Understanding the Law on Maintainability and Judicial Approach under Section 138 NI Act
The filing of a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) requires that the complainant — whether an individual or a company — be duly entitled or authorized to initiate legal proceedings. But what happens when a complaint is filed by a person on behalf of a company without proper authorization? Should the court dismiss the complaint at the outset, or can this issue wait until the final hearing? And if an accused challenges this at the preliminary stage, is a criminal revision against rejection of such a plea maintainable?
This article examines these issues through the lens of Supreme Court and Bombay High Court precedents.
1. Is the Magistrate’s Order Rejecting Accused’s Objection Interlocutory?
When an accused moves an application before the Magistrate seeking dismissal of the complaint for want of proper authorization, and the Magistrate rejects it, the question arises whether such an order is just a procedural step (interlocutory) or an intermediate order affecting substantive rights.
The Supreme Court in
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Madhu Limaye v. State of Maharashtra (1977) 4 SCC 551, and
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Amar Nath v. State of Haryana (1977) 4 SCC 137
clarified that interlocutory orders are those that deal only with the procedure and do not decide important rights of the parties. However, if the accused’s application were allowed, the entire complaint would have been terminated, the rejection of that application is not purely interlocutory—it affects substantial rights and is therefore revisable under Section 397 CrPC.
The Bombay High Court has applied this principle, holding that orders that go to the root of the maintainability of the complaint cannot be treated as simple procedural directions.
2. Can the Sessions Judge Dismiss the Complaint at the Threshold?
The next issue is whether the Sessions Judge (or even the Magistrate) should dismiss a Section 138 complaint immediately for lack of proper authorization or first give the complainant an opportunity to remedy the defect.
The view consistently taken by the Supreme Court is that lack of proper authorization is a curable defect:
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Samrat Shipping Co. Pvt. Ltd. v. Dolly George (2002) 9 SCC 455 – Held that outright dismissal at the initial stage is "too hasty"; the complainant must be allowed to produce proper authorization later.
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Haryana State Coop. Supply and Marketing Federation Ltd. v. Jayam Textiles 2014 INSC 254 - Reiterated that such procedural shortcomings should be given an opportunity to be corrected.
Judicial Approach Recommended:
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Do not dismiss immediately for want of authorization.
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Give a reasonable opportunity to the complainant to file the board resolution or power of attorney.
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Only if the complainant fails to cure the defect despite opportunity should dismissal be considered.
3. Practical Takeaways for Courts and Practitioners
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Revisional Remedy: Rejection of an application that, if allowed, would have ended the proceedings is not interlocutory—revision lies before the Sessions/Court of Revision.
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Defect in Authorization: Is a procedural lapse, not a fatal defect—can be cured at any stage before conclusion of trial.
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Balancing Fairness and Procedure: Courts must balance the accused’s right to challenge maintainability with the complainant’s right to be heard after curing procedural lapses.
Final Word
A Section 138 cheque bounce complaint filed without proper authorization is not dead on arrival. Courts have repeatedly stressed that such defects can — and should — be cured. At the same time, orders refusing to dismiss such complaints at the threshold are open to revisional scrutiny, since they affect crucial rights.
In short:
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Lack of authorization: Curable defect.
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Rejection of dismissal application: Revisable, not interlocutory.
This approach upholds both access to justice for genuine claimants and procedural safeguards for the accused.
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