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REPORTABLE
2025 INSC 1 IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. OF 2025 (Arising out of SLP (Crl.) No. 8659 of 2023)
M/S NARESH POTTERIES …APPELLANT(S)
VERSUS M/S AARTI INDUSTRIES AND ANOTHER …RESPONDENT(S)
Based on the provided legal document, the key points are as follows:
A power of attorney holder can file a complaint under Section 138 of the Negotiable Instruments Act if they are duly authorized and have personal knowledge of the transaction. The authorization must be explicitly demonstrated through documents such as a Letter of Authority, and the holder must possess actual knowledge of the facts (!) (!) .
The complaint filed by the power of attorney holder should be in the name of the payee or holder in due course. The complaint must clearly indicate that the person filing it is authorized and has knowledge of the transaction. If the complainant is a company, the complaint can be filed by an authorized employee or representative, provided proper authorization is demonstrated (!) (!) .
The verification of the complaint can be done based on documents and affidavits without requiring the personal appearance of the complainant, unless the court deems it necessary. The affidavit should affirm that the affiant has personal knowledge of the facts and is authorized to file the complaint (!) (!) .
The court's role in examining the complaint involves a discretionary power. It can rely on affidavits and supporting documents to issue process without necessarily calling the complainant for oath examination, provided the documents sufficiently establish authorization and knowledge (!) (!) .
Explicit assertion of personal knowledge by the power of attorney holder is necessary when the complaint involves a company or corporate entity. However, in cases where the complaint is filed by an authorized representative of a company, it is sufficient that the complaint is in the company's name and that the representative has knowledge and proper authorization (!) (!) .
The legal proceedings under Section 138 are primarily initiated by the complainant, and the court's inquiry into authorization and knowledge is a matter for trial, not a ground for dismissing or quashing the complaint at the outset (!) (!) .
The High Court's decision to quash the complaint was found to be based on an incorrect interpretation of the law and facts. The appellate court emphasized that the complaint, affidavit, and authorization documents in this case sufficiently demonstrated that the complaint was properly filed by an authorized person with personal knowledge of the transaction (!) (!) (!) .
The appellate court restored the complaint to the trial court for hearing on its merits, emphasizing that the procedural requirements for authorization and knowledge were satisfied and that the discretion exercised by the lower court was appropriate (!) .
Overall, the legal framework permits the filing of complaints under Section 138 by authorized representatives or agents, provided there is clear evidence of authorization and personal knowledge, and the court may rely on affidavits and supporting documentation to proceed with the case (!) (!) (!) .
The exercise of inherent powers to quash a complaint should be exercised sparingly and only when there is a clear and substantial defect or lack of jurisdiction. In this case, the appellate court found no such grounds and accordingly allowed the appeal (!) (!) .
These points collectively clarify that a duly authorized power of attorney holder with personal knowledge can initiate and support a complaint under Section 138, and procedural safeguards such as affidavits and documentation are sufficient for the court to proceed, barring any explicit evidence of lack of authorization or knowledge.
JUDGMENT
B.R. GAVAI, J.
1. Leave granted.
2. This appeal challenges the judgment and final order dated 12th April 2023 passed by the learned Single Judge of the High Court of Judicature at Allahabad in Criminal Miscellaneous Application No. 29906 of 2022. The learned Single Judge allowed the Criminal Miscellaneous Application filed by M/s Aarti Industries, Respondent No. 1 herein and quashed the summoning order dated 22nd November 2021 Signature Not Verified Digitally signed by passed by the Additional Chief Judicial Magistrate, Khurja, Bulandshahar, [Hereinafter referred to as ‘trial court’.] in Complaint Case No. 701 of 2021, as well as the entire proceedings arising from the said complaint case filed by the present appellant under Section 138 of the Negotiable Instruments Act, 1881 , [For short ‘NI Act’], pending before the trial court in C.N.R. No. UPBU160012972021.
3. The facts giving rise to the present appeal are as follows:
3.1. M/s Naresh Properties through its Manager Neeraj Kumar, appellant herein, deals in the manufacture and sale of crockeries, insulators, polymer insulators and other such hardware fittings.
3.2. Between the period from 18th June 2021 to 2nd July 2021, M/s Aarti Industries represented by its sole proprietor Sunita Devi, Respondent No. 1 herein, had purchased polymer insulators scrap rejected material, worth Rs. 1,70,46,314/- from the present appellant. After the materials were supplied to Respondent No.1, the appellant raised several bills/invoices seeking payment for the supplied goods.
3.3. Subsequently, on 12th July 2021, the appellant was given a cheque issued in its favour by Respondent No.1 for a sum of Rs.1,70,46,314/-. The said cheque bearing No. 086295 dated 10th July 2021 had been drawn on the A/c No. 3640670725 belonging to M/s Aarti Industries at the Central Bank of India, Branch Khurja.
3.4. Upon receiving the said cheque, the appellant deposited it in its A/c No. 07382560000285 at HDFC Bank, Branch Khurja on 12th July 2021 for encashment. However, the cheque came to be dishonoured and on 13th July 2021, the cheque was returned to the appellant with a return memo which stated that the cheque amount ‘exceeds arrangement’.
3.5. Aggrieved thereby, on behalf of Smt. Shakti Khanna, the owner/proprietor of the appellant-firm, a legal notice dated 15th July 2021 was issued to Respondent No.1 through its sole proprietor, Sunita Devi under the NI Act. According to the legal notice, Respondent No.1 was to pay the cheque amount of Rs. 1,70,46,314/- within a period of 15 days of receiving the notice, failing which the offence punishable under Section 138 of the NI Act was liable to be attracted.
3.6. Immediately thereafter, on 16th July 2021, as a counter blast to the legal notice, Angad the son of the sole proprietor of Respondent No.1 lodged a First Information Report under Sections 420 , 467, 468 and 471 of the Indian Penal Code, 1860 against 7 accused persons. It was alleged that Ashish Khanna, the owner of the appellant-firm, the staff of the appellant-firm and the branch manager of the Central Bank of India, Branch Khurja had colluded together to obtain a cheque book in the name of M/s Aarti Industries by forging the signature of Sunita Devi. It was further alleged that the said cheque book containing cheques from SI No. 86281 to 86380 was thereafter used by the appellant-firm to issue two cheques - first, cheque No. 086291 dated 10th July 2021 for a sum of Rs. 1,62,28,445/- issued in favour of Shakti Ceramics and second, cheque No. 086295 dated 10th July 2021 for a sum of Rs. 1,70,46,314/- issued in favour of the present appellant.
3.7. Subsequently, on 31st August 2021, Smt. Shakti Khanna being the sole proprietor of the appellant-firm issued a Letter of Authority thereby authorizing Sh. Neeraj Kumar, the manager and caretaker of the appellant-firm to file a complaint and take all such necessary steps in the matter of the dishonour of the cheque.
3.8. Upon being so authorized, Sh. Neeraj Kumar
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