{"id":262316,"date":"2022-02-24T13:00:14","date_gmt":"2022-02-24T07:30:14","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=262316"},"modified":"2022-02-25T08:54:23","modified_gmt":"2022-02-25T03:24:23","slug":"section-138-ni-act-prima-facie-indication-as-to-complaint-by-a-company-through-an-authorised-employee-having-knowledge-of-the-case-enough-for-magistrate-to-take-cognizance","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/02\/24\/section-138-ni-act-prima-facie-indication-as-to-complaint-by-a-company-through-an-authorised-employee-having-knowledge-of-the-case-enough-for-magistrate-to-take-cognizance\/","title":{"rendered":"Section 138 NI Act| Prima-facie indication as to complaint by a company through an authorised employee having knowledge of the case enough for Magistrate to take cognizance"},"content":{"rendered":"

Supreme Court<\/strong>: \u00a0\u00a0The 3-judge bench of NV Ramana, CJ and AS Bopanna*<\/strong> and Hima Kohli, JJ has held that when the complainant\/payee for a complaint filed under Section 138 of NI Act is a company, an authorized employee can represent the company. Such averment need not be in any particular manner and prima facie material is sufficient for the Magistrate to take cognizance and issue process.<\/p>\n

In the case at hand the complaint was filed in the name of the company i.e., \u201cthe\u00a0\u00a0 payee\u201d, through it\u2019s General Manager (Accounting). The authorisation by the Managing Director in his favour disclosed that the Managing Director of the appellant company had authorised the 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 SMS Asia Private Limited, to represent the company and take all necessary actions in the matter in learned SDJM\u2019s. Court.<\/p>\n

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, 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\u2019s land and property. The Managing Director was also empowered to delegate where necessary and to the extent required, any of the powers delegated to him, to his subordinate officers.<\/p>\n

In such circumstances, observing that company having authorized the General Manager (Accounting) who had personal knowledge being clearly averred, the Court explained that,<\/p>\n

\n

\u201cWhat can be treated as an explicit averment, cannot be put in a straitjacket but will have to be gathered from the circumstance and the manner in which it has been averred and conveyed, based on the facts\u00a0\u00a0 of each case. The manner in which a complaint is drafted may vary from case to case and would also depend on the skills of the person drafting the same which by itself, cannot defeat a substantive right.\u201d<\/p>\n<\/blockquote>\n

However, what is necessary to be taken note of is as to whether the contents as available in the pleading would convey the meaning to the effect that the person who has filed the complaint, is stated to be authorized and claims to have knowledge of the same. In addition, the supporting documents which were available on the record by themselves demonstrate the fact that an authorized person, being a witness to the transaction and having knowledge of the case had instituted the complaint on behalf of the \u201cpayee\u201d company and therefore, the requirement of Section 142 of NI Act was satisfied.<\/p>\n

Further, when a company is the payee of the cheque based on which a complaint is filed under Section 138 of NI Act, the complainant necessarily should be the Company which would be represented by an employee who is authorized. Prima\u00acfacie, in such a situation the indication in the complaint and the sworn statement (either orally or by affidavit) to the effect that the complainant (Company) is represented by an authorized person who has knowledge, would be sufficient.<\/p>\n

The Court made clear that the employment of the terms \u201cspecific assertion as to the knowledge of the power of attorney holder\u201d and such assertion about knowledge should be \u201csaid explicitly\u201d as stated in A.C. Narayanan v. State of Maharashtra, 2014)\u00a011\u00a0SCC 790<\/strong>\u00a0cannot be understood to mean that the assertion should be in any particular manner, much less only in the manner understood by the accused in the case.<\/p>\n

\n

\u201cAll that is necessary is to demonstrate before the learned Magistrate that the complaint filed is in the name of the \u201cpayee\u201d and if the person who is prosecuting the complaint is different from the payee, the authorisation therefor and that the contents of the complaint are within his knowledge.<\/p>\n<\/blockquote>\n

If at all, there is any serious dispute with regard to the person prosecuting the complaint not being authorized or if it is to be demonstrated that the person who filed the complaint has no knowledge of the transaction and, as such that person could not have instituted and prosecuted the complaint, it would be open for the accused to dispute the position and establish the same during the course of the trial.<\/p>\n

The Court, hence, held that dismissal of a complaint at the threshold by the Magistrate on the question of authorisation, would not be justified. Also, entertaining a petition under Section 482 to quash the order taking cognizance by the Magistrate would be unjustified when the issue of proper authorization and knowledge can only be an issue for trial.<\/p>\n

