Punjab-Haryana High Court
Vijay vs M/S Camy Traders on 14 January, 2025
Neutral Citation No:=2025:PHHC:006397
CRM-A-997-MA-2017 (O&M) -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CRM-A-997-MA-2017 (O&M)
Reserved on: 10.01.2025
Pronouncement on: 14.01.2025
Vijay ...Applicant-Appellant
Versus
M/s Camy Traders ...Respondent
CORAM: HON'BLE MR. JUSTICE HARPREET SINGH BRAR
Present: Mr. Sumit Sangwan, Advocate
for the applicant.
Mr. Balwinder Singh Sudan, Advocate
for the respondent.
HARPREET SINGH BRAR, J.
1. The present application is preferred under Section 378(4) of the
Cr.P.C. against the judgment of acquittal dated 14.03.2017 passed by learned
Judicial Magistrate 1st Class, Bhiwani, in a criminal complaint case, bearing no.
637/2016, filed under section 138 of The Negotiable Instruments Act, 1881
(hereinafter 'NI Act' for brevity).
2. Briefly, the facts are that the applicant-complainant claimed to be
the proprietor of M/s Baanke Bihari, which is engaged in manufacturing non-
woven fabric. The firm supplied the fabric to the respondent-accused vide bill
No.358 dated 30.09.2012 for an amount of Rs.3,32,436/-, bill No.389 dated
28.09.2012 for an amount of Rs.2,05,153/- and bill No.561 dated 14.10.2012
for an amount of Rs.3,18,370/- on credit. The respondent-accused, in discharge
of his legally enforceable debt, issued three cheques i.e. cheque bearing No.
302989 dated 21.10.2012 for an amount of Rs. 3,32,436/-, cheque bearing No.
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302992 dated 28.10.2012 for an amount of Rs. 2,05,153/- and cheque bearing
No.104852 dated 30.11.2012 for an amount of Rs. 3,18,370/-, drawn on Indian
Overseas Bank, Ludhiana, in favour of M/s Baanke Bihari. Thereafter, the
complainant deposited the cheque bearing No.104852 dated 30.11.2012 with
his bank for encashment of the same. However, vide memo dated 28.02.2013,
the above said cheque was returned unpaid with the remark,"payment stopped
by drawer". Subsequently, a legal notice dated 25.03.2013 was served upon the
respondent. Despite the legal notice, the respondent failed to pay the cheque
amount within the stipulated period of 15 days. Hence, the complaint before the
Magistrate.
3. Learned counsel for the applicant inter alia contends that the
learned trial Court has erroneously adopted a hyper-technical approach in
concluding that Vijay Kumar was not competent to file the complaint under
Section 138 of the NI Act and therefore, wrongly dismissed the same vide
impugned judgment dated 14.03.2017. It is an admitted fact that the respondent
had a legal liability to discharge and in lieu of the same, the disputed cheque
was issued. On presentation for encashment, the cheque was dishonoured with
the remarks- 'payment stopped by drawer,' which clearly depicts the mala fide
intention of the respondent. Moreover, the learned trial Court also ignored the
fact that the legal notice served by the applicant upon the respondent received
no reply. As such, an adverse inference must be drawn against the respondent.
The applicant is covered under the definition of 'holder in due course' as
mentioned in Section 8 of the NI Act, as well as duly authorised to file the
complaint (supra). Reliance in this regard can be placed upon the judgments
rendered by the Hon'ble Supreme Court in M/s MMTC Limited vs. M/s
Medchl Chemicals & Pharma (P) Limited 2002(1) R.C.R. (Criminal) 318,
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Allahabad High Court in Gurcharan Singh vs. State of U.P. and another
2002(4) R.C.R(Crl.) 414 and Karnataka High Court in C. Prabhu vs. Sangam
Corporation (Finance and Investment), Bangalore 2002(3) R.C.R.(Crl.) 23.
4. Per contra learned counsel for the respondent, placing reliance on
Section 142 NI Act, averred that the complaint can only be maintainable in the
name of the 'payee' which in this case is either the proprietary concern or the
proprietor of the said concern. Since the applicant is not the proprietor of M/s
Baanke Bihari Textiles, he had no locus standi to initiate proceedings under
Section 138 NI Act. The applicant did supply any document to connect him to
the proprietary concern except an affidavit which too was executed long after
the complaint (supra) was filed. Reliance was placed on the judgment rendered
by the Hon'ble Supreme Court in Milind Shripad Chandurkar vs. Kalim M.
Khan and another 2011(4) SCC 275.
