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Smart Summary

Factual and Procedural Background

The petitioner, common to multiple petitions, challenged the cognizance taken for an offence under Section 138 of the Negotiable Instruments Act and subsequent proceedings before the XII Additional Chief Metropolitan Magistrate (C.M.M.), Bangalore. The factual backdrop given in the opinion is as follows: the petitioner issued seven cheques for Rs. 5 lakhs each dated 19.8.1998 in favour of the respondent. When presented for encashment through Bank of India the cheques were returned dishonoured with the endorsement "Account Closed" dated 22.8.1998. The respondent issued a legal notice as required under Section 138(b) of the Negotiable Instruments Act and thereafter filed complaints before the learned C.M.M., Bangalore through a Power of Attorney (POA). The C.M.M. recorded the sworn statements of the Power of Attorney, took cognizance under Section 138 of the Negotiable Instruments Act and issued summons. The petitioner appeared before the learned C.M.M., secured bail, and subsequently challenged the order taking cognizance.

Legal Issues Presented

  1. Whether the Power of Attorney has authority to present the complaint?
  2. If the Power of Attorney lacks such authority, whether the proceedings are liable to be quashed?

Arguments of the Parties

Petitioner's Arguments

  • The presentation of the complaints by the Power of Attorney is not maintainable.
  • The recording of the sworn statement of the Power of Attorney is bad in law because the Power of Attorney is not the payee or the holder in due course of the alleged cheques.
  • Accordingly, the proceedings initiated are bad in law and the petitions should be allowed.

Respondent's Arguments

  • There is no bar to a Power of Attorney presenting the complaint.
  • The procedure followed by the learned C.M.M. in recording the sworn statement and issuing summons does not call for interference.
  • The respondent therefore urged dismissal of the petitions.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Pan Dalai v. Jacob C. Alexander . 2000 3 Crimes 232 at para 14. Consideration of authority of a Power of Attorney holder to present a complaint under the N.I. Act (as discussed by the Kerala High Court). The court relied on the Kerala High Court's discussion in this case to support the view that a Power of Attorney of the payee or holder in due course is competent to present the complaint.
C.B.S Gramaphone Records and Tapes (India Ltd. v. Noorudeen That a complaint filed by the authorised representative of a company under Section 142 of the N.I. Act is maintainable. Cited (within the Pan Dalai passage) as authority indicating that an authorised representative can present a complaint; used as supporting precedent for competency of representatives to complain under the N.I. Act.
Hamsa v. Ibrahim That a power of attorney of a payee or holder in due course can make a complaint under Section 142 of the N.I. Act. Cited (within the Pan Dalai passage) as authority supporting the proposition that a power of attorney can present a complaint for dishonour of negotiable instruments.

Court's Reasoning and Analysis

The court framed the short point for consideration as whether a Power of Attorney has authority to present the complaint and, if not, whether the proceedings should be quashed. The court observed that the complaints were indeed presented by a Power of Attorney. It reviewed relevant authority from the Kerala High Court (Pan Dalai v. Jacob C. Alexander) which itself referred to decisions holding that authorised representatives (and powers of attorney of payees or holders in due course) can present complaints under provisions of the Negotiable Instruments Act.

Relying on those reasonings, the court stated it was of the clear view that the Power of Attorney of the payee or holder in due course is competent to present the complaint. However, the court made a distinction with respect to the recording of the sworn statement: that aspect "has to be examined afresh after providing an opportunity to both sides." The court further observed that substantive questions such as whether the petitioner issued the cheques and whether they were dishonoured are matters of evidence to be adjudicated during the proceedings before the magistrate.

Accordingly, rather than quashing the proceedings, the court remitted the matter to the learned C.M.M., Bangalore for reconsideration of the legal contentions that might be raised by both parties and to proceed in accordance with law.

Holding and Implications

DISPOSED OF.