[TRL Krosaki Refractories Ltd. v. SMS Asia Private Limited, 2022 SCC OnLine SC 217<\/b><\/a>, decided on 22.02.2022]<\/p>\n

\n

*Judgment by: Justice AS Bopanna<\/h4>\n
\n

Counsels<\/strong><\/p>\n

For appellant: Senior Advocate Ashok\u00a0K.\u00a0Parija<\/p>\n

For respondent: Advocate Santosh\u00a0Kumar<\/p>\n","protected":false},"excerpt":{"rendered":"

Supreme Court: \u00a0\u00a0The 3-judge bench of NV Ramana, CJ and AS Bopanna* and Hima Kohli, JJ has held that when the complainant\/payee <\/p>\n","protected":false},"author":121,"featured_media":262333,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[48701,48702,34012,32256,32659,9441],"class_list":["post-262316","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-assertion","tag-authorisation","tag-company","tag-complainant","tag-power-of-attorney","tag-section-138"],"yoast_head":"\nSection 138 NI Act| Prima-facie indication as to complaint by a company through an authorised employee having knowledge of the case enough for Magistrate to take cognizance | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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Is it permissible? Court answers","author":"Bhumika Indulia","date":"February 16, 2021","format":false,"excerpt":"Allahabad High Court: Ravi Nath Tilhari, J., addressed a matter wherein a person being the director of the company signed a cheque on behalf of the company and since the said cheque got dishonoured, he was made liable, without the company being made liable under the offence of Section 138\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":255760,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/18\/explained-section-138-read-with-section-141-of-the-ni-act-vicarious-liability-of-directors-of-a-company-for-dishonour-of-cheques\/","url_meta":{"origin":262316,"position":2},"title":"Explained| Sections 138 and 141 of NI Act: Vicarious liability of directors of a company for dishonour of cheques","author":"Prachi Bhardwaj","date":"October 18, 2021","format":false,"excerpt":"Supreme Court: Explaining the law relating to vicarious liability of the Directors of a company under Sections 138 and 141 of the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi* and Abhay S. Oka, JJ has held that if, at the time the offence was committed, the person accused\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":226908,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/03\/12\/del-hc-proceedings-under-s-138-ni-act-quashed-against-independent-non-executive-directors-not-involved-in-day-to-day-affairs-of-company\/","url_meta":{"origin":262316,"position":3},"title":"Del HC | Proceedings under S. 138 NI Act quashed against Independent Non-executive Directors not involved in day-to-day affairs of Company","author":"Bhumika Indulia","date":"March 12, 2020","format":false,"excerpt":"Delhi High Court:\u00a0Manoj Kumar Ohri, J., while allowed the present petition and quashed the impugned order summoning the petitioners under Section 138 Negotiable Instruments Act, 1881. Petitioners in the present case were summoned for the offence\u00a0punishable under Section 138 NI Act. Respondent filed a complaint stating that the accused were\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":239115,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/11\/12\/madras-hc-can-a-non-executive-director-who-is-not-responsible-for-day-to-day-affairs-of-company-be-made-vicariously-liable-for-offence-committed-by-company-courts-interpretation-in-light-of-s\/","url_meta":{"origin":262316,"position":4},"title":"Madras HC | Can a ‘Non-Executive Director’ who is not responsible for day-to-day affairs of company be made vicariously liable for offence committed by company? Court’s interpretation in light of S. 141 NI Act","author":"Bhumika Indulia","date":"November 12, 2020","format":false,"excerpt":"Madras High Court:\u00a0G.K. Ilathiraiyan, J., while addressing the instant matter, observed that, a person who is inducted as the Non-Executive Director of an accused company and not responsible for the day-to-day affairs of the company, he\/she cannot be vicariously liable for the offence committed by the company. Petitioners Counsel submitted\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":218651,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/08\/27\/bom-hc-director-who-resigned-before-issuing-of-cheques-held-not-liable-under-s-138-r-w-s-141-of-ni-act-for-dishonour-thereof\/","url_meta":{"origin":262316,"position":5},"title":"Bom HC | Director who resigned before issuing of cheques held not liable under S. 138 r\/w S. 141 of NI Act for dishonour thereof","author":"Bhumika Indulia","date":"August 27, 2019","format":false,"excerpt":"Bombay High Court:\u00a0S.S. Shinde, J. allowed a criminal application filed against the order of the Magistrate whereby he rejected the application filed by the applicant for recalling the issuance of process under Section 138 of the Negotiable Instrument Act, 1881, against him. The applicant was one of the accused in\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/262316","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=262316"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/262316\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/262333"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=262316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=262316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=262316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}