Kerala High Court: complainant under NI Act must prove power of attorney holder knew of impugned transaction

Kerala High Court: complainant under NI Act must prove power of attorney holder knew of impugned transaction

Allows the Criminal Miscellaneous Case by reverting the grievance back to the pre-cognizance stage

The Kerala High Court has held that a complaint filed under the Negotiable Instruments (NI) Act through the power of attorney holder is perfectly legal and competent.

The bench of Justice A Badharudeen added that the holder could depose and verify on oath before the court to prove the contents of a complaint. But he should have witnessed the transactions as an agent of the payee/holder or had knowledge of the transactions.

Citing the AC Narayanan vs the State of Maharashtra & anr case, the court further observed that the complainant has to make specific assertions on the knowledge of the power of attorney in the transaction explicitly in the complaint. If the holder has no knowledge regarding the transactions and the stipulations are not met, the holder cannot depose before the court.

The petition was filed under Section 482 of the CrPC seeking to quash an order passed by the Special Judicial First Class Magistrate (NI Act cases). It pointed out that the complainant was represented by his power of attorney holder, without mentioning this fact in the complaint. Further, the latter verified the complaint as if he was the complainant.

Appearing for the petitioner, the counsel argued that the complaint was filed ignoring the statutory mandates as laid down by the apex court. He added that the affidavit filed along with the complaint did not include any direct knowledge of the power of attorney holder whether he had witnessed the transactions.

The counsel appearing for the 2nd respondent averred that there was no truth in the contentions raised by the petitioner. Certain relevant documents produced before the trial court were suppressed. He argued that the complainant had filed a proof affidavit under the NI Act, as he proposed to give evidence regarding the transaction that led to the execution of the cheque's payment.

The court observed that even though the complaint filed under the NI Act through the power of attorney holder was perfectly legal and competent, the power of attorney holder could depose and verify on oath before the court to prove the contents of the complaint.

The judge noted that the trial court took cognizance of the matter and registered the case with the intention to follow the procedure of summary trial. Section 264 of Cr.P.C deals with the judgment in cases tried summarily. And in such a case where the accused does not plead guilty, the magistrate records the substance of the evidence. The judgment contains a brief statement of the reasons.

He further stated that Section 264 did not provide acquittal of the accused before trial. Thus, the petition was deemed defective at its very inception.

However, he maintained that the manner in which the complaint was filed, the trial court had taken cognizance. The bench said there were no averments in the complaint that the power of attorney had witnessed the transactions as an agent of the payee or had knowledge of the transactions. Therefore, the cognizance taken by the magistrate was illegal.

The court thus allowed the Criminal Miscellaneous Case by reverting the complaint back to the pre-cognizance stage. It provided the liberty to the original complainant to file an affidavit under the NI Act.

While advocate Rajiv Nambisan appeared for the petitioner, the respondents were represented by advocates Jagan Abraham M George, Jaison Antony and public prosecutor G Sudheer.