This article is inspired by a recent judgment of Allahabad High Court in Jitendra Kumar Mangla vs. State of U.P. and another. To read the judgment, click here.
This article deals with the short point involving the role of Power of Attorney vis-à-vis Dishonour of Cheque Cases. Power of Attorney is defined under Section 1A of the Power of Attorney Act 1882 as follows:
“Power-of-Attorney includes any instrument empowering a specified person to act for and in the name of the person executing it.”
Section 138 of the Negotiable Instruments Act 1881 provides for dishonour of cheque for insufficiency etc. of funds in the account. Offence under Section 138 of the Act is primarily a civil wrong. By legal fiction, this act is made into an offence to essentially render gravity to the act of dishonour of a cheque. It is pertinent to note that this legal fiction must be read with the object of the concerned statute i.e. to facilitate smooth functioning of business transactions. In this light, the role of power of attorney must be construed.
Can the Power of Attorney holder initiate a complaint under Section 138 of Negotiable Instruments Act under his own name?
The answer to this question is in the negative. In the case of A.C. Narayana and another vs. State of Maharashtra and another, it was held that:
“In view of the discussion, we are of the opinion that the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal.”
Hence, the Power of Attorney Holder cannot be the complainant in such cases. However, he can file a complaint on behalf of his principal.
Can the Power of Attorney depose as a witness on behalf of the complainant?
In the case of Pradeep Mohanbay (Dr.) v. Minguel Carlos Dias, the Goa Bench of the Bombay High Court held that a power of attorney can file a complaint under Section 138 but cannot depose on behalf of the complainant. He can only appear as a witness. This view was upheld as the correct view by the Hon’ble Apex Court in the case of Janki Vashdeo Bhojwani & Anr vs Indusind Bank Ltd. & Ors.
This was further expanded and dealt with in the case of A.C. Narayana (Supra). The relevant para is as follows:
“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.”
Hence, the settled law is that the Power of Attorney Holder can appear as a witness. However, if he does not have personal knowledge regarding the transactions, he cannot be examined. Hence, 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. This seems to be reasonable as the examination will not have any meaning if the power of attorney holder is not only aware of the facts.
What is required if the Power of Attorney Holder is to be examined?
Firstly, it is required by the complainant to make specific assertions as to the knowledge of the power-of-attorney holder in the said transaction explicitly in the complaint.
In case, the complainant is the company, and an employee has been authorized to represent the said company in the proceedings under Section 138 of the Negotiable Instruments Act, 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.
Secondly, the power of attorney holder must have the knowledge of those transactions which created liability for which the cheque was issued.
Conclusion
Coming to the remedy before the Allahabad High Court under Section 482 of the Criminal Procedure Code 1973/ Section 528 of Bhartiya Nagarik Suraksha Sanhita 2023, a case of quashing can be made out if the complaint is filed under the name of the Power of Attorney Holder, and not in the name of the Grantor.
However, if there is a dispute regarding proper authorization or knowledge of transaction to the power of attorney holder, then it would be open for the accused to dispute authorization during the course of trial and quashing the complaint on such ground is not justified as the proper authorization and knowledge of the fact can only be an issue for trial.