w w w . L a w y e r S e r v i c e s . i n



P.P. Jose, Manager, Mattoor, Kalady, Rice Tech Agro Mills Pvt. Ltd. v/s M.M. Abdulkhader, Proprietor, East India Trading Company, Kothamangalam & Another

    CRL.A. No. 405 of 2005

    Decided On, 08 June 2020

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE P.V. KUNHIKRISHNAN

    For the Appellant: Dinesh Mathew J. Muricken, Advocate. For the Respondents: R1, P.T. Jose, R2, B. Jayasurya, Sr. Public Prosecutor.



Judgment Text

1. The above appeal is filed by the complainant in C.C. No.205 of 2000 on the file of the Judicial First Class Magistrate Court, Perumbavoor. The above calendar case was filed by the appellant against the first respondent herein for prosecuting him under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter the parties are mentioned by their rank before the trial court).

2. The complainant is 'Jose P.P., Manager, Rice Tech Agro Mills Pvt.Ltd., Mattoor, Kalady'. The case of the complainant is that the accused had purchased rice from the complainant firm for Rs.61,331.25 paise and out of which, an amount of Rs.30,000/- is due to the complainant. When the complainant demanded the said amount, the accused informed that he would repay the amount in three installments and issued three cheques for Rs.10,000/- each. The complainant presented the cheques for encashment. But, those cheques were dishonoured from the bank with an endorsement "Funds insufficient," on 06.09.1999, 07.09.1999, and 16.09.1999 respectively. The complainant issued a statutory notice in accordance to the Negotiable Instruments Act, on 18.09.1999 and the accused received the same on 20.09.1999. Even after the receipt of the notice, the accused did not repay the cheque amounts. Hence, the complaint.

3. To substantiate the case, one witness was examined on the side of the complainant and Exts.P1 to P7 are also marked. Ongoing through the evidence and documents, the trial court found that the accused is guilty under Section 138 of the Negotiable Instruments Act. He is sentenced to undergo simple imprisonment for three months and to pay a compensation of Rs.31,000/- to the complainant under Section 357(3) of the Code of Criminal Procedure. In default of payment of the said amount, there is a further direction to the accused to undergo simple imprisonment for 45 days.

4. Aggrieved by the conviction and sentence, the accused filed an appeal before the Sessions Court, Ernakulam. The learned Sessions Judge, after hearing both sides, allowed the appeal, and the conviction and sentence imposed on the accused were set aside mainly for the reason that the complaint is not filed by the payee or holder in due course. Challenging this acquittal order, this Criminal Appeal is filed by the complainant.

5. Heard the learned counsel for the appellant and the learned counsel for the first respondent.

6. The learned counsel for the appellant submitted that the acquittal order passed by the appellate court is per se illegal. According to the counsel, as per Ext.P7, the complainant is an authorized person to prosecute the complaint on behalf of the Company. Therefore, it is stated that the findings of the lower appellate court that, the complaint is filed by an individual and not by the 'Company' or 'Company represented by the Manager', is not correct. The Counsel relied on the judgments of the Madras High Court reported in Sagayadurai and Ors. V. J.D. Electronics [1997 (2) Crimes 115 (Mad.)] and in A. Krishnan v. S.P.Kumar [2001 CRL.L.J.3494]. The counsel also relied on the judgment of the Calcutta High Court, reported in M/s. Mohonlal Khemchand and others v.Pawan Kumar Mohanka and others [1996 CRL.L.J. 2927].

7. The counsel for the accused submitted that the complaint is filed by an individual and not by the Company or the Company represented by the Manager. The complainant has no case that, he became the holder in due course of the cheques. Therefore, the complaint itself is not maintainable, and hence the appellate court correctly allowed the appeal.

8. After hearing both sides, the point to be decided in this appeal is, whether a complaint filed by an authorized person of a Company is maintainable when the payee or the holder in due course of the cheques is the Company itself.

9. Admittedly, in this case, the payee in the cheques is 'Rice Tech Agro Mills Pvt.Ltd'. The statutory notice under Section 138(b) of the Negotiable Instruments Act is issued by Jose P.P., Manager, Rice Tech Agro Mills Pvt.Ltd., Mattoor, Kalady. Section 138(b) of the Negotiable Instruments Act says that the “payee or the holder in due course” of the cheque makes a demand for the payment of the amount in the dishonoured cheque by giving a notice in writing to the drawer of the cheque. As per Section 138 (c) of the Negotiable Instruments Act, the drawer of the cheque fails to make the payment of the amount to 'payee' or as the case may be to the 'holder in due course' of the cheque within 15 days the cause of action will arise. Section 142 of the Negotiable Instruments Act says that no court shall take cognizance of any offence punishable under Section 138 of the Negotiable Instruments Act, except upon a complaint, in writing, made by the 'payee' or, as the case may be, the 'holder in due course' of the cheque.

