Case Note & Summary
The judgment arises from two petitions concerning Criminal Case No.290/SS/2008 pending before the Metropolitan Magistrate, 58th Court at Bandra, relating to a complaint under Section 138 of the Negotiable Instruments Act, 1881. The complainant, Rajesh M. Pamnani, through his father and constituted attorney Menghraj Pamnani, filed the complaint against seven accused persons, including a company and its directors, alleging dishonour of a cheque for Rs. 10 lakh issued by accused No.2. The cheque was dishonoured with the remark 'payment stopped by the drawer'. The complainant claimed that the cheque was issued for financial and managerial consultation provided to the company. The accused filed a petition challenging the process issued against them, while the complainant filed a petition challenging the order rejecting his application for interim compensation. The court examined the maintainability of the complaint, noting that the complainant was not the payee named in the cheque; the payee was 'Rajesh M. Pamnani' but the complaint was filed by his father as constituted attorney. The court held that under Section 138, only the payee or holder in due course can file a complaint, and the power of attorney holder must have specific authority to file the complaint. The court also held that for vicarious liability of directors under Section 141, specific averments of their role in the conduct of business are required, which were absent. Consequently, the court dismissed the complainant's petition and allowed the accused's petition, quashing the process against accused Nos. 2, 3, 5, 6, and 7.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Complaint by Third Party - The complaint under Section 138 must be filed by the payee or the holder in due course of the cheque. A person who is not the payee or holder in due course cannot file the complaint merely because he claims to be entitled to the amount. In this case, the complainant was not the payee named in the cheque, and the complaint was filed by his father as constituted attorney without proper authority. Held that the complaint was not maintainable. (Paras 5-8) B) Negotiable Instruments Act - Vicarious Liability of Directors - Section 141 - Specific Averments Required - For a director to be held vicariously liable under Section 141, there must be specific averments that the director was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Mere description as director is insufficient. In this case, the complaint lacked such specific averments against the accused directors. Held that the directors could not be prosecuted without such averments. (Paras 9-10) C) Negotiable Instruments Act - Power of Attorney - Authority to File Complaint - A power of attorney holder can file a complaint on behalf of the payee only if the payee is unable to file it himself due to illness or other valid reasons. The power of attorney must be specifically authorizing the filing of the complaint. In this case, the father of the complainant filed the complaint as constituted attorney, but the power of attorney did not authorize him to file the complaint. Held that the complaint was not properly instituted. (Paras 5-8)
Issue of Consideration
Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 can be filed by a person who is not the payee or holder in due course of the cheque, and whether the directors of a company can be held vicariously liable without specific averments of their role in the conduct of business.
Final Decision
The court dismissed Criminal Writ Petition No. 3050 of 2009 filed by the complainant and allowed Criminal Writ Petition No. 692 of 2011 filed by the accused, quashing the process issued against accused Nos. 2, 3, 5, 6, and 7.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- complaint by payee or holder in due course
- authority to file complaint
- power of attorney
- vicarious liability of directors
- Section 141 Negotiable Instruments Act
