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2023 DIGILAW 1014 (ALL)

Aarti Industries v. State of U. P.

2023-04-12

RAJEEV MISRA

body2023
JUDGMENT Rajeev Misra, J. Heard Mr. Sagir Ahmad, the learned senior counsel assisted by Mr. Syed Irfan Ali, the learned counsel for applicant, the learned A.G.A. for State and Mr. Gaurav Kakkar, the learned counsel representing first informant/opposite party-2. 2. Perused the record. 3. This application under Section 482 Cr.P.C. has been filed challenging the Summoning Order dated 22.11.2021 passed by Additional Chief Judicial Magistrate, Khurja, Bulandshahar, in Complaint Case No. 701 of 2021 (M/s Naresh Potteries v. M/s Aarti Industries) under Section 138 N.I. Act, Police Station-Kotwali Khurja Nagar, District-Bulandshahar, as well as the entire proceedings of aforementioned complaint case, now pending in the court of Additional Chief Judicial Magistrate, Khurja, Bulandshahar. 4. Record shows that applicant gave a cheque dated 10.07.2021 bearing no. 086295 valued at Rs. 1,70,46,314/- drawn on Central Bank of India, Khurja Branch, Khurja. Aforesaid cheque was presented by the complainant-opposite party 2 in his bank namely HDFC Bank, Khurja on 12.07.2021. However, the same was returned unencashed, vide return memo dated 13.07.2021 with the remark "insufficient funds". In view of above, complainant-opposite party 2 gave a legal notice dated 15.04.2021 as contemplated under section 138(b) of the Negotiable Instruments Act (hereinafter referred to as the NI Act) by registered post. The said notice was served upon applicant on 20.07.2021. Aforementioned notice was replied by the applicant raising various pleas in defence of the fact that no payment is liable to be made by the applicant in terms of the disputed cheque. As the amount payable under the disputed cheque was not paid within the period contemplated under the Act after receipt of notice, complainant-opposite party 2 filed a complaint dated 08.09.2021 in terms of section 138 of the N.I. Act through the power of attorney holder namely Neeraj Kumar. In support of the complaint, the power of attorney holder namely Neeraj Kumar filed his notary affidavit in terms of section 200 Cr.P.C. The same was registered as Complaint Case No. 701 of 2021 (M/s Naresh Potteries v. M/s Aarti Industries) under Section 138 N.I. Act, Police Station-Kotwali Khurja Nagar, District-Bulandshahar. Applicant who is a prospective accused in aforementioned complaint case, was summoned by court below vide summoning order dated 22.11.2021 passed by Additional Chief Judicial Magistrate, Khurja, Bulandshahar. 5. Applicant who is a prospective accused in aforementioned complaint case, was summoned by court below vide summoning order dated 22.11.2021 passed by Additional Chief Judicial Magistrate, Khurja, Bulandshahar. 5. Thus feeling aggrieved by the summoning order dated 22.11.2021, referred to above as well as the entire proceedings of aforementioned complaint case, accused-applicant has now approached this Court by means of present application under Section 482 Cr.P.C. 6. Mr. Sagir Ahmad, the learned senior counsel for applicant in support of present application submits that the impugned summoning order passed by court below is unsustainable in law and fact. Consequently, the same is liable to be quashed by this Court. Before summoning the applicant, court below has not adverted to the material defect in the complaint. Consequently, court below has not exercised it's jurisdiction diligently. Applicant has been summoned by court below in a casual and cavalier manner by means of the summoning order dated 21.12.2021. 7. Elaborating his submission, the learned senior counsel submits that the complaint giving rise to present criminal proceedings was filed on behalf of complainant through his manager, Neeraj Kumar/power of attorney holder. However, in the complaint so filed there is no categorical averment that the power of attorney holder who has filed the complaint is having personal knowledge about the transactions in respect of which the disputed cheque is alleged to have issued by applicant. It is then contended that the power of attorney holder has not stated in the complaint that he has personal knowledge of such facts (i.e. the facts relating to the transactions in respect of which the disputed cheque was given), therefore, it was mandatory for court below to examine the power of attorney holder in terms of Section 200 Cr.P.C. before summoning the accused applicant. The same having not been done, due procedure was not followed by court below before summoning the applicant. As such, the impugned summoning order suffers from procedural defect which has vitiated the same. Thus on account of above, same is liable to be quashed by this Court. 8. The same having not been done, due procedure was not followed by court below before summoning the applicant. As such, the impugned summoning order suffers from procedural defect which has vitiated the same. Thus on account of above, same is liable to be quashed by this Court. 8. Attention of the Court was then invited to the affidavit filed by the power of attorney holder in support of the said complaint and on basis thereof, it is sought to be urged that in the said affidavit, the material facts with regard to the transactions on account of which, the disputed cheque was issued have not been stated. As such, the complaint filed by the power of attorney holder was defective. The same was liable to be rejected. However, court below has illegally proceeded with the same and summoned the applicant. 