10. Section 7 of the Negotiable Instruments Act defines ‘Payee’ as “the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the ‘payee’”. Section 9 of the Negotiable Instruments Act says that ‘Holder in due course’ means “Any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to the bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.”

11. Admittedly, a perusal of the cheques involved in this case, it is clear that the payee is 'Rice Tech Agro Mills Pvt.Ltd.'. Exhibit P3 notice was issued by Jose P.P., Manager, Rice Tech Agro Mills Pvt.Ltd. Similarly, the complaint is also filed by Jose P.P., Manager, Rice Tech Agro Mills Pvt.Ltd. The question is whether the Manager, Rice Tech Agro Mills Pvt.Ltd. can launch the complaint when the payee of the cheques is Rice Tech Agro Mills Pvt.Ltd. The complainant is relying on the Ext.P7 authorization of the Managing Director of the Company. Exhibit P7 reads like this:

“EXTRACT OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF RICE TECH AGRO MILLS PVT LTD, HELD ON 20.09.1999 AT THE REGISTERED OFFICE OF THE COMPANY, RICE TECH AGRO MILLS (P) LTD, MATTOOR, KALADY-683 574.

“Resolved that company do institute the appropriate legal proceedings in the concerned courts against the dealers who have defaulted the payment due to the company and against those parties whose cheques have been returned/dishonoured by the Banks or otherwise and for this purpose Mr.P.P. Jose was appointed and is hereby authorized to attend the court to represent the company and affix his signature on behalf of the company on all complaints, affidavits, petitions to give evidence and to engage counsel whenever so required or in response to any notice or summons from any court or other authority in this regard.”

(Emphasis Supplied)

A reading of the above extract, it is clear that the Company appointed P.P. Jose and authorized him to attend the Court to represent the Company and affix his signature on behalf of the Company on all complaints, affidavits, petitions to give evidence and to engage counsel whenever so required or in response to any notice or summons from any court or other authority in this regard. Therefore, Mr. P.P. Jose was appointed and authorized as per Ext.P7, only to attend the court to represent the Company and to affix his signature on behalf of the Company. There is no authorization to Mr.P.P.Jose to file the complaint directly with his designation as Manager of the Company. Therefore, Ext.P7 will not help Mr. P.P. Jose to file the complaint directly in the capacity of the Manager of Rice Tech Agro Mills Pvt.Ltd. Exhibit P3 notice was issued by P.P.Jose, in his capacity as the Manager of the Company. Moreover, the complaint itself was filed by Jose P.P., Manager, Rice Tech Agro Mills Pvt.Ltd. There is no authorisation to Mr.P.P.Jose to file the complaint in his capacity as Manager of Rice Tech Agro Mills Pvt.Ltd., but, his authorization as per Ext.P7 is only to attend the Court to represent the Company and affix his signature on behalf of the Company. Therefore, Ext.P7 will not help the complainant to file the complaint in his name or in his capacity as the Manager of Rice Tech Agro Mills Pvt.Ltd.

12. Moreover, in Narayanan v. State of Maharashtra [2013 (4) KLT 21 (SC)], the Hon'ble Supreme Court considered the point, whether a power of attorney holder can file a complaint in his own name as if he was the complainant. The relevant paragraph of the decision in Narayanan (supra) is extracted hereunder:

“The power of attorney holder is the agent of the grantor. When the grantor authorizes the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates such legal proceedings, he does so as the agent of the grantor and the initiation is by the grantor represented by his attorney holder and not by the attorney holder in his personal capacity. Therefore, where the payee is a proprietary concern, the complaint can be filed by the proprietor of the proprietary concern describing himself as the sole proprietor of the payee, the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor, and the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor. However, we make it clear that the power of attorney holder cannot file a complaint in his own name as if he was the complainant. In other words, he can initiate criminal proceedings on behalf of the principal.”

(emphasis supplied)

In National Small Industries Corporation Ltd. v. State (NCT of Delhi) and Ors.[AIR 2009 SC 1284], the Hon'ble Supreme Court observed like this:

“10. 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 cheque would be an offence and the manner of taking cognizance of offences punishable under Section 138 of that Act. However, the procedure relating to the initiation of proceedings, trial, and disposal of such complaints, is governed by the Code. Section 200 of the Code requires that the magistrate, on taking cognizance of an offence on complaint, shall examine upon oath the complainant and the witnesses present and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses. The requirement of section 142 of NI Act that payee should be the complainant, is met if the complaint is in the name of the payee. If the payee is a company, necessarily the complaint should be filed in the name of the company. Section 142 of NI Act does not specify who should represent the company, if a company is the complainant. A company can be represented by an employee or even by a nonemployee authorized and empowered to represent the company either by a resolution or by a power of attorney.

