[Cites 17, Cited by 0]
Madras High Court
P.S.K.Finance & Chit Funds Ltd vs Rajendran A1 Died on 9 April, 2026
Author: M.Nirmal Kumar
Bench: M.Nirmal Kumar
Crl.A.No.501 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 26.02.2026
PRONOUNCED ON : 09.04.2026
CORAM
THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR
Crl.A.No.501 of 2017
P.S.K.Finance & Chit Funds Ltd.,
By Managing Director K.Sivakumar,
Age 39 Years,
S/o.T.K.Kuppusamy,
No.395, Bazaar Street,
Salem-1. ... Appellant
Vs.
Rajendren A1 Died
1.Balan,
Aged 55 Years,
S/o.Kannusamy Pillai,
No.38-H, Berkit Street,
T.Nagar, Chennai-17. ... Respondent
PRAYER: Criminal Appeal is filed under Section 378 of Code of Criminal
Procedure, to set aside the judgment dated 18.08.2016 in C.C.No.723 of 2004
passed by the learned Judicial Magistrate No.I, Salem.
For Appellant : Mr.Muruganantham for
Mr.A.Kandasami
For Respondent : Mr.Mohamed Saifullah
Legal Aid Counsel
Page No.1 of 16
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Crl.A.No.501 of 2017
JUDGMENT
The appellant as complainant filed a private complaint against the
respondent for offence under Section 138 of Negotiable Instruments Act, 1881
in C.C.No.723 of 2004 before the learned Judicial Magistrate No.I, Salem
(trial Court). The trial Court by judgment dated 18.08.2016 dismissed the
complaint and acquitted the respondent. Challenging the same, the present
Criminal Appeal is filed.
2.Despite service of notice to the respondent and even after his name
printed in the cause list, no representation for the respondent either in person
or by any counsel. Hence, this Court by order dated 07.01.2026 appointed
Mr.Mohamed Saifullah as Legal Aid Counsel for the respondent.
3.Gist of the case is that the appellant viz., M/s.P.S.K.Finance & Chit
Funds Limited is represented by the Managing Director Mr.K.Sivakumar.
Initially, the complaint was filed by Managing Director Mr.Kuppusamy
through his power agent Mr.Ramasamy against the respondent and one
Rajendren and the power of attorney document in Ex.P1. After demise of
Mr.Kuppusamy on 27.10.2024, his son Mr.K.Sivakumar took over as
Managing Director and executed a power of attorney favouring Mr.Ramasamy
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on 20.12.2004 (Ex.P2). Later the said Mr.Ramasamy passed away and
Mr.Sivakumar executed a power of attorney favouring Mr.Venkatachalam,
Manager-cum-Cashier to prosecute the complaint. In the meanwhile, A1
Rajendren passed away, hence, the case proceeded against the respondent
alone. The case is that Rajendren was a Subscriber to the chits run by the
appellant Company namely Chit Group E19 (Chit No.13) and Chit Group
EA12 (Chit No.24) each for Rs.1,00,000/- for a period of 50 and 25 months
respectively. Rajendren was a successful bidder for the two chits, at that time,
the balance amount to be paid to the appellant was Rs.68,425/- for Chit Group
E19 and Rs.98,231/- for Chit Group EA12 with interest of Rs.344/-, in total
Rs.1,67,000/-. The respondent as a Guarantor executed a Demand Promissory
Note and Letter of Guarantee. In discharge of the said liability, the respondent
as Guarantor issued a cheque bearing No.023911 (Ex.P12) dated 10.02.2004
drawn on City Union Bank, T.Nagar, Chennai for a sum of Rs.1,67,000/-.
When the cheque (Ex.P12) presented by the appellant in Lakshmi Vilas Bank,
Salem Town Branch, the same returned with an endorsement “Insufficient
Funds” on 13.02.2004. Hence, statutory notice (Ex.P14) to Rajendren and to
respondent caused on 23.02.2004. Notice sent to Rajendren returned with an
endorsement Left on 26.02.2004. The respondent received the notice on
28.02.2004, but neither settled the cheque amount nor sent any reply.
