hon'ble Supreme Court in the judgement of A.C. Naraynan (supra), that the power of attorney holder, who filed the complaint clearly needs to aver that he has knowledge of the complete transaction has been watered down by Hon'ble Supreme Court in the matter of M/s TRL Krosaki Reractories Ltd. (supra) wherein it is held that when a complainant is a company and authorized representative can represent the company, such averment and prima facie material is sufficient for the Magistrate to take cognizance in such cases. 36. Undoubtedly, a company is a separate legal entity, which can only be represented through its officers, directors, managing directors, chairman etc. if such a company commits an offence, it would normally be taken as an action of that individual, who has acted on behalf of the company. 37. The argument advanced by the counsel for the applicant that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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