5. Having heard the learned counsel for the parties and after perusing
the record of the case with their able assistance, the following question arises
for the consideration of this Court:
Whether the complainant in a complaint under Section 138 of NI Act can
authorise the manager of the proprietary concern to pursue the matter
during the pendency of the trial?
6 It transpires that the applicant misrepresented himself to be the
proprietor of the firm in the name and style of 'Baanke Bihari Textiles'.
However, the applicant subsequently tendered an affidavit (Ex.CA) in
preliminary evidence on 20.04.2015 wherein he has stated that he is working as
a manager in the said firm and has been authorised to file the complaint by one
Anand Agarwal who is in fact the proprietor of the said firm. To substantiate
this contention, the applicant placed on record special power of attorney (Ex.
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C1) which was executed on 13.02.2015. Curiously, however, the complaint,
which mentions the applicant as the proprietor of the firm, was filed on
15.04.2013 which was much prior to the execution of the special power of
attorney.
7. A two Judge Bench of the Hon'ble Supreme Court in Milind
Shripad Chandurkar(supra), speaking through Justice Dr. Justice B.S.
Chauhan, made the following observations:
"18. Section 7 of the Act 1881 defines "Payee" as the person
named in the instrument, to whom or to whose order the money is
by the 8 instrument directed to be paid. Section 8 defines "the
holder of the cheque" as any person entitled in his own name to the
possession thereof and to receive or recover the amount due
thereon from the parties thereto. Section 9 defines "holder in due
course" as any person who for consideration became the possessor
of a cheque if payable to a bearer or the payee or endorsee
thereof.
Section 138 provides for penalties in case of dishonour of certain
cheques for insufficiency of funds in the accounts. However,
exception contained in clause (c) thereof reads as under :
"The drawer of such cheque fails to make the payment of the
said amount of money to the payee or, as the case may be, to
the holder in due course of the cheque, within fifteen days of
the receipt of the said notice."
(Emphasis added)
19. Section 142 provides for taking cognizance of the offence
notwithstanding anything contained in Criminal Procedure Code
which reads as under :
"(a) no court shall take cognizance of any offence
punishable under Section 138 except upon a complaint, in
writing, made by the payee or, as the case may be, the
holder in due course of the cheque." (Emphasis added)
20. This Court in Shankar Finance and Investments v. State of
Andhra Pradesh & Ors., (2008)8 SCC 536, dealt with the issue
involved herein elaborately and held 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 the sole proprietary concern represented by its
proprietor; and (iii) the proprietor or the proprietary concern
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represented by the Attorney Holder under the power of attorney
executed by the sole proprietor. However, it shall not be
permissible for an Attorney Holder to file the complaint in his own
name as if he was the complainant. He can initiate criminal
proceedings on behalf of the principal.
In a case of this nature, where the "payee" is a company or a sole
proprietary concern, such issue cannot be adjudicated upon taking
any guidance from Section 142 of the Act 1881 but the case shall
be governed by the general law i.e. the Companies Act 1956 or by
civil law where an individual carries on business in the name or
style other than his own name. In such a situation, he can sue in
his own name and not in trading name, though others can sue him
in the trading name. So far as Section 142 is concerned, a
complaint shall be maintainable in the name of the "payee",
proprietary concern itself or in the name of the proprietor of the
said concern.
The Court placing reliance on earlier judgments, particularly, in
Janki Vashdeo Bhojwani v. Indusind Bank Ltd., 2005(1) RCR
(Civil) 240 : (2005)2 SCC 217, held that the general principles of
company law or civil law would apply for maintaining the
complaint under Section 138 of the Act 1881.
8. Sections 7, 9 and 142 of the NI Act become relevant in the present
context because as per Section 142, a complaint is to be submitted in writing
for an offence punishable under Section 138 of the NI Act by a payee or holder
in due course of the cheque that has been dishonoured. "Payee" has been
defined in Section 7 of that Act as the person named in the instrument (in this
case the cheques in question) and " holder in due course" has been defined in
Section 9 of the said Act to mean any person, who for consideration becomes
the possessor of a promissory note. In the instant case, a perusal of the cheque
reveals that the firm, namely, Baanke Bihari textiles is the payee. In such a
scenario, the applicant cannot claim to be the payee of the cheque, nor can he
be the holder in due course since the cheque had neither been issued to him or
in his favour nor he is the sole proprietor of the concern, which would have
empowered him to be the payee himself and thus, make the complaint.
