The main legal point established in the judgment is that an authorized signatory cannot be held personally liable for a dishonored cheque issued on behalf of the principal entity, and the principal entity is a necessary party in such cases.

JUDGMENT :

This revision application has been preferred for setting aside the judgment and order dated 19.11.2018 passed by learned First Additional Sessions Judge, Muzzafarpur in Criminal Appeal No. 95 of 2017 whereby and whereunder the learned Appellate Court has been pleased to hold that the accused of this case (O.P. No.2) cannot be held guilty under Section 138 of Negotiable Instruments Act (hereinafter referred to as the ‘N.I. Act’) and accordingly the judgment of conviction and sentence passed by learned Additional Chief Judicial Magistrate-XIII, Muzaffarpur has been set aside.

Brief Facts of the Case

2. The complaint case was filed by this petitioner on 07.08.2012 in the court of Chief Judicial Magistrate, Muzaffarpur. He claims himself a contractor who was appointed and was given a power of attorney by one M/s Umbrey Trade Agency (hereinafter referred to as ‘Firm’ or ‘Agency’) on 29.01.2010 for two years. It was his case that he had done the work of road construction on behalf of the Agency by making investment in his own capacity. On 17.11.2010 he was allegedly removed as power of attorney holder of the agency and the agency appointed one Mr. Deepak Kumar as new power of attorney holder in his place. The appellant claimed that he had by that time already invested approximately a sum of Rupees Three Crores which had not been paid to him. For this reason, he filed a writ petition in this Court giving rise to C.W.J.C. no. 20175 of 2010 which was disposed of on 21.07.2011 with a direction to the newly appointed power of attorney holder namely Mr. Deepak Kumar to compensate the loss of the petitioner. Copy of the order passed by this Court in the writ petition has been placed before this Court to submit that the Hon’ble Court had been pleased to issue certain directions. This Court will deal with the same at appropriate place in this judgment.

3. It is alleged that the new power attorney holder Mr. Deepak Kumar deposited Rs. 20,69,971/-in the account of the petitioner but in the mean time the agency removed him also and appointed one Mr. Sudhir Kumar (O.P. No. 2) as new power of attorney holder in January, 2012. The petitioner alleged that in this manner the liability fell upon Mr. Sudhir Kumar (O.P. No. 2) to discharge the above referred liability. It is stated that the O.P. no. 2 issued a multi-city cheque bearing no. 014968 on 27.02.2012 of Rs. 2,05,00,000/- from the account of the agency. But on deposit, the said cheque stood dishonoured in want of sufficient funds in the account of the agency. The petitioner sent legal notice to O.P. no. 2 on 25.06.2012 but the O.P. no. 2 did not pay the cheque amount whereafter the petitioner filed the complaint case giving rise to Complaint Case no. 2237 of 2012.

4. The said complaint case was taken up for consideration. The learned Magistrate held an inquiry and found a prima-facie case under Section 138 of the N.I. Act and Section 406 of the IPC. After recording evidence before charge, the charges were framed against the O.P. no. 2. The complainant-petitioner examined five witnesses and produced six exhibits. Exhibit ‘1’ is the signature of the complaint petition. Exhibit ‘2’ is the deposit slip, Exhibit ‘2/1’ is the bank memo, Exhibit ‘3’ is the cheque number whereas Exhibit ‘4’ is the legal notice. Exhibit ‘5’ is said to be the registered slip and Exhibit ‘6’ is the copy of the acknowledgment. It is stated that the accused O.P. no. 2 was also examined and a sanha regarding missing of the cheque was exhibited as Exhibit ‘A’.

Judgment of the Trial Court

5. Learned Additional Chief Judicial Magistrate-XIII, Muzaffarpur examined the evidences on the record and came to a conclusion that the prosecution has been able to prove the charges against the accused persons. The learned Trial Court held that as per order of the Hon’ble High Court, the Power of Attorney Holder Mr. Deepak Kumar was under obligation to pay the amount, therefore, ordinarily whosoever will be the power of attorney