Monday, 18 July 2016

When complaint for dishonour of cheque can be filed by power of attorney holder?


While dealing with the position of a power of attorney holder,
the Supreme Court in A.C.Narayanan vs State of Maharashtra & Anr, 2013 (4)
JCC (NI) 214: (2014) 11 SCC 790 had stated:-
“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……….”
(Emphasis Supplied)”
16. The aforesaid requirement of such an assertion in the complaint
about the power of attorney holder being in know of the transaction in
question is to ensure that without knowledge or without any cause,
any person may not be harassed or troubled or prosecuted in a Court
of law.
17. Though there is no specific statement in the complaint about the
special power of attorney holder to be conversant with the transaction
between the complainant and the petitioner, but the settlement
agreement (Ex.CW-1/H) has been signed by both, the special power of
attorney holder and the petitioner. This makes it very clear that the
petitioner also is aware of the fact that the entire transaction was
known to the attorney. The Supreme Court in A.C.Narayanan (Supra)
has categorized the legal position regarding a power of attorney
holder:-
(i) Filing of complaint petition under Section 138 of N.I. Act
through power of attorney is perfectly legal and competent.
(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.”
18. Thus it is clear that the purpose of a specific statement about the
knowledge of the attorney holder in complaint is only for the purposes
of avoiding prosecution by any person, who is unknown to the
transaction. This not being the case in the present set of facts, the same
cannot be read and construed against the complainant/respondent.
IN THE HIGH COURT OF DELHI AT NEW DELHI
 CRL.REV.P. 683/2015

Date of decision: 13.01.2016
M/S.JANE NORMAN RETAIL PVT LTD
& ANR. ... PETITIONERS