11. Section 138, NI Act mandates that payee alone, whether a corporeal person or incorporeal person, shall be the complainant. Section 200 of the Code contemplates only a corporeal person being a complainant. It mandatorily requires the examination of the complainant and the sworn statement being signed by the complainant. If section 142 of NI Act and Section 200 of the Code are read literally, the result will be: (a) the complainant should be the payee of the cheque; and (b) the complainant should be examined before issuing process and the complainant's signature should be obtained on the deposition. Therefore, if the payee is a company, an incorporeal body, the said incorporeal body can alone be the complainant. The mandatory requirement of section 200 of the Code is that a Magistrate taking cognizance of an offence on complaint, shall examine upon oath the complainant, and that the substance of such examination reduced to writing shall be signed by the complainant. An incorporeal body can obviously neither give evidence nor sign the deposition. If literal interpretation is applied, it would lead to an impossibility as an incorporeal body is incapable of being examined. In the circumstances, a harmonious and purposive interpretation of Section 142 of NI Act and section 200 of the Code becomes necessary. Section 142 only requires that the complaint should be in the name of the payee. Where the complainant is a company, who will represent the company and how the company will be represented in such proceedings, is not governed by the Code but by the relevant law relating to companies. Section 200 of the Code mandatorily requires an examination of the complainant; and where the complainant is an incorporeal body, evidently only an employee or representative can be examined on its behalf. As a result, the company becomes a de jure complainant and its employee or other representative, representing it in the criminal proceedings, becomes the de facto complainant. Thus in every complaint, where the complainant is an incorporeal body, there is a complainant - de jure, and a complainant– de facto. Clause (a) of the proviso to section 200 provides that where the complainant is a public servant, it will not be necessary to examine the complainant.”

(Emphasis Supplied)

In Associated Cement Co.Ltd. v. Keshvanand [AIR 1998 SC 596], the Apex Court observed like this:

"24. The above scheme of the new Code makes it clear that complainant must be corporeal person who is capable of making physical presence in the Court. Its corollary is that even if a complaint is made in the name of an incorporeal person (like a company or corporation)it is necessary that a natural person represents such juristic person in the Court and it is that natural person who is looked upon, for all practical purposes, to be the complainant in the case. In other words, when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complainant to represent the former in Court proceedings.”

(Emphasis Supplied)

This Court also considered this point in Jayakumar v. Devi Vilasom Kettuthengu Sangham [2016(1) KLT 264]. The relevant portions of the judgment, are extracted hereunder:

"5. I have given my anxious consideration to the submissions made at the Bar. The question that arises for consideration is, whether the complaint was maintainable or not? Put it differently, whether the complainant/Society has locus standi to file the complaint under S.138 read with S.142 of the N.I.Act on dishonour of a cheque, which was issued to the Secretary in his name, allegedly in discharge of a liability to the Society?

6. Going by the complaint, obviously, it is seen that the complainant is Devi Vilasom Kettuthengu Sangham and the Sangham is represented by its Secretary Sri.Karunakaran Nair. But going by Ext.P1 cheque, it is seen that the payee is one Karunakaran, Nair. The case of the complainant is that, towards the price of coconuts purchased from the complainant/Society, 16,000/- was due to the complainant/Society and in discharge of the said liability, the said cheque was issued. Therefore, the liability under the cheque was towards Devi Vilasom Kettuthengu Sangham and not towards Karunakaran Nair. But Ext.P1 cheque is seen issued in favour of Karunakaran Nair. It means that though, Karunakaran Nair represents the Society as the Secretary of the Society, the complainant is the Society.

7. Going by S.138 of the N.I.Act, the statutory language is that where any cheque drawn by a person on the account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or liability, is returned by the bank unpaid due to want of sufficient funds, he shall be deemed to have committed an offence and shall be punished accordingly. In short, the cause of action enabling to file a complaint arises in favour of the payee when any cheque drawn by a person for payment of any amount to his favour is dishonoured for want of sufficient funds.

8. According to S.142 of the N.I.Act, notwithstanding anything contained in the Code of Criminal Procedure, 1973, no court shall take cognizance of any offence punishable under S.138 of the N.I.Act except upon a complaint, in writing made by the payee or as the case may be, the holder in due course of the cheque. Thus, the payee or the holder in due course alone has the locus standi to file a complaint under S.142 of the N.I.Act.

