INTRODUCTION:
The significant issue in the present blog is “who can file a complaint under section 138 of NI Act?”; basically, who has the locus to reach the court and avail remedy by filing a complaint under section 138. All the aspects and essentials to invoke section 138 has already been discussed in the earlier blogs.
WHAT IS COMPLAINT?
The term complaint has not been defined in NI Act but in Criminal procedure code in section 2(d) as under:
2(d) “complaint” means any allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report.
WHAT IS SECTION 138 NI ACT?
Section 138 of NI Act- is a right of the aggrieved person to file a complaint in case where cheque is dishonored or bounced from the bank. Section 138 is a penal provision which provides the penalty and punishment in case of cheque dishonor. This section was added in the present Act of 1881 with an amendment in the year 1988. The objective behind the same is to safeguard the transection through cheque or any instrument. There are certain essentials envisaged under section 138 of NI Act that has to be fulfilled in order to avail remedy under section 138 of NI Act.
A complaint under section 138 of the NI Act has to be filed in furtherance of all the rules envisaged under the law. The said complaint must be filed within the limitation period and that too after serving the demand notice and completion of 15 days from the date of service of demand notice to the drawer of the cheque.
WHO CAN FILE A COMPLAINT UNDER SECTION 138 OF NI ACT?
A complaint under section 138 can be filed by a natural person or by an artificial or legal person, legal heirs or representative in case of death of the complainant for enforcement of rights. Section 138 of the Act “the payee or the holder in the due course of the cheque makes demand of the amount specified in the cheques which is bounced and not paid even after sending demand notice as directed in section 138 clause (b) to the drawer of the cheque.
Complaint by natural person:
A natural person to file a complaint under section 142 of NI Act is the payee or the holder in the due course of the cheque. Besides that a complaint can be filed by the payee through a power of attorney holder or duly authorized representative as observed by the supreme court in Shankar Finance & Investments v. State of A.P., (2008) 8 SCC 536:
9. ……. Section 142(a) of the Act requires that no court shall take cognizance of any offence punishable under Section 138 except upon a complaint made in writing by the payee. Thus, the two requirements are that
(a) the complaint should be made in writing (in contradistinction from an oral complaint); and
(b) the complainant should be the payee (or the holder in due course, where the payee has endorsed the cheque in favour of someone else).
Complaint by a proprietary concerned:
Further it was observed that ac complaint can be filed a proprietary concerned, a proprietary concern is nothing but an individual trading under a trade name. In civil law where an individual carries on business in a name or style other than his own name, he cannot sue in the trading name but must sue in his own name, though others can sue him in the trading name.
In para 11 of court observed that a complaint under section 138 is criminal complaint and not as civil therefore observed as under in case where a complaint is filed by a proprietary concerned:
Therefore, where the payee is a proprietary concern, the complaint can be filed:
- by the proprietor of the proprietary concern, describing himself as the sole proprietor of the “payee”;
- the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and
- the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor.
Complaint by power of attorney holder:
Yes, a power of attorney holder can file a complaint under section 138 of NI Act the same was observed by the Supreme Court three judges’ bench in A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790. In para 21 court elaborated following issues:
21.1. Whether a power-of-attorney holder can sign and file a complaint petition on behalf of the complainant?/Whether the eligibility criteria prescribed by Section 142(a) of the NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque?
21.2. Whether a power-of-attorney holder can be verified on oath under Section 200 of the Code?
21.3. Whether specific averments as to the knowledge of the power-of-attorney holder in the impugned transaction must be explicitly asserted in the complaint?
21.4. If the power-of-attorney holder fails to assert explicitly his knowledge in the complaint then can the power-of-attorney holder verify the complaint on oath on such presumption of knowledge?
21.5. Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?
Further in para 30 court answered in affirmative and thereby asserted in the judgment as under:
30 In the light of the discussion, we are of the view that the power-of-attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the NI Act…….
Complaint in case of company:
In a case where the complaint is filed under section 138 by a company, a payee who is going to file a complaint so that there will be no issue on maintainability of filing of complaint. A three judges’ bench in TRL Krosaki Refractories Ltd. v. SMS Asia (P) Ltd., (2022) 7 SCC 612 observed that in case of a company, it is the authorized representative who can file a complaint under section 138 and the said representative has to file an affidavit thereby stating that he is authorized representative of the company and has knowledge of the concerned transaction. The further issue on the veracity of such transaction and knowledge is a matter of trial besides the statement on the aforesaid knowledge and transaction is enough for the magistrate to take cognizance under section 142 of NI Act.
Complaint by the legal heirs:
In civil law the rule is that in case of death of aggrieved person his legal representative can be substituted in order to initiate civil proceedings. A complaint filed under section 138 of NI Act is penal in nature however there is no bar under the law which precludes the legal heirs or representatives to take action and file a complaint under section 138 on behalf of payee.