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Following the procedures, complaint filed before the trial Court. During trial,
the appellant examined the power of attorney as PW1 and marked Exs.P1 to
P16. The respondent examined one witness and marked no document. On
conclusion of trial, the trial Court dismissed the complaint and acquitted the
respondent.
4.Learned counsel for the appellant submitted that the trial Court
completely misread the evidence and provisions of law and held that the
Managing Director Mr.Sivakumar of the appellant Company though executed
a power of attorney (Ex.P3) favouring his Manager and Cashier
Mr.Venkatachalam, but no resolution produced. It is to be seen that the
respondent not questioned and challenged the power of attorney (Ex.P3).
Further the trial Court held that the cheque (Ex.P12) dated 10.12.2004 pertains
to a time barred debt failing to consider that as per the Section 25(3) of
Contract Act, once the liability is acknowledged and a cheque is issued in
discharge of such liability, the limitation period stands extended, and the debt
cannot be construed as time-barred. As per Section 118 of N.I.Act, the date
found in the cheque is to be considered as the date of issuance of cheque.
Since the cheque is dated 10.12.2004, there is no time barred debt.
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5.He further submitted that the respondent issued the cheque (Ex.P12) in
the name of M/s.Dharmasastha Travels, of which, he is the Proprietor, hence,
there is no bar to proceed against the respondent in his individual name.
Though the respondent took a defence that the dues to the chit repaid and the
security cheque misused, but no document produced to substantiate the same.
The appellant to prove the case marked Exs.P1 to P16. The appellant
confirmed that he joined the company in 1970 as Cashier and later became
Manager-cum-Cashier, hence, he was well aware of the transaction between
the appellant and the respondent. The appellant neither disputed the Demand
Promissory Note nor the Guarantee of Undertaking executed by the respondent
and only taken a technical plea and the trial Court gave undue importance
without considering the facts of the case. The appellant proved the statutory
presumption under Sections 118 & 139 of N.I.Act and the respondent not
probablized any defence. In support of his submissions, learned counsel for
the appellant relied on the following decisions:
(i)Relied on the decision of the Hon’ble Apex Court in Punjab National
Bank and others v. Surendra Prasad Sinha reported in 1993 Supp (1) SCC
499 for the point that when the Principal debtor failed to repay the debt, the
outstanding debt in terms of contract can be claimed and the rules of limitation
are not meant to destroy the rights of the party. Further Section 3 of the
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Limitation Act, 1963 only bars the remedy but does not destroy the right which
the remedy relates to. The right to the debt continues to exist notwithstanding
the remedy is barred by the limitation.
(ii)Relied on the decision of the Hon’ble Apex Court in National
Insurance Co. Ltd., v. Seema Malhotra and others reported in (2001) 3 SCC
151 for the point that the drawer of the cheque promises the insurer that the
cheque, on presentation, would yield the amount in cash. It cannot be
forgotten that a cheque is a Bill of Exchange drawn on a specified banker. A
Bill of Exchange is an instrument in writing containing an unconditional order
directing a certain person to pay a certain sum of money to a certain person. It
involves a promise that such money would be paid.
(iii)Further placed reliance on the decision of the Bombay High Court in
Dinesh B.Chokshi v. Rahul Vasudeo Bhatt and another reported in 2013 (2)
Mh.L.J.130 wherein the Hon’ble Division Bench following the decision of
National Insurance Co. Ltd., (cited supra) held that a cheque issued for
discharge of a debt which is barred by law of limitation is itself a promise
within the meaning of Sub-section (3) of Section 25 of the Contract Act. A
promise is an agreement and such promise which is covered by Section
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25(3) of the Contract Act becomes enforceable contract provided that the same
is not otherwise void under the Contract Act.
(iv)Further placed reliance on the decision of Kerala High Court in
Dr.K.K.Ramakrishnan v. Dr.K.K.Parthasaradhy & another reported in 2003
SCC OnLine Ker 420 wherein it had held that when a person issues a cheque,
he acknowledges his liability to pay. In the event of the cheque being
dishonoured on account of insufficiency of funds, he will not be entitled to
claim that the debt had become barred by limitation and that the liability was
not thus legally enforceable and he would be liable for penalty in case the
charge is proved against him.
