# Ashok Sharma v. State of U.P. & Anr

- **Citation:** (2024) 4 ILRA 669
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-07
- **Case number:** Application U/S 482. No. 18652 of 2016
- **Bench:** Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/ashok-sharma-v-state-of-u-p-anr-51840
- **Pages:** 12

## Headnote

Law
-
Code
of
Criminal
Procedure,1973
-Section
482Negotiable Instruments Act,1881 -
Section 138 -Quashing of Summoning
Order Denied - The applicant sought to quash
the summoning order dated 16.02.2016 under
Section 138 of the Negotiable Instruments Act
(N.I. Act) and related proceedings - Held, the
complaint met the requirements of Sections
138 and 142 N.I. Act, and issues regarding
authorization
and
vicarious
liability
are
matters for trial, not for quashing at this
stage. (Paras 2, 13, 31, 42)

B. Section 138 N.I. Act - Validity of
Complaint - The complaint was filed by a
company
through
an
authorized
representative for a dishonored cheque -
Held, the complaint satisfied the ingredients
of Section 138, as the cheque was dishonored
due to insufficient funds, a legal notice was
issued timely, and the complaint was filed by
the payee company, represented by an
authorized person. (Paras 3, 16, 31)

C. Section 141 N.I. Act - Vicarious Liability
of Directors - The applicant, a cheque
signatory, and other directors were alleged to
be responsible for company transactions -
Held, Section 141 imputes vicarious liability to
directors involved in the company's affairs,
and specific roles or authorization disputes
are to be resolved during trial, not at the
summoning stage. (Paras 6, 12, 21, 34)

D.
Power
of
Attorney
in
Company
Complaints - The applicant argued the
complaint was invalid due to lack of explicit
authorization or personal knowledge of the
power of attorney holder - Held, per TRL
Krosaki
Reractories
Ltd.,
a
company's
authorized representative need only show
prima facie authorization and knowledge of
transactions, with disputes to be adjudicated
at trial. (Paras 5, 7, 13, 31, 35)

E. Resignation of Director - Liability Under
Section 168 Companies Act - One applicant
claimed exemption from liability due to
resignation before the cheque's issuance -
Held, under Section 168, a director remains
liable for acts during their tenure, and
whether resignation absolves liability is a trial
issue. (Paras 18, 24, 25, 38)

Application Dismissed.

List of Cases cited:
670 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

4 All. Ashok Sharma Vs. State of U.P. & Anr.
669
said order to secure the ends of justice.
There is nothing on record to demonstrate
as to how present applicant is prejudiced,
or if there is any likelihood of causing
miscarriage of justice to him, owing to
the order under challenge by which
application u/s 216 Cr.P.C. for framing
additional
charge
has
simply
been
allowed acknowledging the relevant fact
which has been left to be considered at
the time of framing of charges.

21. Resultantly, instant application
being, misconceived and devoid of merits
is dismissed with no order as to costs.
----------
(2024) 4 ILRA 669
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 07.02.2024

BEFORE

THE HON'BLE PRASHANT KUMAR, J.

Application U/S 482. No. 18652 of 2016
with
Application U/S 482. No. 12562 of 2016
with
Application U/S 482. No. 9430 of 2016

Ashok Sharma ...Applicant
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicant:
Sri Amit Daga, Sri Ashish Kumar Singh

Counsel for the Opposite Parties:
G.A., Sri Dinkar Lal, Sri Dipendra Kumar, Sri
Pradeep Kumar Rai, Sri Satendra Kumar, Sri
Suyash Agarwal, Sri Swetashwa Agarwal

Criminal
Law
-
Code
of
Criminal
Procedure,1973
-Section
482Negotiable Instruments Act,1881 -
Section 138 -Quashing of Summoning
Order Denied - The applicant sought to quash
the summoning order dated 16.02.2016 under
Section 138 of the Negotiable Instruments Act
(N.I. Act) and related proceedings - Held, the
complaint met the requirements of Sections
138 and 142 N.I. Act, and issues regarding
authorization
and
vicarious
liability
are
matters for trial, not for quashing at this
stage. (Paras 2, 13, 31, 42)

B. Section 138 N.I. Act - Validity of
Complaint - The complaint was filed by a
company
through
an
authorized
representative for a dishonored cheque -
Held, the complaint satisfied the ingredients
of Section 138, as the cheque was dishonored
due to insufficient funds, a legal notice was
issued timely, and the complaint was filed by
the payee company, represented by an
authorized person. (Paras 3, 16, 31)