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9. Learned counsel for the applicant placed reliance on the judgement
of the Hon'ble Supreme Court in M/s MMTC Limited vs. M/s Medchl
Chemicals & Pharma (P) Limited (supra), however, such reliance is misplaced
since the aforementioned judgement deals with companies registered under the
Companies Act. Unlike a company incorporated under the Companies Act,
1956, which is a separate legal entity distinct from its shareholders, a
proprietary concern does not have a legal existence independent of its
proprietor. The complainant firm in this case is admittedly unregistered and,
therefore, not a legal entity or juristic person like a registered company or
corporation. In the case of M/s M.M.T.C. Ltd (supra), the complainant was a
company, which qualifies as a juristic person. Unlike natural persons, juristic
persons cannot act or speak on their own and must be represented by an
authorized individual. In that matter, the dishonored cheque was issued in favor
of the company, and the complaint under Section 138 of the Negotiable
Instruments Act was initially filed by an officer on behalf of the company.
Subsequently, with the court's permission, another officer was authorized to
represent the company in the proceedings. It was held that a complaint could be
validly instituted by an officer acting in the name and on behalf of the
company. Furthermore, any lack of authority at the time of filing the complaint
could be rectified at a later stage. However, in the case of a proprietary concern
similar principles would not be applicable since, essentially, it is an individual
conducting business under a trade name. The Hon'ble Apex Court in Shankar
Finance and Investments v. State of Andhra Pradesh & Ors. (supra) opined
as follows:
9. "...Therefore 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';
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(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. It
follows that in this case the complaint could have been validly filed
by describing the complainant in any one of the following four
methods :
"Atmakuri Shankara Rao, sole proprietor of
M/s. Shankar Finance & Investments "
Or
"M/s. Shankar Finance & Investments a sole proprietary
concern represented by its proprietor Atmakuri Shankara
Rao"
Or
"Atmakuri Shankara Rao, sole proprietor of
M/s. Shankar Finance & Investments , represented by his
Attorney Holder Thamak Satyanarayana"
Or
"M/s. Shankar Finance & Investments , a proprietary
concern of Atmakuri Shankara Rao, represented by his
Attorney Holder Thamada Satyanarayana".
What would have been improper is for the Attorney holder
Thamada Satyanarayana to file the complaint in his own name as
if he was the complainant."
10. Moreover, a three Judge Bench of the Hon'ble Supreme Court in
A.C. Narayanan vs. State of Maharashtra and another 2014(11) SCC 790
authoritatively settled the controversy and opined as follows:
"24. 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 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.
xxx xxx xxx xxx
26. While holding that there is no serious conflict between the decisions
in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the
position and answer the questions in the following manner :
(i) Filing of complaint petition under Section 138 of N.I Act
through power of attorney is perfectly legal and competent.
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(ii) 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 said
transactions.
(iii) 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.
(iv) 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.
(v) 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.
Reverting to the facts of the case, the complaint could have been filed (i)
by the proprietor of the proprietary concern, describing himself as the sole
proprietor of the "payee", who is Anand Aggarwal in this case; (ii)
the proprietary concern, describing itself as a sole proprietary concern,
represented by its sole proprietor i.e. M/s Baanke Bihari Textiles; or (iii) the
proprietor or the proprietary concern represented by the attorney holder under
a power of attorney executed by the sole proprietor. However, it is apparent that
the applicant filed the complaint in his own name as if he was the complainant
and not on behalf of his principal. In fact, there is nothing on record to suggest
that the applicant was a power of attorney holder at the time of the filing of the
complaint. A special power of attorney (Ex. C1) was later put to the fore;
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however, a perusal of the same reveals that it was executed on 13.02.2015 i.e.
after approximately two years from the filing of the complaint. Even if for the
sake of argument it is accepted that the applicant was a power of attorney
holder at the time of filing of the complaint, there is neither evidence to the
effect that the applicant was a witness to the transaction nor any specific
assertion as to the knowledge of the power of attorney holder of the said
transaction in the complaint. Lastly, since the applicant had no authority to file
the complaint (supra), the demand notice served by him would also be rendered
defective and otiose.
11. In view of the facts and circumstances of the case, the question
framed above is answered in the negative. Accordingly, this Court finds that
learned counsel for the applicant-appellant has failed to point out any perversity
or illegality in findings recorded by the learned trial Court which warrants
interference by this Court. As such, there is no merit in the present application
and hence, the leave to appeal is denied.
12. Pending miscellaneous application(s), if any, shall also stand
disposed of.
(HARPREET SINGH BRAR)
JUDGE
14.01.2025
Neha
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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