(v)Relied on the decision of the High Court of Punjab and Haryana in
Sultan Singh v. Tej Partap in CRM-M No.39414 of 2021 wherein it had held
a debt which has become time barred can be enforced in case the ingredients of
Section 25(3) of the Contract Act are fulfilled.
6.Making the above submissions and relying upon the decision of the
Hon’ble Apex Court, learned counsel for the appellant prays for setting aside
the judgment of acquittal.
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7.The Legal Aid Counsel for the respondent submitted that admitted
position is that the appellant Company is a Finance & Chit Fund registered
Company, its Managing Director Mr.Sivakumar executed a power of attorney
(Ex.P3) in favour of Mr.Venkatachalam, Manager and Cashier to prosecute the
complaint against the respondent and Rajendren (died). When the appellant
was questioned as to whether any resolution authorizing the Managing
Director to execute the power of attorney produced, he admitted no such
resolution produced. Learned counsel further submitted that the Memorandum
of Association and Article of Association are public documents which establish
that no power is granted to Managing Director in his individual capacity to
execute power of attorney in favour of any person to prosecute a complaint. In
the absence of any such specific authority vested with Managing Director, then
the power has to be derived only by way of resolution. In this case,
admittedly, no resolution produced to show the Managing Director authorized
to execute power of attorney favouring the appellant. Hence, Ex.P3 is not a
legally sustainable document.
8.He further submitted that Ex.P4 is the Demand Promissory Note dated
06.11.1997 executed by Rajendren, Subscriber to the Chit. The respondent’s
guarantee letter dated 06.11.1997 is Ex.P5. Both Rajendren and the
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respondent executed surety bond dated 06.11.1997 is Ex.P6. Exs.P7, P8 & P9
are the Demand Promissory Note, Guarantee Document and Asset Valuation
Document for other chit. It is confirmed that the first chit was closed on
06.11.1997 and the second chit was closed on 08.01.1998. In this case, the
cheque is of the year 2004, which is six years after the execution of the
Demand Promissory Note and Undertaking Guarantee, hence, it is beyond the
period of three years limitation. He further submitted that the appellant unale
to produce any communication or undertaking of the respondent
acknowledging the loan and executing the cheque. In this case, no such
extension of guarantee exists. In view of the same, the cheque (Ex.P12)
pertains to a time barred debt and unenforceable.
9.He further submitted that the trial Court by a well reasoned judgment
framed five questions and answered the same referring to the evidence which
are as follows:
(i)the first question is that the locus standi of the complainant to
prosecute the complaint by way of a power of attorney. The trial Court held
that, in the absence of authorization through a company resolution, the power
of attorney had no authority to proceed with the complaint.
(ii)the second question is that whether the Managing Director can
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further delegate the power to power agent i.e., complainant. This was
answered in negative.
(iii)the third question is with regard to time barred debt. The trial Court
referring to the Chit Group E19 concluded on 03.09.2000 and the Chit Group
EA12 concluded on 29.07.1999, held that the cheque (Ex.P12) is of the year
2004, is time barred.
(iv)the fourth question is that the cheque (Ex.P12) was drawn by the
Proprietor of M/s.Sree Dharma Sastha Travels. The trial Court held that there
is nothing to show that Rajendren and the respondent are Partners and in
discharge of that liability, the cheque (Ex.P12) was issued.
(v)the fifth question is that the appellant not produced the company by-
laws to charge beyond the chit amount along with the interest.
10.In support of his submissions, learned counsel for the respondent
relied on the following decisions.
(i)Relied on the decision of the Hon’ble Apex Court in State Bank of
Travancore v. M/s.Kingston Computers(I) P. Ltd. reported in 2011 (5) MLJ
842 wherein it had held that in the absence of producing the resolution passed
by the Board of Directors of a Company giving authority to the person to
prosecute the complaint, even if that person holds a high position in the
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company, the power of attorney is nothing more than a scrap of paper.