9. It is thus urged that in view of the inherent defect in the complaint and the affidavit filed in support thereof, the statement of the power of attorney holder having not been recorded under Section 200 Cr.P.C., the impugned summoning order passed by court below cannot be sustained and is, therefore, liable to be quashed by this Court. To buttress his submission, he has relied upon the judgment of Supreme Court in A.C. Narayanan v. State of Maharashtra (2015) 12 SCC 203 . 10. Per contra, Mr. Gaurav Kakkar, the learned counsel representing complainant-opposite party 2 has opposed the present application. He submits that it is an undisputed fact that the complaint on behalf of complainant-opposite party 2 was filed by the power of attorney holder i.e. the Manager of the firm namely Neeraj Kumar. However, it is patently wrong to show that the Manager/power of attorney holder was ignorant about the business transactions of the firm. 11. He has invited the attention of the Court to the complaint and has referred to paragraph 2 of the affidavit of the power of attorney holder filed in support of the complaint. Attention of the Court was then invited to the letter of authority issued by the complainant-opposite party 2 in favour of the power of attorney holder, wherein it is mentioned that the power of attorney holder is well acquainted with the facts of the case. Attention of the Court was then invited to the letter of authority issued by the complainant-opposite party 2 in favour of the power of attorney holder, wherein it is mentioned that the power of attorney holder is well acquainted with the facts of the case. On the basis of above, he submits that due pleading was raised in respect of the fact that the power of attorney holder has due knowledge of the transaction giving rise to the above mentioned criminal proceedings. 12. To lend legal support to his submission, the learned counsel for complainant has referred to the judgment of Supreme Court in M/s T.R.L. Krosaki Refractories Ltd. v. M/s SMS Asia Private Limited (2022) 7 SCC 612 . 13. Referring to the judgment of Supreme Court in M/s T.R.L. Krosaki Refractories Ltd. (Supra), he submits that in view of the categorical pronouncement by the Apex Court in aforementioned judgment, none of the submissions urged by the learned senior counsel on behalf of applicant are cogent enough, to quash the impugned summoning order as well as the proceedings of the complaint case by this Court. 14. He, therefore, submits that no question of law or fact is involved in present application. The impugned summoning order passed by court below as well as the proceedings of the complaint case giving rise to present application does not suffer from any defect much less a legal defect warranting interference by this Court. Consequently, the present application is liable to be dismissed by this Court. 15. Per contra, the learned A.G.A. has also opposed the present application. However, he has adopted the submissions urged by the learned counsel for complainant-opposite party 2. 16. Having heard, the learned senior counsel for applicant, the learned A.G.A. for State, the learned counsel representing first informant/opposite party-2 and upon perusal of record, this Court finds that the only issue which arises for consideration in the present application is whether in a given case where the complaint is filed by the power of attorney holder, it is necessary for the power of attorney holder to state that the transactions giving rise to the execution of the cheque are in his personal knowledge and therefore he is aware about the facts of the case giving rise to the criminal proceedings or whether upon failure of the complainant to do so the complaint case is liable to be dismissed. The issue involved herein though factual in nature but the legal effect of the same has been considered in detail by the Apex Court in M/s T.R.L. Krosaki Refractories Ltd. (Supra). 17. Before proceeding to point out the ratio laid down by the Apex Court in aforementioned judgment, it is apposite to mention here that a two Judges Bench of the Supreme Court while hearing Criminal Appeal No. 73 of 2007 (A.C. Narayanan v. State of Maharashtra) came to be conclusion that there appears to be difference of opinion in M.M.T.C. Ltd. and Anr. v. Medchl Chemicals and Pharma (P) Ltd. and Anr., (2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. (2005) 2 SCC 217 . Accordingly, the Bench in A.C. Narayanan (Supra) referred the matter for consideration before larger bench. Upon reference a Three Judges Bench of the Supreme Court in A.C. Narayanan v. State of Maharashtra answered the reference. Following was observed by the Bench in paragraphs 21, 30 and 33:- "21. In terms of the reference order, the following questions have to be decided by this Bench: 21.1. Whether a power of attorney holder can sign and file a complaint petition on behalf of the complainant? /Whether the eligibility criteria prescribed by Section 142(a) of the NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque? 21.2. Whether a power of attorney holder can be verified on oath under Section 200 of the Code? 21.3. Whether specific averments as to the knowledge of the power of attorney holder in the impugned transaction must be explicitly asserted in the complaint? 