Reportable IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1449 OF 2003

M/s. Shankar Finance & Investments …… Appellant  

Versus

State of Andhra Pradesh & Ors. …..

Respondents

O R D E R

R. V. Raveendran J.

The  complainant  in  a  proceedings  under  section  138  of  the

Negotiable Instruments Act, 1881 (‘Act’ for short), challenges in this appeal

by special leave, the order dated 21.8.2002 passed by the Andhra Pradesh

High Court in Criminal Petition No.1737 of 2001 holding that the complaint

signed by a Power of Attorney holder was not maintainable.

2. The appellant – complainant filed a complaint dated 2.4.1996 against

respondents 2 to 4 herein (namely M/s Speciality  Aqua Ventures Ltd, its

Managing Director and Chairman arrayed as accused 1, 2 and 3) alleging

that a cheque for Rs.12,40,000/- issued by the third respondent (on behalf of

respondents  2  to  4)  was  dishonoured.  Respondents  2  and  4  filed  an

application  seeking  discharge.  The  said  petition  was  dismissed  by  the

learned Magistrate by order dated 17.12.1998. The Revision filed by them

against  the order  of  the learned Magistrate  was  rejected by the  Sessions

Court on 12.2.2001. Thereafter, the fourth respondent herein (third accused)

filed a petition under section 482 Cr.PC for quashing the proceedings. The

fourth respondent contended that he could not be arrayed as an accused as

the cheque was issued by the third respondent in his individual  capacity.

The High Court allowed the said petition on a different ground, by order

dated  21.8.2002,  and  quashed  the  complaint  as  against  the  fourth

respondent. It held that the complaint was not signed by the payee, that is,

the sole proprietor of the payee concern, but was signed by his Power of

Attorney Holder and that was not permissible.  

3. The  said  order  of  the  High  Court  is  challenged  in  this  appeal  by

special leave. By interim orders dated 28.11.2003 and 2.4.2004, this Court

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stayed the operation of the order of the learned Single Judge and directed

that the case should be proceeded with.  

4. The  question  that  arises  for  our  consideration  is  whether  the

complaint under section 138 of the Act signed by a Attorney holder is not

maintainable.

5. Section 190 of Code of Criminal Procedure (‘Code’ for short) enables

a Magistrate to take cognizance of an offence upon receiving a complaint of

facts which constitutes such offence. Section 200 of the Code requires the

Magistrate taking cognizance of an offence on complaint, to examine upon

oath the complainant and the witness present, if any.  Section 142 of the Act

provides  that  notwithstanding  anything  contained  in  the  Code,  no  Court

shall  take cognizance of any offence punishable under section 138 of the

Act except upon a complaint, in writing, made by the payee or, as the case

may be, the holder in due course of the cheque.  

6. In  MMTC Ltd. vs. MEDCHL Chemicals & Pharma (P) Ltd. – 2002

(1) SCC 234, a complaint was filed by MMTC Ltd. through the Manager of

its  Regional  Office.  Subsequently,  the  Manager  was  substituted  by  Dy.

General Manager who was duly authorized. The High Court held that the

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complaint was not maintainable as it was signed and presented by a person,

who was neither  an authorized agent  nor  a person empowered under the

articles of association or by any resolution of the Board to do so. It held that

only the  Executive  Director  of  MMTC Ltd  had the  authority to  institute

legal proceedings. Reversing the said decision, this Court held :  

“In our view the reasoning given above cannot be sustained. Section 142 of the Negotiable Instruments Act provides that a complaint under section 138 can be made by the payee or the holder in due course of the said cheque. The two complaints,  in question, are by the appellant company who is the payee of the two cheques.  

This Court has as far back as in the case of Vishwa Mitter v. O.P. Poddar - (1983) 4 SCC 701, held that it is clear 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. It has been held that no court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint. It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must  satisfy the eligibility criterion prescribed by the Statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee  or  the  holder  in  due  course.  This  criteria  is  satisfied  as  the complaint is in the name and on behalf of the appellant company.”

(Emphasis supplied)

Referring  to  the  decision  in  Associated  Cement  Co.  Ltd.  v.

Keshvanand [1998 (1) SCC 687], this Court held :

“It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been  held  that  there  may  be  occasions  when  different  persons  can represent  the  company.  It  has  been  held  that  it  is  open to  the  de  jure complainant  company to  seek  permission  of  the  court  for  sending any

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other person to represent the company in the court. Thus, even presuming that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent stage the company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground.”

7. The payee of the cheque is M/s Shankar Finance & Investments. The

complaint is  filed by “M/s Shankar Finance & Investments,  a proprietary

concern of Sri Atmakuri Sankara Rao, represented by its power of Attorney

Holder  Sri  Thamada  Satyanarayana”.  It  is  therefore  evident  that  the

complaint is in the name of and on behalf of the payee. Section 142(a) of the

Act requires that no Court shall take cognizance of any offence punishable

under section 138 except upon a  complaint made in writing by the payee.