versus
STATE (NCT OF DELHI) & ANR. ..... RESPONDENTS

CORAM:
HON'BLE MR. JUSTICE ASHUTOSH KUMAR
Citation:2016 ALLMR(CRI)JOURNAL328

1. The petitioner stands convicted and sentenced by the Trial
Court in CC No.3771/01/11 under Section 138 of the N.I Act and has
been directed to undergo RI for six months, pay a compensation of
Rs.11,50,000/- to the complainant and in case of failure in paying the
said amount, to further suffer SI for two months by judgment and
order dated 20.02.2014 and 23.07.2015. The petitioner preferred an
appeal against the aforesaid judgment and order of conviction of the
Trial Court vide Crl.Appeal No.53/2015 before the District and
Sessions Judge, West Delhi. The Appellate Court vide order dated
07.09.2015 affirmed the judgment and order on sentence passed by the
Trial Court and dismissed the appeal.
2. Hence the present revision petition.
3. Respondent No.2 Smt.Pushpa Gupta, proprietor of
M/s.D.V.Trading Company through her special power of attorney
holder and son, Manan Gupta, filed a complaint under Section 138 of
the N.I Act alleging that she had business relationship with the
petitioners and that she had started a franchise showroom of the
petitioners at Paschim Vihar. Since the showroom could not be run
properly, it had to be shut down. As per the agreement between the
complainant and the petitioners, towards full and final settlement of all
dues, the petitioners had issued a cheque bearing No.029731 dated
30.07.2011 for Rs.8,75,307 drawn on Axis Bank, Mansarovar Garden,
New Delhi in favour of the firm of the complainant. When the
aforesaid cheque was presented before the bank for encashment, the
same was returned for insufficiency of funds. A legal notice was sent
to the petitioners on 17.08.2011 at two addresses namely at
Mansarovar Garden and Ashok Vihar but the same was refused to be
accepted. The notice sent at Mansarovar Garden address was refused
to be accepted by the petitioners but the notice at Ashok Vihar was
delivered to the petitioners on 19.08.2011. Despite service of notice,
the petitioners did not pay the cheque amount.
4. The aforesaid complaint has been signed by the complainant
Smt.Pushpa Gupta and her son and power of attorney holder, Manan
Gupta. An affidavit accompanied the complaint of Manan Gupta, the
Special Power of Attorney holder.
5. Petitioner No.2 was produced in custody pursuant to the
summons as he was in judicial custody in some other case. 
under Section 251 of the Code of Criminal Procedure was served upon
him. No prayer was made on his behalf for summoning and examining
either the complainant or her son, the power of attorney holder. The
petitioner was thereafter directed to lead defence evidence. No
evidence was led by the petitioner despite several adjournments.
6. The evidence of the complainant had been tendered through her
special power of attorney by way of an affidavit (Ex.CW-1/1). Since
no material came forward, the requirement of recording the statement
of the petitioner under Section 313 of the Code of Criminal Procedure
was also waived.
7. The Trial Court, thereafter, on the admission of the accused
about his signature on the cheque in question held that the
presumption under Section 118 and 139 of the N.I.Act operated
against him and the same could not be rebutted.
8. A complaint was raised by the petitioner that he had not been
served with any demand notice and, therefore, no cause of action
accrued against him. The aforesaid contention was seriously disputed
on behalf of the complainant. The plea of no opportunity to him for
cross examining the complainant or for leading defence evidence was
not accepted by the Trial Court. Thus the petitioner was convicted and
sentenced as aforesaid.
9. The Appellate Court took note of the fact that an application
under Section 145(2) of the N.I Act was filed by the petitioner at the
time when the case was listed for final arguments and, therefore, the
prayer made on his behalf was rejected by the Trial Court on
09.09.2013. The petitioner challenged the aforesaid order by way of
criminal revision No.134/2013 before ASJ-01, West, which too was
dismissed. As against the aforesaid dismissal by the Revisional Court,
Crl.M.C No.273/2014 was preferred before the High Court of Delhi,
which too was dismissed on 20.01.2014. The High Court was of the
view that there was no justifiable reason for not filing any application
under Section 145(2) of the N.I.Act, 1881 at the stage of notice and,
therefore, came to the opinion that it was a dilatory tactics of the
petitioner to delay the disposal of the case.
10. Learned counsel appearing for the petitioner has submitted that
since the complaint was filed by the special power of attorney holder
who did not have any personal knowledge about the transaction
alleged between the complainant and the accused, the same was not
maintainable and, therefore, the entire prosecution of the petitioner is
vitiated. It has been submitted that neither in the complaint petition
nor in the special power of attorney, is it mentioned that the special
power of attorney had personal knowledge of the transaction between
the accused and the complainant.
11. A perusal of the complaint shows that the same was signed by
the complainant Smt.Pushpa Gupta. The special power of attorney
holder of the complainant namely Manan Gupta also appears to be
aware of the transaction between the parties which is evident from
Ex.CW-1/H which is a document of settlement between the parties.
The aforesaid document has been signed by the attorney and the
petitioner. Thus the contention of the petitioner that the attorney did
not have any complete knowledge about the transaction between the
parties cannot be accepted. The grievance of the petitioner about not
having been provided with the opportunity of defending his case or
defending himself is also untenable as no attempt was made by him or
on his behalf to cross examine the complainant or the special power of
attorney holder. At a much belated stage, a bleak attempt was made to
ask for cross examining the complainant but considering it to be an
attempt to delay the trial, such a prayer was rejected. The challenge to
such a rejection order also could not be sustained.
12. The petitioner, therefore, has left undisputed the fact that the
cheque in question was signed by him. Thus the presumption under
Sections 118B and 139 of the N.I.Act directly applies to the facts of
this case.
13. At the stage of notice under Section 251 of the Code of
Criminal Procedure, the petitioner had, though, accepted that the
cheque in question was signed by him but denied of having filled up
the other particulars. Such a denial cannot be accepted. Whenever a
person signs a cheque and delivers it to the payee, presumption under
Section 118B and 139 of the N.I.Act has to be raised and in the
absence of any attempt to rebut the same, it stands admitted.
14. In A.C.Narayaanan vs State of Maharashtra & Anr, 2013 (4)
JCC (NI) 214: (2014) 11 SCC 790, the Supreme Court has held that a
Magistrate has the power to issue process on the basis of contents of
the complaint, documents in support thereof and the affidavit
submitted by the complainant in support of the complaint. Once the
complainant files an affidavit in support of the complaint before the
issuance of the process under Section 200 of the Code of Criminal
Procedure, it is open for a Magistrate, if he thinks fit, to call upon the
complainant to remain present or to examine him as to the facts
contained in the affidavit submitted by him in support of his
complaint. Such is but only a matter of discretion and a Magistrate is
not bound to call upon the complainant to remain present before the
Court and to examine him upon oath for taking a decision whether or
not to issue process on the complaint under Section 138 of the
Negotiable Instruments Act.
15. While dealing with the position of a power of attorney holder,
the Supreme Court in A.C.Narayanan (Supra) had stated:-
“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……….”
(Emphasis Supplied)”
16. The aforesaid requirement of such an assertion in the complaint
about the power of attorney holder being in know of the transaction in
question is to ensure that without knowledge or without any cause,
any person may not be harassed or troubled or prosecuted in a Court
of law.
17. Though there is no specific statement in the complaint about the
special power of attorney holder to be conversant with the transaction
between the complainant and the petitioner, but the settlement
agreement (Ex.CW-1/H) has been signed by both, the special power of
attorney holder and the petitioner. This makes it very clear that the
petitioner also is aware of the fact that the entire transaction was
known to the attorney. The Supreme Court in A.C.Narayanan (Supra)
has categorized the legal position regarding a power of attorney
holder:-
(i) Filing of complaint petition under Section 138 of N.I. Act
through power of attorney is perfectly legal and competent.
(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.”
18. Thus it is clear that the purpose of a specific statement about the
knowledge of the attorney holder in complaint is only for the purposes
of avoiding prosecution by any person, who is unknown to the
transaction. This not being the case in the present set of facts, the same
cannot be read and construed against the complainant/respondent.
19. Thus for the reasons aforesaid, this Court finds no apparent
reason to differ with the judgment of the Trial Court as well as of the
Appellate Court.
20. The revision petition is dismissed.
Crl.M.(Bail) No.8008/2015
1. In view of the petition having been dismissed, this application
has become infructuous.
2. This application is disposed of accordingly.
 ASHUTOSH KUMAR, J
JANUARY 13, 2016

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