21.4. If the power of attorney holder fails to assert explicitly his knowledge in the complaint then can the power of attorney holder verify the complaint on oath on such presumption of knowledge? 21.5. Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?" The consideration made in paras 29 to 30 would be relevant to be noted, which read as hereunder: "29. 21.5. Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?" The consideration made in paras 29 to 30 would be relevant to be noted, which read as hereunder: "29. From a conjoint reading of Sections 138, 142 and 145 of the NI Act as well as Section 200 of the Code, it is clear that it is open to the Magistrate to issue process on the basis of the 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 issuance of the process under Section 200 of the Code, it is thereafter open to the Magistrate, if he thinks fit, to call upon the complainant to remain present and to examine him as to the facts contained in the affidavit submitted by the complainant in support of his complaint. However, it is a matter of discretion and the Magistrate is not bound to call upon the complainant to remain present before the court and to examine him upon oath for taking decision whether or not to issue process on the complaint under Section 138 of the NI Act. For the purpose of issuing process under Section 200 of the Code, 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 NI Act. It is only if and where the Magistrate, after considering the complaint under Section 138 of the NI Act, documents produced in support thereof and the verification in the form of affidavit of the complainant, is of the view that examination of the complainant or his witness(s) is required, the Magistrate may call upon the complainant to remain present before the court and examine the complainant and/or his witness upon oath for taking a decision whether or not to issue process on the complaint under Section 138 of the NI Act. 30. 30. In the light of the discussion, we are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the NI Act. An exception to the above is when the power of attorney holder of the complainant does not have a personal knowledge about the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainant payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorney holder cannot depose as a witness. 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. On this count, the fourth question becomes infructuous." The answer to the question raised for consideration is contained in para 33 which read as hereunder: 33. While holding that there is no serious conflict between the decisions in M.M.T.C. and Vashdeo Bhojwani, we clarify the position and answer the questions in the following manner: 33.1. Filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent. 33.2. 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. 33.3. 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. 33.4. 33.3. 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. 33.4. In the light of Section 145 of the NI 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 NI 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 NI Act. 33.5. 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. After the reference was answered by the full bench, the division bench proceeded to decide the case of A.C. Narayanan v. State of Maharashtra. With reference to question no. 2 answered by the full bench, the Court examined the veracity of the proceedings and ultimately denuded its conclusion in paragraph 20 of the report. For ready reference, the same is reproduced hereinunder:- "In this case it is not in dispute that the complaint was filed by one Shri V. Shankar Prasad claiming to be General Power of Attorney of the complainant company. Subsequently PW-1 Shri Ravinder Singh gave the evidence on behalf of the Company under the General Power of Attorney given by the complainant Company. The complaint was not signed either by Managing Director or Director of the Company. It is also not in dispute that PW-1 is only the employee of the Company. As per Resolution of the Company i.e. Ex.P3 under first part Managing Director and Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for prosecution. Under third part of the said Resolution they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. Under third part of the said Resolution they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. But nothing on the record suggest that an employee is empowered to file the complaint on behalf of the Company. This apart, Managing Director and Director are authorized persons of the Company to file the complaint by signing and by giving evidence. At best the said persons can nominate any person to represent themselves or the Company before the Court. In the present case one Shri Shankar Prasad employee of the Company signed the complaint and the Deputy General Manager of the Company i.e. PW-1 gave evidence as if he knows everything though he does not know anything. There is nothing on the record to suggest that he was authorized by the Managing Director or any Director. Therefore, Magistrate by judgment dated 30th October, 2001 rightly acquitted the appellant. In such a situation, the case of the appellant is fully covered by decision by the larger bench of this Court passed in the present appeal. We have no other option but to set aside the impugned judgment dated 19th September, 2007 passed by the High Court of Judicature, Andhra Pradesh at Hyderabad in Criminal Appeal No.578 of 2002. The judgment and order dated 30th October, 2001 passed by the Court of XVIII Metropolitan Magistrate, Hyderabad in C.C.No.18 of 2000 is upheld." 