9. The above view is further fortified by S.138(b) of the N.I.Act. According to S.138(b) of the N.I.Act, the payee or the holder in due course of the cheque, as the case may be, shall send a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. Thus the sub-section (b) clarifies that the payee or the holder in due course alone has the right to proceed against the drawer for the commission of the offence under S.138 of the N.I.Act. According to S.7 of the N.I.Act, the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called "payee". Similarly, according to S.9 of the N.I.Act. "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.

10. The proposition that can be culled out from the mandatory language under Ss.142 and 138(b) of the N.I.Act is that the locus standi to file a complaint under S.138 of the N.I.Act is given to the payee or holder in due course of the dishonoured cheque only and no court shall take cognizance of the offence punishable under S.138 of the N.I.Act, unless the complaint is filed by the payee or holder in due course of the dishonoured cheque.”

In the light of the above authoritative judgments of the Apex Court and this Court, it is clear that a power of attorney holder or an authorized agent of a Company can only represent the Company and they cannot file a complaint in his own name as if he was the complainant. In other words, he can initiate criminal proceedings only on behalf of his principal. This is clear from Section 138 (b) and (c) of the Negotiable Instruments Act also. In Section 138 (b) and (c), 'payee' or 'the holder in due course' is mentioned. A power of attorney holder of a Company is not a payee or the holder in due course, unless it is specifically stated in the document. Section 142 (a) of the Negotiable Instruments Act also mandates that no court shall take cognizance of any offence punishable under Section 138 of the Negotiable Instruments Act except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. In every private complaint, where the complainant is an incorporeal body, there is a complainant – de jure and a complainant – de facto. Admittedly, Mr. P.P. Jose, Manager, Rice Tech Agro Mills Pvt.Ltd. is not the payee or, as the case may be, the holder in due course of the cheques. Therefore, the complaint filed by Mr. P.P.Jose based on Ext.P7 authorization is not maintainable because the payee of the cheques, in this case, is 'Rice Tech Agro Mills Pvt.Ltd.'

13. It is a well-recognized principle of criminal jurisprudence that anyone can set or put the criminal law into motion except when a statute enacts or creating an offence indicates to the contrary. It is true that, there is no question of locus standi of the complainant in criminal jurisprudence save and except that when the statute creating an offence provides for the eligibility of the complainant by necessary implications in it, and then the general principles get excluded by such statutory provisions. Section 142 is such a statutory provision by which it is stated that notwithstanding anything contained in the Code of Criminal Procedure, no Court shall take cognizance of any offence punishable under Section 138 of th

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e Negotiable Instruments Act except upon a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. Section 190 of the Code of Criminal Procedure indeed permits anyone to approach the Magistrate with a complaint especially because, it does not prescribe any qualification, the complainant is required to fulfill, to be eligible to file a complaint. But where an eligibility criterion for the complainant is contemplated, just like in the Negotiable Instruments Act, the general rule that anyone can set or put the criminal law into motion will go away. When the Negotiable Instruments Act clearly states that only the payee or, as the case may be, the holder in due course of the cheque alone can file the complaint and the Court can take cognizance of any offence punishable under Section 138 of the Negotiable Instruments Act, only based on such complaint, a power of attorney holder or an authorized agent of a Company cannot file a complaint in his personal capacity, even though he mentioned his designation in the Company in the complaint. In such a situation, the power of attorney holder or, the authorized person can only represent the Company. The company itself should be the complainant especially when the cheques are issued in the name of the Company. The company will be the complainant – de jure and the power of attorney holder/the authorised person will be the complainant – de facto. In the light of the above discussion, I respectfully disagree with the judgments of the Madras High Court in Sagayadurai and A.Krishnan(mentioned supra) and Calcutta High Court Judgment in Mohonlal Khemchand(mentioned supra) relied on by the counsel for the appellant. 14. In this case, admittedly, the cheques are issued in the name of the Company 'Rice Tech Agro Mills Pvt.Ltd'. But the complaint is filed by P.P. Jose, Manager, Rice Tech Agro Mills Pvt.Ltd. Mr.P.P. Jose is not the payee or, the holder in due course of the cheques. Therefore, the appellate court rightly found that the complaint is not maintainable. There is nothing to interfere with the acquittal order passed by the appellate court. Hence, this Crl. Appeal is dismissed confirming the order dated 07.12.2004 in Crl.Appeal No.1004 of 2004 on the file of the Sessions Court, Ernakulam.
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