Cheque Bounce Complaint Filed By POA Holder Maintainable When He Has Personal Knowledge Of Facts Of Matter & Has Been Authorized By Firm’s Proprietor: SC

The appeal, before the Apex Court, challenged the final order of the Single Judge of the Allahabad High Court whereby a summoning Order as well as the entire proceedings arising from the complaint case filed by the appellant under Section 138 of the Negotiable Instruments Act, 1881 was quashed.

The Division Bench comprising Justice B.R. Gavai & Justice K.V. Viswanathan asserted, “As aforementioned, Section 142 of the NI Act contemplates that the complaint filed under Section 138 of the NI Act should be in writing and should be filed by the payee or the holder of the cheque. Therefore, it is abundantly clear that the complaint in the present matter satisfies the requirements of Section 142 of the NI Act.”

Senior Advocate Navin Pahwa represented the Appellant while Advocate Shailesh Sharma represented the Respondent.

In the year 2021, for a short duration, one M/s Aarti Industries represented by its sole proprietor Sunita Devi-Respondent had purchased polymer insulators scrap rejected material, worth Rs. 1,70,46,314/- from the present appellant. After the materials were supplied to Respondent No.1, the appellant raised several bills/invoices seeking payment for the supplied goods. The appellant was given a cheque issued in its favour by Respondent No.1 for the demanded amount but the cheque came to be dishonoured and was returned to the appellant with a return memo which stated that the cheque amount ‘exceeds arrangement’.

Thereafter, an FIR was lodged under 4 Sections 420, 467, 468 and 471 of the Indian Penal Code, 1860 against 7 accused persons alleging that the owner of the appellant firm, the staff of the appellant firm and the branch manager of the Central Bank of India had colluded together to obtain a cheque book in the name of M/s Aarti Industries by forging the signature of Sunita Devi. A complaint was thereafter filed under Section 138 of the NI Act.

The appellant’s Counsel brought it to the Court’s notice that t the High Court had quashed the criminal case on the simple ground that from a conjoint reading of the averments made in the Letter of Authority and the affidavit of evidence under Section 200 of the Cr.P.C. , Neeraj Kumar, the power of attorney holder was found to have no personal knowledge of the facts and circumstances of the case.

The main issue before the Bench was whether the complaint filed by the appellant under Section 138 of the NI Act was in accordance with the requirement under Section 142 of the NI Act.

The Bench, at the outset, held, “...Section 142 of the NI Act creates a legal bar on the court from taking cognizance of any offence punishable under Section 138 of the NI 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.”

Reference was made by the Apex Court to its judgment in National Small Industries Corporation Limited v. State (NCT of Delhi) and Others (2009) wherein it was observed that for the purposes of Section 142 of the NI Act, the company will be the complainant and for the purposes of Section 200 of the Cr.P.C., its employee who represents the company, will be the de facto complainant while the company will remain the de jure complainant, regardless of any change in the de facto complainant.

Further, reference was made to the judgment in TRL Krosaki Refractories Limited v. SMS Asia Private Limited and Another (2022) wherein it has been observed that when the company is the payee of the cheque based on which a complaint is filed under Section 138 of the NI Act, the complainant should necessarily be the company which is to be represented by an authorised employee and in such a situation, the indication in the complaint and the sworn statement, oral or by affidavit, to the effect that complainant is represented by an authorised person who has knowledge, would be sufficient.

The Bench noted that the issue raised by the Respondent before the High Court was that the complaint filed by Neeraj Kumar on behalf of the appellant-firm was rendered defective as there was no specific averment about his knowledge about the transaction in the relevant documents. The sole reason on which the High Court passed the impugned order was that there was no specific pleading in the Letter of Authority or the affidavit of the power of attorney holder under Section 200 of the Cr.P.C. to the effect that he had personal knowledge of the facts giving rise to the proceedings under Section 138 of the NI Act and further the complaint was totally silent as to any such personal knowledge.

It was also noticed by the High Court that the Complaint was filed in the name of M/s Naresh Potteries through Neeraj Kumar (Manager and Authority-letter holder). Further, the cheque which was the subject matter of the complaint revealed that it hd been issued in the name of Naresh Potteries.

Referring to the Letter of Authority, the affidavit in support of the complaint and the affidavit of evidence under Section 200 of the Cr.P.C., the Bench observed that Neeraj Kumar, the power of attorney holder being the manager of the appellant-firm and the caretaker of its day-to-day business, was well-conversant with the transactions which led to the issuance of the cheque to the appellant-firm and which eventually led to the initiation of the criminal proceedings against the Respondent.

The Bench further said, “...it had been categorically averred that the sole proprietor of the appellant-firm had duly authorized Sh. Neeraj Kumar to act on its behalf in view of the fact that Sh. Neeraj Kumar was incharge of the day-to-day affairs of the appellant-firm and as such had personal knowledge of the facts of the matter.”

It was noticed that in the instant matter, the averments made in the documents made it wholly clear that Neeraj Kumar possessed personal knowledge of the facts of the matter at hand and was well-equipped and duly authorised to initiate criminal proceedings against Respondent No.1. “That beside the fact that it would always be open for the trial court to call upon the complainant for examination and cross-examination, if and when necessary, during the course of the trial. As such, a peremptory quashing of the complaint case by the High Court is completely unwarranted and that too on an incorrect factual basis”, it added.

Stating that the Court had repeatedly cautioned that the inherent powers under Section 482 of the Cr.P.C. should be exercised sparingly and with great caution and further that inherent powers should not be used to interfere with the jurisdiction of the lower courts or to scuttle a fair investigation or prosecution, the Bench did not find that the instant matter called for any interference by the High Court in the exercise of its discretionary powers under Section 482 of the Cr.P.C.

Thus, allowing the Appeal, the Bench quashed the final judgment of the High Court and restored the complaint.

Cause Title: M/s Naresh Potteries v. M/s Aarti Industries And Another (Neutral Citation: 2025 INSC 1)

Appearance:

Appellant: Senior Advocate Navin Pahwa, Advocates Vak Rohini Wagh, Aditya Shukla, Anuj Tiwari, Saurabh Mishra, AOR Bharat Thakorlal Manubarwala

Respondents: Advocate Shailesh Sharma, AOR Vijendra Singh, Advocates Shweta Yadav, Apurva Mahndiyan, Kumar Abhinandan

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