High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. THANGARAJ
M. Lakshmi - Appellant
Versus
Shanmuga Priya Textiles P. Limited - Respondents
Crl. O.P. No. 10634 of 1998 and Crl. M.P. No. 4408 of 1998
Decided On : 31 August 1999
Certainly. Here are the citations for the judgments based on the principles discussed:
A judgment emphasizing that a complaint filed by a person representing a company must be supported by proper authorization, such as a board resolution, to be considered valid. Without such authorization, the complaint may be deemed not maintainable. This judgment clarifies that a person acting under a power of attorney or delegated authority must have explicit approval from the company's board to represent the company in legal proceedings (!) .
A ruling that highlights the importance of the person filing a complaint being either a director, manager, or another authorized representative of the company, and that delegation of authority must be properly conferred. It also states that a delegate cannot further delegate powers unless explicitly authorized, and that a power of attorney given in a personal capacity does not automatically confer authority to act on behalf of the company in legal matters (!) .
A decision that underscores the necessity of clear and proper authorization for anyone filing a criminal complaint on behalf of a company, particularly emphasizing that a person acting as an attorney must do so within the scope of the authority granted and that such authority must be demonstrated by appropriate documentation, such as a resolution or a valid power of attorney explicitly stating the capacity in which the person acts (!) .
A ruling that confirms that if a complaint is filed by a person who is not authorized or does not have proper authority, the court may quash the proceedings, as the fundamental requirement of locus standi and proper authorization is not satisfied (!) .
Please let me know if you need further assistance.
S. THANGARAJ, J.
The petitioner has filed this petition under section 482 of the Criminal Procedure Code, 1973, to call for the records in C.C. No. 321 of 1997 on the file of the Judicial Magistrate, Udumalpet, and to quash the same.
The respondent herein, who is the complainant, has filed a complaint under section 200 of the Criminal Procedure Code, for an offence under section 138 of the Negotiable Instruments Act against the petitioner herein alleging that for the purchase of 4.2 counts cotton yarn worth Rs. 1, 35, 000 the petitioner herein has issued a cheque dated January 4, 1997, drawn on City Union Bank for Rs. 1, 35, 000 and when presented for collection, it was returned with an endorsement "returned as funds are insufficient". Thereafter, the respondent had sent a lawyer's notice dated May 12, 1997, and the same was received by the petitioner herein on May 15, 1997, and no reply has been sent by the petitioner. The said complaint is pending in C.C. No. 321 of 1997, on the file of the Judicial Magistrate I, Udumalpet.
The cause title shows that the complaint was filed by one K. Rajaram - power of attorney of Thiru Ramakrishnan - managing director of M/s. Shanmuga Priya Textiles (P.) Ltd. As per the provisions of the Companies Act, 1956, there should be a resolution by the board of directors conferring a specific authority on an individual to represent the company in any matter particularly for filing a criminal complaint. As no such authorisation was given by the board of directors in favour of K. Rajaram, the complaint is not maintainable since the same was filed by K. Rajaram as power of attorney of Ramakrishnan.
The petitioner has relied on a decision of this court in Vijayakumar v. Monara Chits (P.) Ltd. 1997 (3) CTC 132, wherein it was held, when once the capacity of the person to file a complaint
"has not been substantiated and when it is submitted that the petitioner is a company incorporated under the Companies Act, without a resolution of the board and in the absence of proof, the person mentioned in the complaint had no right to maintain the complaint and therefore the lower court was not justified in taking cognizance of the complaint".
The respondent has relied on a decision of this court in Shakthi Concrete Industries Ltd. v. Valuable Steels (India) Ltd. 1998 1 LW (Crl.) 354, wherein it was held (pages 433, 434, 435) :
"... the cause title as well as the averments made in the complaints and the sworn statement would disclose that the complaints had been filed by the company represented by the director and as such, the company alone approaches the court as payee as provided under section 142 of the Negotiable Instruments Act, 1881. ... In the instant case, as per the cause title and the averments, the complainant-company has approached the court through some human agency, namely, a director of the company, in preferring the complaints, as the company has no soul, mind, body and limbs. If the company approaches the court through some other person, who is not connected with the affairs of the company then necessarily it has to authorise that person to file the complaint on its behalf. Therefore, in this case, the company being the complainant through its director is competent to file the complaints even without any authorisation .... the complaints are valid and the same are in accordance with law".
The present case is somewhat different on the question of fact. The transaction was between the petitioner-company and the respondent-company. The petitioner-company has issued the cheque in favour of the respondent-company which was subsequently dishonoured. The petitioner has questioned the locus standi of the person who has filed the complaint.
Section 142(a) of the Negotiable Instruments Act, says -
"Cognizance of offences. - Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),
(a) no court shall take cognizance of any offence punishable under section 138 except upon a comp
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