Thus the  two requirements  are that  (a)  the  complaint  should be made in

writing  (in  contradistinction  from  an  oral  complaint);  and  (b)  the

complainant  should be the payee (or the holder in due course, where the

payee has endorsed the cheque in favour of someone else). The payee, as

noticed above, is M/s Shankar Finance & Investments. Once the complaint

is in the name of the ‘payee’ and is in writing, the requirements of section

142  are  fulfilled.  Who should  represent  the  payee  where  the  payee  is  a

company,  or how the payee should be represented where payee is a sole

proprietary concern, is not a matter that is governed by section 142, but by

the general law.  

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8. As  contrasted  from a  company  incorporated  under  the  Companies

Act, 1956 which is a legal entity distinct from its shareholders, a proprietary

concern  is  not  a  legal  entity  distinct  from  its  proprietor.  A  proprietary

concern is nothing but an individual trading under a trade name. In civil law

where an individual  carries on business in a name or style other than his

own name, he cannot sue in the trading name but must sue in his own name,

though others can sue him in the trading name. Therefore, if the appellant in

this case had to file a civil suit, the proper description of plaintiff should be

“Atmakuri Sankara Rao carrying on business under the name and style of

M/s Shankar Finance & Investments, a sole proprietary concern”. But we

are not dealing with a civil suit. We are dealing with a criminal complaint to

which the special requirements of section 142 of the Act apply. Section 142

requires that the complainant should be payee. The payee is M/s Shankar

Finance & Investments.  Therefore  in  a  criminal  complaint  relating  to  an

offence  under  section  138  of  the  Act,  it  is  permissible  to  lodge  the

complaint in the name of the proprietary concern itself.  

9. The next question is where a proprietary concern carries on business

through  an  attorney  holder,  whether  the  attorney  holder  can  lodge  the

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complaint? The attorney holder is the agent of the grantor. When the grantor

authorizes  the  Attorney  Holder  to  initiate  legal  proceedings  and  the

attorney holder  accordingly initiates  legal  proceedings,  he does so as the

agent of the grantor and the initiation is by the grantor represented by his

attorney holder,  and  not  by the  attorney holder  in  his  personal  capacity.

Therefore where the payee is a proprietary concern, the complaint can  be

filed : (i) by the proprietor of the proprietary concern, describing himself as

the sole proprietor of the ‘payee’; (ii) The proprietary concern, describing

itself as a sole proprietary concern, represented by its sole proprietor; and

(iii) the proprietor or the proprietary concern represented by the attorney-

holder under a power of attorney executed by the sole proprietor. It follows

that in this case the complaint could have been validly filed by describing

the complainant in any one of the following four methods  :

“Atmakuri  Shankara  Rao,  sole  proprietor  of  M/s.  Shankar Finance & Investments”  

Or

“M/s.  Shankar  Finance  &  Investments  a  sole  proprietary concern represented by its proprietor Atmakuri Shankara Rao”  

Or

“Atmakuri  Shankara  Rao,  sole  proprietor  of  M/s.  Shankar Finance  &  Investments,  represented  by  his  Attorney  Holder Thamak Satyanarayana”  

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Or

“M/s. Shankar Finance & Investments, a proprietary concern of Atmakuri  Shankara  Rao,  represented  by his  Attorney Holder Thamada Satyanarayana”.  

What  would  have  been  improper  is  for  the  Attorney  holder  Thamada

Satyanarayana  to  file  the  complaint  in  his  own  name as  if  he  was  the

complainant.  

10. This Court has always recognized that the power of attorney holder

can  initiate  criminal  proceedings  on  behalf  of  his  Principal.  In  Ram

Chander Prasad Sharma v. State of Bihar and Anr. [AIR 1967 SC 349], the

prosecution was commenced in regard to tampering of electric meter seals,

with a charge sheet  submitted by the police  after  investigation  on a first

information  report  by  one  Bhattacharya,  Mains  Superintendent  of  Patna

Electric Supply Co. (‘PES Co.’ for short). An objection was raised by the

accused that the prosecution was incompetent as it was not launched by a

person competent to do so. The said objection was based on section 50 of

the Indian Electricity Act, 1910, which provided that no prosecution shall

be instituted against any person for any offence against that Act or any rule,

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licence or order thereunder, except at the instance of the Government or an

Electric Inspector, or of a person aggrieved by the same. This Court held :  

“…  The P.E.S. Co.,  however, is  a body corporate and must act  only through  its  directors  or  officers.  Here  we  have  the  evidence  of Ramaswami to the effect that he held a general power of attorney from the P.E.S. Co., and that he was specifically empowered thereunder to act on behalf of P.E.S. Co., in all legal proceedings. The evidence shows that  it  was  at  his  instance  that  Bhattacharya  launched  that  first information report and, therefore, it would follow that the law was set in motion by the “person aggrieved”.  The objection based on Section  50 must, therefore, be held to be untenable.”