C. Section 141 N.I. Act - Vicarious Liability
of Directors - The applicant, a cheque
signatory, and other directors were alleged to
be responsible for company transactions -
Held, Section 141 imputes vicarious liability to
directors involved in the company's affairs,
and specific roles or authorization disputes
are to be resolved during trial, not at the
summoning stage. (Paras 6, 12, 21, 34)

D.
Power
of
Attorney
in
Company
Complaints - The applicant argued the
complaint was invalid due to lack of explicit
authorization or personal knowledge of the
power of attorney holder - Held, per TRL
Krosaki
Reractories
Ltd.,
a
company's
authorized representative need only show
prima facie authorization and knowledge of
transactions, with disputes to be adjudicated
at trial. (Paras 5, 7, 13, 31, 35)

E. Resignation of Director - Liability Under
Section 168 Companies Act - One applicant
claimed exemption from liability due to
resignation before the cheque's issuance -
Held, under Section 168, a director remains
liable for acts during their tenure, and
whether resignation absolves liability is a trial
issue. (Paras 18, 24, 25, 38)

Application Dismissed.

List of Cases cited:
670 INDIAN LAW REPORTS ALLAHABAD SERIES
1. A.C. Narayanan Vs St. of Maharashtra, (2014)
& (2015)

2. TRL Krosaki Reractories Ltd. Vs SMS Asia Pvt.
Ltd., Criminal Appeal No. 270 of 2022

3. Samrat Shipping Co. Pvt. Ltd. Vs Dolly
George, (2002)

4. National Small Industries Corp. Ltd. Vs St.
(NCT of Delhi), (2009)

5. Sunil Bharti Mittal Vs CBI, (2015)

(Delivered by Hon'ble Prashant Kumar, J.)

1. Heard Sri Amit Daga, learned
counsel for applicant, Sri Swetashwa
Agarwal, learned counsel for opposite party
no.2 and Sri Shashidhar Pandey, learned
AGA for the State.

2. By means of this application under
Section 482 Cr.P.C. the applicant has
prayed for quashing the summoning order
dated 16.02.2016 passed by Additional
Chief Judicial Magistrate, Court No.1,
Muzaffarnagar in Criminal Complaint Case
No.49/9 of 2016 (whereby the trial court
summoned accused applicant for the
offence punishable under Section 138 of
Negotiable Instruments Act) as well as
entire proceedings of Criminal Complaint
Case
No.49/9
of
2016
(Uttarakhand
Engineering Products Pvt. Ltd. Vs. M/s.
Trimurti Concast Pvt. Ltd. and others),
under Section 138 of N.I.Act, Police
Station
New
Mandi,
District
Muzaffarnagar, pending in the Court of
Additional Chief Judicial Magistrate, Court
No.1, Muzaffarnagar.

3. Brief facts of the case are that
Uttarakhand Engineering Products Private
Limited (here-in-after for the sake of
brevity
has
been
referred
to
as
"Complainant") is engaged in the business
of Sponge Iron and Silicon Manganese.
M/s Trimurti Concast Pvt. Ltd. placed an
order for supply of Sponge Iron and Silicon
Manganese, the complainant supplied the
product, thereafter, M/s Trimurti Concast
Pvt.
Ltd
gave
a
cheque
of
Rs.1,07,05,318.00 on 16.07.2015 bearing
cheque no.000441 drawn in HDFC Bank,
53/4-A, Bagh Kambalwala, Jansath Road,
New Mandi Muzaffarnagar. This cheque
was presented on 12.10.2015 and the same
was bounced because of insufficiency of
funds, thereafter, the complainant gave a
legal notice on 23.10.2015 within stipulated
time. When, M/s Trimurti Concast Pvt. Ltd
did
not
pay
the
said
amount
the
complainant was left with no option but to
file a complaint under Section 138 of
Negotiable Instruments Act before Chief
Judicial Magistrate, Muzaffarnagar. The
evidence was filed by way of an affidavit
and also filed all relevant documents,
thereafter, the Court was pleased to issue
summons on 16.02.2016.

4. Once the summons were issued, the
applicant herein, Ashok Sharma, who was
signatory of the cheque filed the instant
application under Section 482 Cr.P.C. in
which
this
Court
vide
order
dated
05.07.2016 issued notices to the opposite
party
no.2
and
stayed
the
further
proceedings of the aforesaid complaint
case, therefore, the trial could not proceed
since last 8 years. Now the pleadings are
complete and the matter is ripe for hearing.

