S.K. Mihani vs Ajeem Uddin

This is an application under Section 378(4) of the Code of Criminal Procedure, 1973 seeking leave to appeal against the judgment dated 14.03.2016 passed by the learned 12th Additional Sessions Judge, Bhopal in Criminal Appeal No.104/2015, whereby the learned appellate Court has allowed the appeal preferred by the respondent/accused and has set aside the judgment of conviction and order of sentence dated 05.01.2015 passed by the learned trial Court.

Briefly stated, the case of the appellant is that the appellant was working as an authorized Branch Manager of the finance company which had extended financial assistance to the respondent for purchase of a Tata Sumo vehicle bearing registration No.MP-04-H-9422. Towards discharge of the liability, the respondent issued cheque No.240844 dated 20.05.2005 for a sum of Rs.3,50,000/- drawn on State Bank of India. The said cheque, when presented for encashment, which was dishonoured on account of insufficiency of funds. Thereafter, statutory notice dated 04.06.2005 was issued to the respondent, upon failure of payment, complaint under Section 138 of the Negotiable Instruments Act, 1881 was instituted on 30.06.2005.

The learned trial Court, after recording evidence, vide judgment dated 05.01.2015 convicted the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act and sentenced him to undergo rigorous imprisonment for one year and further directed payment of compensation of Rs.6,35,000/-.

Aggrieved by the aforesaid judgment, the respondent preferred an appeal before the Sessions Court. The learned appellate Court, by the impugned judgment dated 14.03.2016, reversed the conviction and acquitted the respondent, principally on the ground that the appellant, who had appeared and deposed on behalf of the complainant Company, was not shown to be duly authorized to institute and prosecute the complaint.

Learned counsel for the appellant submits that the learned appellate Court has erred in reversing the well-reasoned judgment of conviction passed by the trial Court. It is contended that the appellant was the Branch Manager of the finance Company and had duly represented the Company in the proceedings. Learned counsel submits that the authorization letter, marked as Ex.P-12, was available on record and the learned appellate Court ought not to have held that the appellant was unauthorized to represent the complainant Company.

It is further submitted that the respondent himself had admitted the transaction relating to financing of vehicle and had also admitted the signature of the appellant. It is argued that the statutory presumption under Section 139 of the Negotiable Instruments Act operated in favour of the complainant and the defence of the respondent that the cheque was issued as a security cheque, was not properly appreciated by the learned appellate Court.

Learned counsel has also placed reliance upon the judgment of the Hon'ble Supreme Court in M/s Naresh Potteries v. M/s Aarti Industries and another 2025 INSC 1 to contend that a complaint under Section 138 of the Negotiable Instruments Act filed by a Company through its authorized representative cannot be discarded on the ground of authorization or competence of the representative, particularly when the representative is conversant with the affairs of the Company and the transaction in question.

Heard learned counsel for the applicant and perused the record.

It is not in dispute that the complaint in the present case was instituted in the year 2005. The authorization letter relied upon by the appellant is dated 20.11.2009. Thus, the authorization relied upon by the appellant came into existence almost four years after the institution of the complaint. There is nothing on record to demonstrate that the complainant Company had, at the time of institution of the complaint, authorized the applicant to institute the proceedings.

The judgment relied upon by learned counsel for the applicant in M/s Naresh Potteries (supra) does not advance the case of the applicant. In the said case, the complaint under Section 138 of the Negotiable Instruments Act was instituted on 08.09.2021 after the sole proprietor of the complainant-firm had issued a Letter of Authority dated 31.08.2021 authorizing the concerned Manager to file the complaint and take necessary steps in relation to dishonour of cheque. The Hon'ble Supreme Court, on the facts of that case, further noticed that the authorized representative was the Manager and caretaker of the day-to-day business of the firm and was well conversant with its affairs and financial transactions. The complaint, therefore, had been instituted after the authority had already been conferred upon the representative.

The factual position in the present case is materially different. Here, the complaint was instituted in 2005, whereas the authorization relied upon by the appellant is of 20.11.2009. Thus, the very document on which reliance is placed to establish the authority of the appellant came into existence subsequent to the institution of the complaint. The ratio of M/s Naresh Potteries (supra), therefore, cannot be invoked to validate the institution of the present complaint retrospectively.

In fact, the judgment relied upon by the appellant reinforces the necessity of examining whether the representative was duly authorized to act on behalf of the payee. The Hon'ble Supreme Court, while considering Section 142 of the Negotiable Instruments Act, reiterated that where the payee is a Company, the complaint must be in the name of the Company and the Company may be represented by an employee or other person duly authorized and empowered to represent it. The Court further emphasized that the person prosecuting the complaint, if different from the payee, must have the requisite authorization and knowledge of the transaction.

The decision in M/s Naresh Potteries (supra) was rendered in a materially different factual setting. The Hon'ble Supreme Court found that the authorization preceded the institution of the complaint and that the material on record demonstrated that the authorized representative was conversant with the transaction and was duly authorized to initiate the criminal proceedings. It was in that factual background that the Court held that the complaint ought not to have been quashed at the threshold.

The said judgment, therefore, cannot be read as laying down a proposition that a subsequent authorization, issued years after institution of a complaint, would automatically cure the absence of authority, at the time when the complaint was instituted. On the contrary, the judgment proceeds upon the existence of due authorization to initiate the proceedings and, consequently, does not support the appellant on the facts of the present case.

So far as the contention regarding the presumption under Section 139 of the Negotiable Instruments Act is concerned, such presumption arises in favour of the complainant only upon the foundational requirements of a legally maintainable complaint being satisfied. The presumption cannot dispense the requirement under Section 142 of the Negotiable Instruments Act regarding institution of the complaint by the payee or holder in due course, represented through a duly authorized person where the payee is a Company or Corporate entity.

This Court is conscious of the settled principle that while considering an application for leave to appeal against acquittal, the Appellate Court is required to exercise caution and interference is warranted where the view taken by the Court below is manifestly erroneous or perverse. However, upon consideration of the material available on record, this Court does not find any compelling ground to hold that the judgment of acquittal passed by the learned Appellate Court suffers from such perversity or manifest illegality as would warrant grant of leave to appeal.

Consequently, this Court is of the considered opinion that no case is made out for grant of leave to appeal under Section 378(4) of the Code of Criminal Procedure, 1973.

Accordingly, the application for leave to appeal is dismissed.