19. A similar issue cropped up in M/s T.R.L. Krosaki Refractories Ltd. v. M/s SMS Asia Private Limited, the Court in aforesaid judgment examined the validity of the complaint in the light of the opinion given by the three judges bench in A.C. Narayanan v. State of Maharashtra. 20. Paragraphs 29 and 30 of the aforesaid report clearly answer the submission urged by the learned senior counsel Mr. Sageer Ahmad that court below could have proceeded only after examining the power of attorney holder under section 200 Cr.P.C. For ready reference, paragraphs 29 and 30 of the report is extracted hereinunder:- "29. 20. Paragraphs 29 and 30 of the aforesaid report clearly answer the submission urged by the learned senior counsel Mr. Sageer Ahmad that court below could have proceeded only after examining the power of attorney holder under section 200 Cr.P.C. For ready reference, paragraphs 29 and 30 of the report is extracted hereinunder:- "29. From a conjoint reading of Sections 138, 142 and 145 of the NI Act as well as Section 200 of the Code, it is clear that it is open to the Magistrate to issue process on the basis of the 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 issuance of the process under Section 200 of the Code, it is thereafter open to the Magistrate, if he thinks fit, to call upon the complainant to remain present and to examine him as to the facts contained in the affidavit submitted by the complainant in support of his complaint. However, it is a matter of discretion and the Magistrate is not bound to call upon the complainant to remain present before the court and to examine him upon oath for taking decision whether or not to issue process on the complaint under Section 138 of the NI Act. For the purpose of issuing process under Section 200 of the Code, 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 NI Act. It is only if and where the Magistrate, after considering the complaint under Section 138 of the NI Act, documents produced in support thereof and the verification in the form of affidavit of the complainant, is of the view that examination of the complainant or his witness(s) is required, the Magistrate may call upon the complainant to remain present before the court and examine the complainant and/or his witness upon oath for taking a decision whether or not to issue process on the complaint under Section 138 of the NI Act. 30. 30. In the light of the discussion, we are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the NI Act. An exception to the above is when the power of attorney holder of the complainant does not have a personal knowledge about the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainant payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorney holder cannot depose as a witness. 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. On this count, the fourth question becomes infructuous." 21. The court then proceeded to consider the question whether the power of attorney holder has personal knowledge of the transactions giving rise to the proceedings under section 138 NI Act. The court upon consideration of the facts of the aforesaid case ultimately opined as follows in paragraphs 11 and 12 of the report. "11. A cumulative perusal of the facts of the instant case would indicate that the requirement as indicated in A.C. Narayanan, (supra) are in fact satisfied. Firstly, as noted above, the complaint was filed in the name of the company i.e., "the payee", through Mr. Subhasis Kumar Das, General Manager (Accounting). The authorisation dated 23.05.2015 by the Managing Director in his favour (Annexure P 17) discloses that Mr. Priyabrata Panda, Managing Director of the appellant company had authorised Mr. Subhasis Kumar Das, General Manager (Accounting) to institute criminal proceedings, including proceedings under the provisions of the N.I. Act and civil proceedings on behalf of the company against M/s. SMS Asia Private Limited (respondent), to represent the company and take all necessary actions in the matter in learned SDJM's Court. The specimen signature of Mr. Subhasis Kumar Das has also been attested by the Managing Director. The Managing Director apart from himself being the key managerial personnel of the appellant company, has also been delegated the power by the Board of Directors through the document dated 06.04.1998 (Annexure P16). The specimen signature of Mr. Subhasis Kumar Das has also been attested by the Managing Director. The Managing Director apart from himself being the key managerial personnel of the appellant company, has also been delegated the power by the Board of Directors through the document dated 06.04.1998 (Annexure P16). Through the said document the Managing Director has been delegated, in general, all powers necessary for the management and operation of the company and it has been specified among others, to exercise the power relating to important issues affecting the company's land and property. Through the said document, the Managing Director is also empowered to delegate where necessary and to the extent required, any of the powers delegated to him, to his subordinate officers. The above noted documents would disclose that the complaint under Section 138 NI Act was filed on behalf of the "payee" company with due authorisation. 