ARGUMENT ON BEHALF OF
THE APPLICANT

5. Learned counsel for the applicant
submits that prosecution, initiated under
Section 138 of N.I.Act by and on behalf of
the company cannot be initiated through
power of attorne. It is initiated by power of
4 All. Ashok Sharma Vs. State of U.P. & Anr.
671
attorney HOLDER, then the power of
attorney and letter of authorized signatory
must be on record of trial court. There was
not even a single authorization letter, power
of attorney or letter bearing seal and
signatures of the Board of Directors of the
Company, which authorize to institute
complaint on behalf of the complainant is
available before the trial Court, therefore,
the complaint filed by the complainant is
not maintainable

6. He further submits that complaint
does not fulfil the basic ingredients of
Section 141 of N.I.Act. The complaint as
well as the statements are absolutely silent
on the point, that on the date of issuance of
the cheque or on the date on which the
cheque was dishonoured, who was in
charge or responsible, and looking after day
to day affairs of the company. Hence, the
complaint against the applicant is not
maintainable.

7. In support of his argument learned
counsel for the applicant placed reliance on
the judgement of Hon'ble Supreme Court
in the case of A.C. Narayan vs. State of
Maharashtra and another1 wherein the
Court had held as follows:-

"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 N.I. 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.

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. We also reiterate that 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 Page 13 13 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."

8. Learned counsel for the applicant
further placed reliance on the judgement of
Hon'ble Supreme Court A.C. Narayanan
vs. State of Maharashtra and another2
wherein the Court held as follows:-

"From the bare perusal of the
said complaint, it can be seen that except
mentioning in the cause title there is no
mention of, or a reference to the Power of
Attorney in the body of the said complaint
nor was it exhibited as part of the said
complaint. Further, in the list of evidence
there is just a mere mention of the words at
serial no.6 viz. "Power of Attorney",
however there is no date or any other
particulars of the Power of Attorney
mentioned in the complaint. Even in the
verification
statement
made
by
the
672 INDIAN LAW REPORTS ALLAHABAD SERIES
respondent no.2, there is not even a
whisper that she is filing the complaint as
the Power of Attorney holder of the
complainant. Even the order of issue of
process dated 20th February, 1998 does
not mention that the Magistrate had
perused any Power of Attorney for
issuing process.

The appellant has stated that his
Advocate
conducted
search
and
inspection of the papers and proceedings
of the criminal complaint and found that
no Power of Attorney was found to be a
part of that record. This has not been
disputed by the respondents. In that view
of the matter and in light of decision of
the larger Bench, as referred above, we
hold that the Magistrate wrongly took
cognizance in the matter and the Court
below erred in putting the onus on the
appellant rather than the complainant.
The
aforesaid
fact
has
also
been
overlooked by the High Court while
passing the impugned judgment dated
12th August, 2005."

9. He further submits that in the
complaint it is not stated that the
complaint has been filed through the
power of attorney holder. He further
submits that there is no averment in the
complaint nor in the counter affidavit
where the authorized signatory is said to
have knowledge about the business
transactions between the accused and
company. If it is not so, it is a directors
alone who should deposed before the trial
Court.

10. He further submits that it has not
been averred in the complaint or in the
counter affidavit that the director, Mr.
Ashok Sharma was responsible for the
day to day affairs of the company. He
further submits that only allegation against
the applicant is the he (Ashok Sharma)
was the signatory and has issued the
cheque.

11. He further submits that applicant,
Ashok Sharma is not a active director of
the company he is sleeping director of the
company and not actively involved in the
day to day affairs of the company and not
authorized to conduct day to day affairs of
the company, nor had the authority to sign
or issue the cheque.

ARGUMENT ON BEHALF OF
OPPOSITE PARTY NO.2

12. Per contra, Mr. Shwetashwa
Agarwal, learned counsel for the opposite
party no.2 submits that averment made by
the applicant that the applicant, Ashok
Sharma was a sleeping director is just a fig
of imagination. He cannot be a sleeping
director when he himself is signing the
cheque. As regard to, whether he has no
authority to sign the cheque, Mr. Agarwal
states, if he has no authority to sign the
cheque then signing a cheque amounts to a
criminal breach of trust. It that was a
situation why the other directors have not
initiate any criminal proceedings against
him.

