Negotiable Instruments Act, 1881: ss.138, 142 – Complaint filed u/s.138 by the Managing Director of the appellant-company – Board Resolution authorising the Managing Director to file complaint for dishonour of cheque annexed with the complaint – Defence of respondent that the complaint was not in proper form as the complaint and the Board Resolution annexed did not lead to conclusion that it was filed on behalf of the Company – Held: It is quite apparent from the format of the complaint that the Managing Director had filed the complaint on behalf of the Company – There could be a format where the Company’s name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company – It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation – The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director – Only the existence of authorisation could be verified – Respondent not having disputed his signatures on the cheques, it was for him to show in what circumstances the cheques had been issued, i.e., why was it not a cheque issued in due course – There was no plea of any fraud or misrepresentation – The complaint was properly instituted and the respondent failed to disclose why he did not meet the financial liability arising to a payee, who is a holder of a cheque in due course – Complaint was instituted in July, 2006 – In the given scenario, the respondent should be sentenced with imprisonment for a term of one year and with fine twice the amount of the cheque, i.e., Rs.3,20,000/- – However, in view of passage of time, the sentence would stand suspended if he pays a further sum of Rs.1,60,000/- to the appellant.
Allowing the appeal, the Court
HELD: 1. The respondent not having disputed his signatures on the cheques, it was for him to show in what circumstances the cheques had been issued, i.e., why was it not a cheque issued in due course. The words of Section 139 of the NI Act are quite clear that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. The respondent has not set up a case that the nature of transaction was of the nature which fell beyond the scope of Section 138. Other than taking a technical objection, really nothing was said on the substantive aspect. [Para 17][327-H; 328-A-B]
2. The only eligibility criteria prescribed under Section 142(1)(a) is that the complaint must be by the payee or the holder in due course. It is quite apparent from the format of the complaint that the Managing Director has filed the complaint on behalf of the Company. There could be a format where the Company’s name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company. [Paras 18, 22][328-B-C; 329-A-B]
Triyambak S. Hegde v. Sripad Crl. Appeal Nos.
849-850/2011 decided on 23.09.2021; Associated Cement Co. Ltd. v. Keshavanand (1998) 1 SCC 687 : [1997] 6 Suppl. SCR 500; M.M.TC Ltd. & Anr. v. Medchl Chemicals and Pharma (P) Ltd. & Anr. (2002) 1 SCC
234 : [2001] 5 Suppl. SCR 265; Credential Finance Ltd. v. State of Maharashtra (1998) 3 Mh.L.J. 805 – referred to.
3. A copy of the Board Resolution was filed along with the complaint. An affidavit had been brought on record in the trial court by the Company, affirming to the factum of authorisation in favour of the Managing Director. A Manager or a Managing Director ordinarily by the very nomenclature can be taken to be the person in-charge of the affairs of the Company for its day-to-day management and within the activity would certainly be calling the act of approaching the court either under civil law or criminal law for setting the trial in motion. It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified. [Para 23][329-B-E]
4. The authorisation in the present case, was a copy and, thus, does not have to be signed by the Board Members, as that would form a part of the minutes of the Board meeting and not a true copy of the authorisation. The authorisation in the form of a certified copy of the Resolution, it states that legal action has to be taken against the respondent for dishonour of cheques issued by him to discharge his liabilities to the Company. To this effect, the appellant was authorised to appoint advocates, issues notices through advocate, file complaint, verifications on oath, appoint Constituent attorney to file complaint in the court and attend all such affairs which may be needed in the process of legal actions. The finding by the Courts below as to the lack of authorisation to depose also, thus, stands nullified. [Para 24, 25][329-E-H]
5. The complaint was properly instituted and the respondent failed to disclose why he did not meet the financial liability arising to a payee, who is a holder of a cheque in due course. The complaint was instituted in July, 2006. Fifteen years have elapsed since then. The punishment prescribed for such an offence under Section 138 of the NI Act is imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. In the given scenario the respondent should be sentenced with imprisonment for a term of one year and with fine twice the amount of the cheque, i.e., Rs.3,20,000/-. However, in view of passage of time, if the respondent pays a further sum of Rs.1,60,000/- to the appellant, then the sentence would stand suspended. [Paras 28, 29][330-EH; 331-A]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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