Published on: February 12, 2024 at 16:37 IST
The Allahabad High Court, presided over by Justice Prashant Kumar, clarified that neither Section 142 of the Negotiable Instruments Act, 1881 nor Section 200 of the Criminal Procedure Code explicitly dictates who can file a complaint on behalf of a company under Section 138 of the Negotiable Instruments Act, 1881.
The Court emphasized that when a company acts as the payee, the complaint should be formally registered in the name of the company.
Justice Prashant Kumar stated, “Section 142 of the N.I. Act does not specify as to who should represent the company if the company is the complainant. A company can be represented by an employee or even by a known employee, who is duly authorized and empowered to represent the company either by resolution or by a power of attorney.”
Furthermore, the Court highlighted the mandatory nature of Section 200 of the Criminal Procedure Code, which requires an examination of the complaint.
It clarified that in cases involving an incorporeal body, such as a company, only an employee or an authorized representative can be examined on behalf of the company.
The Court concluded that in every complaint lodged by a company, there exists a complainant dejure (by law) and a complainant de facto (in fact).
Addressing the liability of directors in the accused company, the court reasoned that since a company is a distinct legal entity, it can only be represented through its officers, directors, managing directors, chairman, etc.
Consequently, the Court held that any offense committed by the company should be attributed to the individuals acting on behalf of the company, making all directors liable for the company’s actions.
The case in question involved a complaint filed by Uttarakhand Engineering Products Private Limited against M/s Trimurti Concast Pvt. Ltd. for a bounced cheque.
The accused challenged the summons, arguing that the prosecution under Section 138 of the NI Act could not be initiated by a power of attorney without specific authorization from the Board of Directors.
In response, the court referred to relevant Supreme Court judgments and asserted that the power of attorney holder filing the complaint need not explicitly aver knowledge of the complete transaction.
The Court underscored that when a company is the complainant, an authorized representative can suffice, and such an averment is adequate for the magistrate to take cognizance.
In dismissing the application under Section 482 of the Criminal Procedure Code, the court directed the trial court to expedite proceedings, ideally concluding within six weeks.
Case Title: Ashok Sharma v. State of U.P. and Another [APPLICATION U/S 482 No. – 18652 of 2016]