13.
 In response
to
the
first
submission, learned counsel for opposite
party no.2 submits that the law cited by
counsel for the applicant has been watered
down and clarified in the latest judgement
of Hon'ble Supreme Court in the case of
M/s TRL Krosaki Reractories Ltd. Vs.
M/s SMS Asia Private Limited and
another (Criminal Appeal No.270 of
2022 arising out of SLP (Crl.) No.3113
of 2016)3 he relies on paragraph no.25,
which is quoted hereunder:-
4 All. Ashok Sharma Vs. State of U.P. & Anr.
673

"In that view, the position that
would emerge is 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. 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. The
employment of the terms "specific assertion
as to the knowledge of the power of
attorney holder" and such assertion about
knowledge should be "said explicitly" as
stated in A.C. Narayanan (supra) cannot be
understood to mean that the assertion
should be in any particular manner, much
less only in the manner understood by the
accused in the case. All that is necessary is
to
demonstrate
before
the
learned
Magistrate that the complaint filed is in the
name of the "payee" and if the person who
is prosecuting the complaint is different
from the payee, the authorisation therefor
and that the contents of the complaint are
within
his
knowledge.
When,
the
complainant/payee is a company, an
authorized employee can represent the
company. Such averment and prima facie
material is sufficient for the learned
Magistrate to take cognizance and issue
process. If at all, there is 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. As noted in Samrat Shipping Co.
Pvt. Ltd. 4dismissal of a complaint at the
threshold by the Magistrate on the question
of authorisation, would not be justified.
Similarly, we are of the view that in such
circumstances entertaining a petition under
Section 482 to quash the order taking
cognizance by the Magistrate would be
unjustified when the issue of proper
authorisation and knowledge can only be
an issue for trial."

14. He further submits that A.C.
Narayanan
case
was
between
two
individuals and the Hon'ble Supreme Court
was appreciating the facts of that particular
case vis a vis the powers of a principal and
an agent inter se and now that law has been
clarified because in the cases of company, a
company is a corporeal personality it is a
dejure complainant and the person, who is
representing the company is a defacto
complainant,
so
those
parameters
of
specific assertions, specific words cannot
be put into a strait-jacket formula and those
specific words are not required to be
mentioned. The only thing, which has to be
appreciated by the Court at the time of
summoning of accused is as to whether the
complaint has been filed by a payee or a
holder in due course, which in the case is a
company so obviously the company has
filed the complaint but through a defacto
complainant, who is authorized signatory
duly authorized by the resolution of the
Board of Directors of the company. He
further submits that it is a sufficient
requirement to meet out the ingredients of
Section 141 of N.I.Act. He further submits
that it has also been held by the Hon'ble
Supreme Court that these arguments as to
whether he had the authority or not cannot
be appreciated at the time of summoning
and there is a full-fledged trial to follow to
adjudicate these issues. The accused has the
liberty to raise these questions during the
674 INDIAN LAW REPORTS ALLAHABAD SERIES
course of trial but at the stage of
summoning this burden cannot be put upon
the magistrate to scan through the entire
evidence and conduct a mini trial prior to
the summoning of the accused.

15. He further submits that in the
complaint if a specific word is not used that
would not defeat the substantive right for
prosecution. Once he has specifically
alleged the specific acts and the role played
to the accused persons.

16. He further submits that the
complaint qualifies the threshold of the
complaint as per the ingredient of Sections
138 and 142 of N.I.Act. The legally
enforceable debt is there it is not disputed,
the cheque has been dishonoured on the
ground of insufficient funds, it cannot be
disputed. The legal notice was sent in time,
it is not disputed and the complaint has
been filed as per the provisions of Section
138 of N.I.Act. is not disputed.

17. He further submits that the
arguments advanced by the counsel for the
applicant are squarely covered by the
judgment of Hon'ble Supreme Court in the
matter of M/s TRL Krosaki Reractories
Ltd. (supra).

18. He further refers on Section 168
of the Companies Act, which lays down
that even upon resignation of a director he
would be liable for the acts performed
during the course of his directorship. For
ready reference Section 168 (1) and (2) of
the Companies Act are quoted hereunder:-

(1) A director may resign from
his office by giving a notice in writing to
the company and the Board shall on receipt
of such notice take note of the same and the
company shall intimate the Registrar in
such manner, within such time and in such
form as may be prescribed and shall also
place the fact of such resignation in the
report of directors laid in the immediately
following general meeting by the company:

Provided that director shall also
forward director may also forward a copy
of his resignation along with detailed
reasons for the resignation to the Registrar
within thirty days of resignation in such
manner as may be prescribed.

(2) The resignation of a director
shall take effect from the date on which the
notice is received by the company or the
date, if any, specified by the director in the
notice, whichever is later:

Provided that the director who
has resigned shall be liable even after his
resignation for the offences which occurred
during his tenure.

