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Dealing with the legitimacy of a complaint filed under Section 138 and 142 of Negotiable Instruments Act, 1881, the Supreme Court recently held that "when the complainant/payee is a company, an authorized employee can represent the company."

A bench of Chief Justice of India NV Ramana along with Justices AS Bopanna and Hima Kohli said, 

“…when a company is the payee of the cheque based on which a complaint is filed under Section 138 of N.I. Act, the complainant necessarily should be the Company which would be represented by an employee who is authorized."

"Prima ­facie, 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,” bench added.

The bench further opined that if there was 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.

The TRL Krosaki Refractories Ltd. approached the Supreme Court assailing the judgment passed by the Orissa High Court whereby it had quashed the order passed by the Sub-Divisional Judicial Magistrate (SDJM), Jharsuguda taking cognizance and issuing summons in a case where cheques issued to TRL Krosaki were dishonored.

Another company namely SMS Asia Private Limited had issued seven cheques, in all amounting to rupees 1,10,00,000 in favour of TRL Krosaki. On presentation, the said cheques were dishonored by the Bank and were returned with the endorsement, ‘account closed’. Since no reply was received to the notices sent to SMS Asia, a complaint was filed before the SDJM.

The said complaint was registered based on the affidavit filed on behalf of the complainant, in lieu of an oral sworn statement. The SDJM on being satisfied that there is sufficient material and the complaint under Section 138 of N.I Act against the accused is in accordance with law, took cognizance of the complaint and directed summons to SMS Asia.

Thereafter, SMS Asia approached the High Court under Section 482 CrPC. In its petition, SMS Asia contended that the complaint filed was by an incompetent person without the requisite averments in the complaint, despite which the SDJM had taken cognizance and issued summons.

It was further contended that Mr. Subhasis Kumar Das, General Manager (Accounting) who had filed the complaint representing the complainant company, neither had knowledge about the alleged transaction, nor had he witnessed the same.

Upon this, the High Court accepted the said contention and held that there is no mention in the complaint or affidavit as to when and in what manner the company had authorized its General Manager (Accounting) to represent the company to file the complaint.

It was further held by the High Court that neither any resolution of the Board of Directors of the complainant company nor any authorisation of the company in favour of the person representing it in the complaint was filed for perusal of the Magistrate.  

However, when the matter reached the top court, relying on Samrat Shipping Co. Pvt. Ltd. Samrat v. Dolly George, Court held that dismissal of a complaint at the threshold by the Magistrate on the question of authorisation, would not be justified.  

Furthermore, Court was of the view that in such circumstances entertaining a petition under Section 482 to quash the order of taking cognizance by the Magistrate would be unjustified when the   issue of proper authorisation and knowledge can only be an issue for trial.

Court also noted that the requirement as contemplated under Section 142 (1) (a) of NI Act that the complaint ought to be in writing and that it should be filed by the payee or the holder in due course, was duly satisfied.

Lastly, while considering the scope of Section 142 (1)(a) of N.I. Act, the Court relied on the case of Vishwa Mitter v. O.P. Poddar, wherein it was held that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence, before a Magistrate entitled to take cognizance. Court said,

"It was further held in Vishwa Mitter (supra) that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complaint requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by such statute. In that circumstance, it was held that the only eligibility criteria prescribed by Section 142 of N.I. Act is that the complainant must be by the payee or the holder in due course."

Accordingly, the court was of the opinion that the High Court was not justified in entertaining the petition filed under Section 482 CrPC and quashing the order taking cognizance of the complaint filed by TRL Krosaki.

While restoring the complaint, noting that the complaint was filed in the year 2015, the court ordered that the same shall be proceeded with further expeditiously and be concluded in a period not later than six months.

“The appeal is accordingly allowed with cost quantified at Rs. 1,00,000/­ (Rupees one lakh only) payable by the respondent to the appellant”, further ordered the Court.

Case title: M/s TRL Krosaki Refractories Ltd. v M/s SMS Asia Private Limited & Anr.