IMPORTANT POINT
In absence of specific authorization for initiation of legal proceedings, in power of attorney, complaint filed is illegal.

K. Shreedhar RAO, A.C.J.—The payee is a proprietary concern. The Power of Attorney of the payee, who is incidentally son of the payee, has filed the complaint under Section 138 NI Act. The Power of Attorney was not produced before the Trial Court. The petitioner, who is an accused in the, said complaint, has filed this petition for quashing on the ground that the complaint is filed by an incompetent person.

2. Mr. G. N. Sahewalla, Senior Counsel for the petitioner relies upon the decision of the Supreme Court in Shankar Finance and Investments v. State of Andhra Pradesh and others, (2008) 8 SCC 536. In para 11 of the said decision, the following observations are made:

“11. The next question is: where a proprietary concern carries on business through an attorney holder, whether the attorney holder can lodge the 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 anyone 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 and Investments. represented by his Attorney Holder Thamak Satyanarayana”

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.

3. The respondent, who has filed the complaint as a Power of Attorney has now produced the copy of the Power of Attorney in this proceeding. On perusal of the terms of the Power of Attorney, it nowhere discloses that the Power of Attorney has been authorized to institute the legal proceedings. The Power of Attorney contains authorization to deal with the banks and for entering into contracts but there is no authorization to initiate legal proceedings. In view of the decision of the Supreme Court, in the absence of specific authorization for initiation of legal proceedings, the complaint filed is illegal.

4. Mr. K. Agarwala, Senior Counsel for the respondent relied upon the decision of the Supreme Court in Haryana State Co-operative Supply and Marketing Federation Limited v. Jayam Textiles and another, (2014) 4 SCC 704.

5. In the cited case, on behalf of the company, a complaint was filed and the authorization given by the company to file the complaint was not filed. But, subsequently the said authorization was produced by the complainant. In the context of the said facts, the Supreme Court made the following observations :

“7…We are of the opinion that in the facts and circumstances of the case, an opportunity should be given to the appellant Federation to produce and prove the authorization before the Trial Court, more so, when money involved is public money. We, therefore, set aside the judgments of the Courts below and remit the matters back to the Trial Court with a direction to conduct trial afresh taking into consideration the aut