19. He further submits that scope of
judicial enquiry is limited at this stage
would be very limited, moreover, there are
catina of judgements, which says that the
inherent power of Section 482 Cr.P.C.
should sparingly be used.

CASE
NO.12652
OF
2016
(NARENDRA SINGH PAWAR)

20. Learned counsel for the applicant
submits that the applicant, Narendra Singh
Pawar is not signatory of the cheque and
there was no allegation that he was looking
after day to day affairs of the company.

21. Per contra Mr. Shwetashwa
Agarwal, learned counsel for opposite party
no.2 submits that as per provisions of
Section 141 of N.I. Act the vicarious
liability flows from the company to the
4 All. Ashok Sharma Vs. State of U.P. & Anr.
675
directors,
who
are
involved
in
the
transaction in question. Here in the facts of
the present case their involvement in the
transaction
has
been
shown
in
the
complaint right from the very inception.
The complaint and the statement on oath
submitted
by
the
complainant
undisputedly
discloses
specific
allegations of participation and the
specific acts attributed to all the directors
of the company, who were involved in
the transaction. They placed the orders on
behalf of the company, and the opposite
party no.2 was pursuing the payment
from the company through them. There is
specific assertion against the directors of
the Company. The cheque was issued on
behalf of the company in which the
accused/applicant herein are the directors
and also responsible for the day to day
affairs of the company, and the signatory
was one of the director, Mr. Ashok
Sharma, towards the discharge of the
legally enforceable debt. Legal notice
was sent to all of them. No reply was
given by them. Thereafter, a complaint
was filed that is sufficient compliance of
their participation.

22. Learned counsel for the opposite
party no.2 submits that the this concept of
vicarious liability is alien to criminal
jurisprudence, however, the same was
introduced in the N.I.Act for the reasons
of dealing with corporeal entities because
in a company the directors and its
representatives and signatories are the
persons who run the company. Since the
company is juristic personality and
cannot be prosecuted, hence, the normal
criminal law will not be applicable in that
case, it is for this reason the vicarious
liability
was
first
recognized
and
introduced by the law makers while
drafting N.I.Act.

23. Learned counsel for the opposite
party no.2 further submits that keeping this
in mind Section 141 was enacted wherein just
now the company, the key personnels,
directors was to be held liable for such kind
of criminal offence.

CASE
NO.9430
OF
2016
(YATINDRA SINGH PAWAR)

24. Learned counsel for the applicant
submits that the cheque was issued on
16.07.2015 and Mr. Yatindra Singh Pawar
was appointed as director of the company on
24.11.2005 resigned from the company on
02.05.2015 and the same came in effect on
13.05.2015.

25. In reply Mr. Agarwal, submits that
even assuming that he has resigned on
02.05.2015 still he cannot get out of the
liabilities as the order was placed while he
was a whole time director of the company.
The material was supplied while he was a
whole time director of the company, it seems
if he has resigned only for the sake of getting
away from the civil and criminal liabilities
then such kind of resignation cannot absolve
him of such liabilities.

CONCLUSION

26. It is undisputed that M/s. Trimurti
Concast Pvt. Ltd. placed an order for supply
of Sponge Iron and Silicon Manganese,
which the complainant company had supplied
against which a cheque was given on behalf
of M/s. Trimurti Concast Pvt. Ltd. and the
signatory of the cheque was one of its
directors of the company, Mr. Ashok
Sharma.

27. The cheque was presented on
12.10.2015 and the same was returned back
due to insufficiency of funds. A legal
676 INDIAN LAW REPORTS ALLAHABAD SERIES
notice as contemplated under Negotiable
Instruments Act was issued on 23.10.2015
within time. When no payment was made
to the complainant, he filed a complaint
under
Section
138
of
Negotiable
Instruments Act before the Chief Judicial
Magistrate, Muzaffarnagar, who being
satisfied had issued summons vide order
dated 05.07.2016.

28. The counsel for the applicant has
argued that the proceedings under Section
138 of Negotiable Instruments is not
maintainable as the complaint has been
filed by a power of attorney holder and the
power of attorney was not placed before the
trial court neither the power of attorney
holder had averred in the complaint that he
had a personal knowledge about the alleged
transactions.

29. To buttress his argument, the
counsel for the applicant has relied on a
decision passed by Hon'ble Supreme Court
in the case of A.C. Narayan vs. State of
Maharashtra
and
another,
(2014)
(supra).