Direct effect on the parties:

  • The petitions challenging cognizance and the proceedings were disposed of by the High Court.
  • The court held that a Power of Attorney of the payee or holder in due course is competent to present the complaint; it did not quash the proceedings on the basis of presentation by the Power of Attorney.
  • The question concerning the recording of the sworn statement of the Power of Attorney is to be re-examined by the learned C.M.M. after giving both parties an opportunity; factual disputes (issue of cheques and dishonour) remain matters for evidence before the magistrate.
  • The matter is remitted to the learned C.M.M., Bangalore to consider legal contentions raised by both parties and proceed in accordance with law.

The opinion does not purport to lay down a new, broader precedent beyond its application to the present petitions; it relied on existing decisions and remitted the case for further proceedings.

    S. Ramesh v. Basanth Kumar Patil

    Veerabhadraiah, J.:—

    The petitioner is common in all these petitions. He has questioned the cognizance taken for the offence under Section 138 of the Negotiable Instrument Act and the proceedings initiated by the learned XII Addl. C.M.M Bangalore.

    2. The petitioner herein issued 7 cheques for Rs. 5 lakhs each dated 19.8.1998 in favour of the respondent. When the cheques were presented for encashment through Bank of India they were bounced with an endorsement “Account Closed” dated 22.8.1998 Therefore, the respondent caused a legal notice as required under Section 138(b) of the Negotiable Instruments Act and thereafter filed complaints before the learned C.M.M Bangalore through the Power of Attorney, who recorded the sworn statements of the Power of Attorney, took cognizance for the offence under Section 138 of the Negotiable Instruments Act and issued summons.

    3. The petitioner appeared before the learned C.M.M and secured bail and thereafter questioned the order of the learned C.M.M taking cognizance for the alleged offence.

    4. The main contention of the learned Counsel for the petitioner Sri C.V Nagesh is that the presentation of the complaints by the Power of Attorney itself is not maintainable. Furthermore, the recording of the sworn statement of the Power of Attorney is bad in law since the Power of Attorney is not the payee or the holder in due course of the alleged cheques. Therefore, contended that the proceedings initiated were bad in law. Accordingly, prayed to allow the petitions.

    5. On the otherhand, the learned Counsel for the respondent contended that there is no bar as such for the Power of Attorney to present the complaint and the procedure followed by the learned C.M.M in recording the sworn statement and issuing of summons does hot call for interference. Therefore, prayed to dismiss all the petitions.

    6. In the light of the submissions, the short point for consideration that arises is;

    Whether the Power of Attorney has no authority to present the complaint? If so, the proceedings were liable to be quashed?

    7. Admittedly, the complaint came to be presented by the Power of Attorney. In so far as this aspect is concerned, the Kerala High Court while considering a similar question regarding the authority of the Power of Attorney Holder to present a complaint, in the case of Pan Dalai v. Jacob C. Alexander . 2000 3 Crimes 232 at para 14., of its order has observed thus:

    “14. In the decision in C.B.S Gramaphone Records and Tapes (India Ltd. v. Noorudeen, a single Judge of this Court has held that complaint filed by the authorised representative of a company under Section 142 of the N.I Act is maintainable.

    In the decision in Hamsa v. Ibrahim, a single Judge of this Court has held that a power of attorney of a payee or holder in due course can make a complaint under Section 142 of the N.I Act.”

    8. In the light of the above reasonings, I am also of the clear view that the Power of Attorney of the payee or holder in due course is competent to present the complaint. That in so far as the aspect of recording of the sworn-statement is concerned, that has to be examined afresh after providing an opportunity to both sides. The further submission of the petitioner in so far as whether he had issued any cheques and on presentation whether they were dishonoured are all purely a matter of evidence.

    9. In view of the facts and circumstances, the matter is remitted back to the learned C.M.M Bangalore to consider the legal contentions that may be raised by both the parties and proceed in accordance is law.

    10. With the said observations, these petitions are disposed of.

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    Comments

    S. Ramesh v. Basanth Kumar Patil
    (Feb 19, 2001)