(ii)Relied on the decision of the Hon’ble Apex Court in A.C.Narayanan
v. State of Maharashtra reported in 2013 (4) MLJ (Criminal) 213 wherein it
had held that filing of complaint petition under Section 138 of N.I Act through
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. The power of attorney holder must have witnessed
the transaction as an agent of the payee/holder. The complainant to make
specific assertion as to the knowledge of the power of attorney holder in the
said transaction explicitly in the complaint. The general power of attorney
cannot be delegated to another person without specific clause permitting the
same in the power of attorney. In this case, the Managing Director had no
such clause in the Articles of Association for sub delegation.
(iii)Relied on the decision in Dilip Hariramani v. Bank of Baroda
reported in 2022 SCC OnLine SC 579 wherein the Hon’ble Apex Court had
laid down the principles that the provisions of Section 141 imposes vicarious
liability by deeming fiction which presupposes and requires the commission of
the offence by the company or firm.
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(iv)Relied on the decision in M/s.Sonali Power Equipments Pvt. Ltd. v.
Chairman, Maharashtra State Electricity Board, Mumbai & Ors. reported in
2025 LiveLaw (SC) 721 wherein the Hon’ble Apex Court held that the parties
may also enter into a contract for repayment of a time-barred debt, which is
recognised under Section 25(3) of the Contract Act. In such cases the
Limitation Act does not apply and time barred cases are excluded. In this case,
there is no contract for repayment of time barred debt.
11.Making the above submissions and relying upon the above decisions,
learned counsel for the respondent prays for dismissal of the appeal and to
confirm the judgment of the trial Court.
12.Considering the submissions and on perusal of the materials, it is
seen that in this case, the appellant is a power of attorney of M/s.P.S.K.Finance
& Chit Funds Limited and prosecuted the case based on the power of attorney
(Ex.P3) executed by the Managing Director. When the appellant was
questioned as to whether any resolution authorizing the Managing Director to
execute the power of attorney produced, he admitted no such resolution
produced. In the absence of a resolution authorizing sub-delegation, the power
of attorney (Ex.P3) executed for that purpose is not valid. Hence, in this case,
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Ex.P3 is of no significance. In this case, the power of attorney (Ex.P3) is the
foundational document by which the case prosecuted by the authorised
representative against the respondent. When the foundation falls, the entire
structure bound to fall. In view of the above, the entire case falls. Added to it,
Exs.P4 to P9 are the Demand Promissory Notes, Guarantee Letter and
undertaking given by Rajendren and the respondent. All these documents are
of the year 1997 and 1998. The trial Court on the evidence and materials
found that Chit Group E19 concluded on 03.09.2000 and Chit Group EA12
concluded on 29.07.1999, hence, the transaction gets over on those dates. In
this case, admittedly, the cheque (Ex.P12) is dated 10.02.2004 which is beyond
the period of limitation of three years.
13.The appellant neither in his evidence nor produced any document to show
that there was any undertaking or contract for repayment of the time barred
debt, which is recognized under Section 25(3) of Contract Act. In the absence
of the same, it cannot be construed that the cheque was issued for discharge of
the debt barred by law of limitation and it cannot be treated as extended.
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14.Thus, the trial Court by a well reasoned judgment framed five
questions and answered the same referring to the evidence. Out of the five
questions framed, except question No.4, all other questions rightly answered.
In any event, the trial Court rightly came to the conclusion that the appellant
failed to prove the case legally beyond all reasonable doubt and the respondent
probablized his defence. Hence, this Court is not inclined to interfere with the
impugned judgment of the trial Court.
15.In the result, this Criminal Appeal stands dismissed and the judgment
of acquittal dated 18.08.2016 in C.C.No.723 of 2004 passed by the learned
Judicial Magistrate No.I, Salem is affirmed.
16.This Court places its appreciation to the Legal Aid Counsel for
thorough preparation and vehemently put for the case of the respondent. The
Legal Services Authority, Madras High Court is directed to pay entitled
remuneration to the learned counsel Mr.Mohamed Saifullah.
09.04.2026
Speaking order/Non-speaking order
Index: Yes/No
Neutral Citation: Yes/No
vv2
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To
The Judicial Magistrate No.I,
Salem.
Copy To:
The Legal Services Authority,
Madras High Court.
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M.NIRMAL KUMAR, J.
vv2
PRE-DELIVERY JUDGMENT IN
09.04.2026
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