30. He further placed reliance on
another judgement of Hon'ble Supreme
Court in the case of A.C. Narayanan vs.
State of Maharashtra and another,
(2015)
(supra)
wherein
the
Hon'ble
Supreme
Court
had
set
aside
the
proceedings initiated under Section 138 of
N.I. Act on the ground that there is no
whisper in the complaint that the same was
being filed through a power of attorney
holder.

31. Per contra, learned counsel for the
opposite party no.2 has placed reliance in
one of the latest judgement of Hon'ble
Supreme Court in the case of M/s TRL
Krosaki Reractories Ltd. Vs. M/s SMS
Asia Private Limited and another (supra)
in which the Hon'ble Supreme Court has
clearly held that the ratio laid down in the
matter of A.C. Naraynan cannot be
understood to mean that the assertion
should be in any particular manner much
less only in the manner understood by the
accused in the case. All that is necessary is
to
demonstrate
before
the
learned
Magistrate that the complaint filed is in the
name of the "payee" and if the person who
is prosecuting the complaint is different
from the payee, the authorisation therefor
and that the contents of the complaint are
within
his
knowledge.
When,
the
complainant/payee is a company, an
authorized employee can represent the
company. Such averment and prima facie
material is sufficient for the learned
Magistrate to take cognizance and issue
process. If at all, there is 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.

32. The Hon'ble Supreme Court in
the matter of Samrat Shipping Co.Pvt.
Ltd. Vs. Dolly George5 has held as under:-

Having heard both sides we find
it difficult to support the orders challenged
before us. A Company can file a complaint
only through human agency. The person
who presented the complaint on behalf of
the Company claimed that he is the
authorised representative of the company.
Prima facie, the trial court should have
accepted it at the time when a complaint
4 All. Ashok Sharma Vs. State of U.P. & Anr.
677
was presented. If it is a matter of evidence
when the accused disputed the authority of
the
said
individual
to
present
the
complaint, opportunity should have been
given to the complainant to prove the same,
but that opportunity need be given only
when the trial commences. The dismissal of
the complaint at the threshold on the
premise that the individual has not
produced certified copy of the resolution
appears to be too hasty an action. We,
therefore, set aside the impugned orders
and direct the trial court to proceed with
the trial and dispose it off in accordance
with law. Parties are directed to appear
before the trial court on 31.01.2000.

33. The Hon'ble Supreme Court in
the matter of National Small Industries
Corporation Limited vs. State (NCT of
Delhi)6 has held as follows:-

"The term `complainant' is not
defined under the Code. Section 142 NI Act
requires a complaint under section 138 of
that Act, to be made by the payee (or by the
holder in due course). It is thus evident that
in a complaint relating to dishonour of a
cheque (which has not been endorsed by
the payee in favour of anyone), it is the
payee alone who can be the complainant.
The NI Act only provides that dishonour of
a cheque would be an offence and the
manner of taking cognizance of offences
punishable under section 138 of that Act.
However,
the
procedure
relating
to
initiation of proceedings, trial and disposal
of such complaints, is governed by the
Code. Section 200 of the Code requires that
the Magistrate, on taking cognizance of an
offence on complaint, shall examine upon
oath the complainant and the witnesses
present
and
the
substance
of
such
examination shall be reduced to writing
and shall be signed by the complainant and
the witnesses. The requirement of section
142 of NI Act that payee should be the
complainant, is met if the complaint is in
the name of the payee. If the payee is a
company, necessarily the complaint should
be filed in the name of the company.
Section 142 of NI Act does not specify who
should represent the company, if a
company is the complainant. A company
can be represented by an employee or even
by
a
non-employee
authorized
and
empowered to represent the company either
by a resolution or by a power of attorney.

Section 142 only requires that the
complaint should be in the name of the
payee. Where the complainant is a
company, who will represent the company
and how the company will be represented
in such proceedings, is not governed by the
Code but by the relevant law relating to
companies. Section 200 of the Code
mandatorily requires an examination of the
complainant; and where the complainant is
an incorporeal body, evidently only an
employee
or
representative
can
be
examined on its behalf. As a result, the
company becomes a de jure complainant
and its employee or other representative,
representing it in the criminal proceedings,
becomes the de facto complainant. Thus in
every complaint, where the complainant is
an
incorporeal
body,
there
is
a
complainant -- de jure, and a complainant -
- de facto. Clause (a) of the proviso to
section 200 provides that where the
complainant is a public servant, it will not
be necessary to examine the complainant
and his witnesses. Where the complainant
is an incorporeal body represented by
one of its employees, the employee who is a
public servant is the de facto complainant
and
in
signing
and
presenting
the
complaint, he acts in the discharge of his
official duties. Therefore, it follows that in
678 INDIAN LAW REPORTS ALLAHABAD SERIES
such cases, the exemption under clause (a)
of the first proviso to section 200 of the
Code will be available.