12. The next aspect on which the High Court has interfered is on accepting the contention that there is no averment in the complaint as to whether the General Manager (Accounting) had any knowledge about the transaction or he was a witness to the transaction. On the said aspect it is noted that the transaction between the parties is based on the agreement dated 18.07.2014 (Annexure P1). The said document depicts, below the signature of the executives representing the appellant and the respondent company, a witness each from either side have appended their signatures. The witness on behalf of the appellant company is none other than Mr. Subhasis Kumar Das who was at that point in time, designated as General Manager (Commercial). Further, the document for reconciliation of account spanning the period from 01.04.2011 to 30.09.2014, as carried out on 28.10.2014, depicts that the same was attested by the representatives of both the companies. The appellant company is represented by Mr. Subhasis Kumar Das. That apart, when the cheques were dishonoured, it was Mr. Subhasis Kumar Das, General Manager (Accounting) who had issued the notices (Annexure P 11, 1213) on behalf of the appellant company, to the respondent company. The said documents would indicate that the person who had knowledge of the transaction and was witness to it, has been authorized and has instituted the complaint on behalf of the company." 22. Subhasis Kumar Das, General Manager (Accounting) who had issued the notices (Annexure P 11, 1213) on behalf of the appellant company, to the respondent company. The said documents would indicate that the person who had knowledge of the transaction and was witness to it, has been authorized and has instituted the complaint on behalf of the company." 22. When the facts of the present case are examined in the light of above, the court finds that the following recital is contained in the letter of authority:- ^^izekf.kr fd;k tkrk gSa fd eSa Jherh 'kfDr [k=k vk;q 72 o"kZ iRuh Jh lqHkk"k pan [k=k eSa ujs'k ikVjht th-Vh- jksM [kqtkZ & 203131 ¼m-iz-½ dh gSfl;r iathd`r ,dy Lokeh ¼lksy izksijkbVj½ vf/kd vk;q gksus ds dkj.k Jh uhjt dqekj iq= Jh lwjt ukjk;.k mez 42 o"kZ fuoklh ,p-,u- 934] panzyksd dkWyksuh xyh ua- 4] [kqtkZ uxj ftyk cqyan'kgj tks bl QeZ ds izca/kd vFkkZr eSustj gSa rFkk lkekU; o nSfud :i ls QeZ ds izca/kdh; dk;Z laikfnr djrs gSa rFkk fnu&izfrfnu gksus okys vkfFkZd laO;ogkjksa rFkk dz;&fodz ls okfdQ gSa] dks eSa vkjrh baMLV~ht [kqtkZ ds fo:) pSd ckmal ds dsl ¼pSd la- 086295@10-07-2021 :- 1]70]46]314&00½ dk ifjokn ekuuh; l{ke U;k;ky; esa QeZ ^^eSa- ujs'k ikVjht [kqtkZ** ds uke ls nk;j djus ds fy, izkf/kd`r djrh gwaA** 23. In the affidavit under section 200 Cr.P.C. of the power of attorney holder, the following recital is contained in paragraph 11 of the same:- ^^;g fd 'kiFk i= esa fd, x, leLr dFku esjh tkudkjh esa gSaA ifjoknh QeZ esa gq, izR;sd dk;Z dh eq>s tkudkjh gS rFkk ifjoknh QeZ ds Lokeh }kjk Hkh eq>s nSfud :i ls dk;Z dh tkudkjh nh tkrh gSA** 24. In the complaint filed by complainant-opposite party 2, there is no recital of the fact that the power of attorney holder namely Neeraj Kumar has personal knowledge of the facts giving rise to the proceedings under section 138 NI Act. 25. When the principles enunciated by the Court in aforementioned judgments are applied to the present case, the Court finds that no specific pleading has been raised in the letter of authority, and the affidavit of the power of attorney holder that he has personal knowledge of the facts giving rise to the proceedings under section 138 NI Act. The complaint is totally silent regarding the above. The complaint is totally silent regarding the above. A conjoint reading of the averments made in the letter of authority and the affidavit of the power of attorney holder under section 200 Cr.P.C. clearly go to suggest that the power of attorney holder is not having personal knowledge of the facts giving rise to the proceedings under section 138 NI Act, even though he is working as Manager of the firm. This being the position, the submissions urged by the learned senior counsel in support of present application are liable to be accepted as they create a dent in the proceedings impugned in present application. 26. Resultantly, the present application succeeds and is liable to be allowed. 27. It is accordingly allowed. 28. The impugned summoning order 22.11.2021 passed by Additional Chief Judicial Magistrate, Khurja, Bulandshahar in Complaint Case No. 701 of 2021 (M/s Naresh Potteries v. M/s Aarti Industries) under Section 138 N.I. Act, Police Station-Kotwali Khurja Nagar, District-Bulandshahar, as well as the entire proceedings of aforementioned complaint case now pending in the court of Additional Chief Judicial Magistrate, Khurja, Bulandshahar are hereby quashed. 29. Cost made easy.