(emphasis supplied)    

11. The  assumption  of  the  High  Court  that  where  the  payee  is  a

proprietary concern, the complaint can be signed only by the proprietor of

the  proprietary  concern  and  not  by  a  Power  of  Attorney  holder  of  the

proprietor,  is not sound. It  is not in dispute  that in this case a power of

attorney has been granted by Atmakuri Shankara Rao, as Proprietor of M/s

Shankar Finance & Investments in favour of Thamada Satyanarayana and

the same was produced along with the complaint.  The description of the

complainant is as under :  

“M/s  Shankar  Finance  and  Investments,  (a  proprietary  concern  of  Sri Atmakuri  Sankara  Rao S/o  Late Sri  A.  B.  Rama Murthy,  Hindu,  aged about 65 years), having its  office at Flat  No.3B, Third Floor, Maharaja Towers. Vishakhapatnam – 3 represented by its Power of Attorney Holder Sri Thamada Satyanarayana, S/o Late Adinarayana, Hindu, aged 50 years, Service,  residing  at  MIG-B-230,  Sagarnagar,  VUDA  Layout, Vishakhapatnam – 43.”  

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The said description is proper and therefore, the complaint has been duly

filed by the payee.   

12. The  High  Court  has  referred  to  the  fact  that  the  sworn  statement

before the learned Magistrate was of the attorney holder of the payee and

not by the payee in person. According to the tenor of the order of the High

Court,  this  was  also  irregular.  But  we  find  nothing  irregular  in  such  a

procedure. It is now well settled that the object of section 200 of the Code in

providing for examination of the complainant and his witnesses by the court

is  to  satisfy  itself  about  the  existence  of  a  prima facie  case  against  the

person accused of the offence and to ensure that such person is not harassed

by false and vexatious complaints by issue of process; (See Nirmaljit Singh

Hoon v. State of West Bengal – 1973 (3) SCC 753). Where the proprietor of

the proprietary concern has personal knowledge of the transaction and the

proprietor has signed the complaint, he has to be examined under section

200 of the Code. A power of attorney holder of the complainant who does

not have personal knowledge, cannot be examined. But where the attorney

holder  of  the  complainant  is  in  charge  of  the  business  of  the  payee-

complainant  and  the  Attorney  holder  alone  is  personally  aware  of  the

transactions, and the complaint is signed by the attorney holder on behalf of

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the payee-complainant, there is no reason why the  attorney holder cannot

be examined as the complainant. We may, in this connection, refer to the

decision of  this Court in  Janki Vashdeo Bhojwani v. Indusind Bank Ltd.

[2005  (2)  SCC 217],  where  the  scope  of  an  attorney holder  ‘acting’  on

behalf of the principal in a civil suit governed by Code of Civil Procedure

was examined. This Court observed:

“Order 3 Rules 1 and 2 CPC empower the holder of power of attorney to “act” on behalf of the principal. In our view the word “acts” employed in Order 3 Rules 1 and 2 CPC confines only to in respect of “acts” done by them  power-of-attorney  holder  in  exercise  of  power  granted  by  the instrument.  The  term  “acts”  would  not  include  deposing  in  place  and instead of the principal.  In other words, if the power-of-attorney holder has  rendered some “acts” in  pursuance of  power  of  attorney,  he  may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined.”    

[Emphasis supplied]

The principle  underlying  the  said  observations  will  apply to  cases

under  section  138  of  the  Act.  In  regard  to  business  transactions  of

companies, partnerships or proprietary concerns, many a time the authorized

agent or  attorney holder may be the only person having personal knowledge

of the particular transaction; and if the authorized agent or attorney-holder

has signed the complaint,  it  will  be absurd to  say that  he should not  be

examined  under  section  200  of  the  Code,  and  only  the  Secretary of  the

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company or the partner of the firm or the proprietor of a concern, who did

not  have personal  knowledge of the  transaction,  should be examined.  Of

course,  where  the  cheque  is  drawn  in  the  name  of  the  proprietor  of  a

proprietary  concern,  but  an  employee  of  such  concern  (who  is  not  an

attorney holder) has knowledge of the transaction, the payee as complainant

and the employee who has knowledge of the transaction, may both have to

be examined. Be that as it may. In this case we find no infirmity.

13. We,  accordingly,  allow  this  appeal,  set  aside  the  impugned  order

dated  21.8.2002  and  direct  the  learned  Magistrate  to  proceed  with  the

complaint as already directed by the interim order.  

……………………….J [R. V. Raveendran]

…………………………J [P. Sathasivam]

New Delhi;  June 26, 2008.  

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