Resultantly, when in a complaint
in regard to dishonour of a cheque issued
in favour of a company or corporation, for
the purpose of section 142 NI Act, the
company will be the complainant, and for
purposes of section 200 of the Code, its
employee who represents the company or
corporation,
will
be
the
de
facto
complainant. In such a complaint, the
dejure complainant, namely, the company
or corporation will remain the same but the
defacto
complainant
(employee)
representing such de jure complainant can
change, from time to time. And if the de
facto complainant is a public servant, the
benefit of exemption under clause (a) of
proviso to section 200 of the Code will be
available, even though the complaint is
made in the name of a company or
corporation.

34. The Hon'ble Supreme Court in
the matter of Sunil Bharti Mittal Vs.
Central Bureau of Investigation7 has
held as follows:-

In the present case, however, this
principle is applied in an exactly reverse
scenario. Here, company is the accused
person and the learned Special Magistrate
has observed in the impugned order that
since the appellants represent the directing
mind and will of each company, their state
of mind is the state of mind of the company
and, therefore, on this premise, acts of the
company is Criminal Appeal No. of 2015 &
Ors. Page 41 of 58 (arising out of SLP
(Crl.) No. 2961 of 2013 & Ors.) Page 42
attributed and imputed to the appellants. It
is difficult to accept it as the correct
principle
of
law.
As
demonstrated
hereinafter, this proposition would run
contrary to the principle of vicarious
liability detailing the circumstances under
which a direction of a company can be held
liable.

(iii)
Circumstances
when
Director/Person in charge of the affairs of
the company can also be prosecuted, when
the company is an accused person:

No doubt, a corporate entity is an
artificial person which acts through its
officers, directors, managing director,
chairman etc. If such a company commits
an offence involving mens rea, it would
normally be the intent and action of that
individual who would act on behalf of the
company. It would be more so, when the
criminal
act
is
that
of
conspiracy.
However, at the same time, it is the
cardinal
principle
of
criminal
jurisprudence that there is no vicarious
liability unless the statute specifically
provides so.

Thus, an individual who has
perpetrated the commission of an offence
on behalf of a company can be made
accused, along with the company, if there is
sufficient evidence of his active role
coupled with criminal intent. Second
situation in which he can be implicated is
in those cases where the statutory regime
itself attracts the doctrine of vicarious
liability, by specifically incorporating such
a provision.

When
the
company
is
the
offendor, vicarious liability of the Directors
cannot be imputed automatically, in the
absence of any statutory provision to this
effect. One such example is Section 141 of
the Negotiable Instruments Act, 1881. In
Aneeta Hada (supra), the Court noted that
4 All. Ashok Sharma Vs. State of U.P. & Anr.
679
if a group of persons that guide the
business of the company have the criminal
intent, that would be imputed to the body
corporate and it is in this backdrop,
Section 141 of the Negotiable Instruments
Act has to be understood. Such a position
is,
therefore,
because
of
statutory
intendment making it a deeming fiction.
Here also, the principle of "alter ego", was
applied only in one direction namely where
a group of persons that guide the business
had criminal intent, that is to be imputed to
the body corporate and not the vice versa.
Otherwise, there has to be a specific act
attributed to the Director or any other
person
allegedly
in
control
and
management of the company, to the effect
that such a person was responsible for the
acts committed by or on behalf of the
company."

35. In view of the aforesaid facts and
circumstances and the ratio laid down by
the
Hon'ble
Supreme
Court
in
the
judgement of A.C. Naraynan (supra), that
the power of attorney holder, who filed the
complaint clearly needs to aver that he has
knowledge of the complete transaction has
been watered down by Hon'ble Supreme
Court in the matter of M/s TRL Krosaki
Reractories Ltd. (supra) wherein it is held
that when a complainant is a company and
authorized representative can represent the
company, such averment and prima facie
material is sufficient for the Magistrate to
take cognizance in such cases.

36. Undoubtedly, a company is a
separate legal entity, which can only be
represented through its officers, directors,
managing directors, chairman etc. if such a
company commits an offence, it would
normally be taken as an action of that
individual, who has acted on behalf of the
company.

37. The argument advanced by the
counsel for the applicant that the other
director,
Narendra
Singh
Pawar
had
nothing to do with the transaction is also
not correct. All the directors are equally
responsible for the act done on behalf of
the company.

