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Complaint Filed By The Authorized Person Of A Company Is Sufficient For A Magistrate To Take Cognizance

By - Simran Tandon on March 31, 2022

The Supreme Court, in the case of M/s TRL Krosaki Refractories Ltd. Versus M/s SMS Asia Private Limited & Anr.1 has held Complaint By Authorized Person Sufficient To Take Cognizance and that a Magistrate is empowered to take cognizance of a case under Section 138 of the Negotiable Instruments Act, 1881 on presentation of prima facie evidence of due authorization by the company to a person representing it.  

Complaint By Authorized Person Sufficient To Take Cognizance

The facts of the case are that the respondent had issued a cheque in favour of the appellant company. However, the said cheque was dishonoured and consequently, the appellant –  after duly notifying the same to the defendants – has filed the complaint before the ‘SDJM’ under Section 138 and 142 of the Negotiable Instruments Act, 1881.

The respondent subsequently filed a petition before the High Court of Orissa under Section 482 of the CrPC, seeking to quash the order passed by the SDJM by contending that it was incorrect on the part of the SDJM to take cognizance of the complaint of the appellant company filed through one Mr Subhasis Kumar Das, who was the General Manager (Accounting) as the said person was not competent enough to file the complaint without the requisite averments in the complaint. 

The High Court, allowing the petition upheld the claims of the respondent, observed that the appellant (through Mr Das) had no locus standi to file the complaint in question in the light of the judgment in A.C. Narayanan vs. State of Maharashtra & Anr2 as neither any affidavit nor any complaint mentioned the mode or the manner of N.I. Act) is following the requirements under Section 142 of the N.I. Act

The apex court, to reach a conclusion, relied on the A.C. Narayanan to test the veracity of the view adopted by the High Court. The court held that the complainant had satisfied the requirements laid down in A.C. Narayanan as the Managing Director had filed criminal proceedings, including proceedings under the provisions of the N.I. Act and civil proceedings on behalf of the company.

The court further held that the affidavit supporting the complaint contained averments regarding authorization in favour of and knowledge on the part of Mr Das and that what is to be treated as an explicit averment couldn’t be put in a straitjacket formula and has to be gathered from the surrounding facts and circumstances keeping in view that 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. Such authorization could be deciphered by a sworn statement (either orally or by affidavit) to that effect.

Lastly, the Court – quashing the decision of the High Court on the grounds of it being unjustified in entertaining the respondent’s petition under Section 482 of Cr.P.C. –  observed that what is necessary for a magistrate to take cognizance and to issue process is that: 

  • The complaint was filed in the name of the “payee” 
  • If some person other than the payee is prosecuting the complaint, then it must be shown that they have authorization from the “payee” and knowledge of the transaction. 

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