38. Asfar as, the third director, Mr.
Yatindra Singh Pawar is concerned, it has
been alleged that he has resigned few days
before the cheque was given. It can only be
seen during the trial whether he was
responsible in placing the order getting the
material and, thereafter, resigning to
absolve himself from any king of liability.
This issue cannot be adjudicated upon in
the present proceedings.

39. 37A. It is a settled principle that if
the payee is a company the complaint has
to be filed in the name of the company.
Section 142 of the N.I.Act does not specify
as to who should represent the company, if
the company is the complainant. A
company can be represented by an
employee or even by a known employee,
who is duly authorized and empowered to
represent the company either by resolution
or by a power of attorney.

40. Further, where the company is a
complainant,
who
will
represent
the
company, and how the company will be
represented in 138 proceedings is not
covered by the Code. Section 200 of the
Code mandatory requires an examination of
the complaint, and whether the complainant
is an incorporeal body, it is only one of its
employee or authorized representative can
be examined on behalf of the company.
With the result, the company becomes a
dejure complainant and the person, who is
representing the company whether it is
employee or the authorized representative
680 INDIAN LAW REPORTS ALLAHABAD SERIES
becomes de facto complainant, thus, in
every complaint lodged by a company,
which is a separate juristic personality,
there is a complainant dejure and a
complainant de facto.

41. This application has been
pending since last 8 years and the trial
could not proceed, it is in the interest of
justice that the trial may be concluded
expeditiously in accordance with law,
preferably within a period of six months
from the date of receipt of certified copy
of this order without granting any
unnecessary adjournments to either side.

42. In view of the aforesaid facts and
circumstances, the instant application filed
by the directions of the company is devoid
of merit, and is, accordingly, dismissed.
----------
(2024) 4 ILRA 680
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 28.10.2023

BEFORE

THE HON'BLE GAJENDRA KUMAR, J.

Application U/S 482. No. 20183 of 2013

Smt. Kirti ...Applicant
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicant:
Sri Santosh Tripathi, Sri Manas Bhargava

Counsel for the Opposite Parties:
G.A., Sri Satish Kumar Tyagi, Sri Devesh
Mishra, Sri Harsh Kumar Anand

Criminal
Law
-

Code
of
Criminal
Procedure,1973 -Section 482- The Dowry
Prohibition Act, 1961 - Sections 3/4 - Indian
Penal Code, 1860- Sections 498-A, 323, 504,
506, 406 -The applicants sought to quash the
proceedings in Case No. 1643 of 2012 under
Sections 498-A, 323, 504, 506, 406 IPC and
Sections 3/4 of the Dowry Prohibition Act -
Held, the proceedings were quashed as the
allegations were omnibus, vague, and lacked
specific evidence, indicating an abuse of process
with ulterior motives. (Paras 3, 14, 16, 23)

B. Section 498-A IPC - Misuse of Provisions -
The FIR alleged cruelty and dowry demands
against the applicants, including the husband
and his sister - Held, general and omnibus
allegations without specific instances of cruelty
or dowry demands, as deprecated in Kahkashan
Kausar and Varala Bharath Kumar, do not justify
prosecution and warrant quashing to prevent
misuse of law. (Paras 15, 16, 17)

C. Abuse of Process and Ulterior Motive -
The opposite party no. 2 filed the FIR after
marital disputes and a divorce petition in the
USA, with a delay in reporting - Held, the FIR
appeared to be a tool to harass and coerce the
applicants, falling under categories (1) and (5)
of St. of Har. Vs Bhajan Lal for quashing due to
lack of prima facie offence and inherent
improbability. (Paras 14, 18, 23)

D. Inherent Powers of High Court - The
court emphasized the cautious exercise of Code
of Criminal Procedure,1973 -Section 482powers
to prevent abuse of process and secure justice -
Held, the court must examine attending
circumstances beyond FIR averments to identify
frivolous or vexatious proceedings, as guided by
Salif @ Shalu and Neeharika Infrastructure.
(Paras 19, 20, 22)

E. Fraud and False Allegations - The
applicants argued the FIR was lodged with mala
fide intent and false allegations - Held,
proceedings based on fraud or unclean hands,
as per S.P. Chengalvaraya Naidu and A.VS
Papayya Sastry, are null and void, justifying
quashing to prevent injustice. (Paras 5, 6, 7, 9)

Applications Allowed.

List of Cases cited:

1. S.P. Chengalvaraya Naidu Vs Jagannath,
1994 AIR 853