A.C. Narayanan vs State of Maharashtra - Case Analysis

Introduction of A.C. Narayanan vs State of Maharashtra

The case of A.C. Narayanan vs State of Maharashtra (2013) addresses the legal validity of complaints filed by a Power of Attorney holder under Section 138 of the Negotiable Instruments Act, 1881. The main issues in this case revolves around whether a Power of Attorney holder can file, sign and verify such complaints and the necessary knowledge and assertions required for this process under the law.

Historical Context and Facts of A.C. Narayanan vs State of Maharashtra

The case at hand revolves around the Appellant who is the Vice-Chairman and Managing Director of M/s Harvest Financials Ltd. The company has its registered office in Bombay. 

Role of the Appellant

The Appellant collected funds from several individuals under an investment scheme in the form of loans. The Appellant in return issued post-dated cheques either in his personal capacity or as a signatory of the company. Upon presentation these cheques were dishonoured.

Filing of Complaints

Mrs. Doreen Shaikh who was acting as the Power of Attorney holder for six complainants namely, Mr. Yunus A. Cementwalla, Smt. Fay Pinto, Mr. Mary Knoll Drego, Smt. Evelyn Drego, Mr. Shaikh Anwar Karim Bux and Smt. Gwen Piedade filed six complaint cases against the Appellant. The complaints were filed under Section 138 and Section 142 of the Negotiable Instruments Act, 1881.

Verification and Issuance of Process

Mrs. Doreen Shaikh verified the complaints as the Power of Attorney holder for the six complainants. The Additional Chief Metropolitan Magistrate issued process against the Appellant under Section 204 of the Criminal Procedure Code, 1973 for offences under Section 138 and Section 142 of the Negotiable Instruments Act, 1881.

Application for Discharge

The Appellant sought discharge of the process in each of the complaints. The Additional Chief Metropolitan Magistrate dismissed the application of the Appellant.

Appeal in the High Court

The Appellant filed an appeal before the High Court against the decision of the Additional Chief Metropolitan Magistrate and sought quashing of the complaints. However, the High Court dismissed the applications.

Appeal in the Supreme Court

The Appellant aggrieved by the decision of the High Court approached the Supreme Court by filing an appeal by way of special leave.

Issue addressed in A.C. Narayanan vs State of Maharashtra

The main question which was addressed in this case were-

• Whether a Power of Attorney holder can sign and file a complaint petition on behalf of the complainant?
• Whether a Power of Attorney holder can be verified on oath under Section 200 of the Criminal Procedure Code?
• Whether the proceedings contemplated under Section 200 of the Criminal Procedure 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?

Legal Provisions involved in A.C. Narayanan vs State of Maharashtra

Section 138 of the Negotiable Instruments Act, 1881

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-

1. the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
2. the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
3. the drawer of such a cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Section 142 of the Negotiable Instruments Act, 1881

Section 142 of the Act deals with the cognizance of offences. It states that-

• Notwithstanding anything contained in the Code of Criminal Procedure,1973-

1. no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheques
2. such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.
3. no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.

• The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction-

1. if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated.
2. if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.

Judgment and Impact of A.C. Narayanan vs State of Maharashtra

The Supreme Court in A.C. Narayanan vs State of Maharashtra (2013) addressed important questions related to the filing of complaints under Section 138 of the Negotiable Instruments Act by a Power of Attorney holder. 

The Court in this case held that a Power of Attorney holder can legally sign and file a complaint on behalf of the complainant provided the complaint is filed in the name of the payee or the holder in due course of the cheque and must satisfy the essential requirements under Section 142(a) of the NI Act. 

The Court also held that a Power of Attorney holder can verify the complaint on oath under Section 200 of the Criminal Procedure Code, 1973 only if they have personal knowledge of the transaction in question. The Court highlighted that the complaint must assert the knowledge of the Power of Attorney holder regarding the transaction.

The Court also clarified that under Section 145 of the NI Act, the Magistrate can issue a process based on the affidavit submitted by the complainant without requiring the personal attendance of the complainant. The decision in this case ruled that the complaints under Section 138 of the NI Act can be filed by Power of Attorney holders only if they possess knowledge of the transaction.

Conclusion

The Supreme Court in this case held that a Power of Attorney holder can file a complaint under Section 138 provided that they have personal knowledge of the transaction. The complaint must be filed in the name of the payee and specific averments about the Power of Attorney holder’s knowledge are essential under the Criminal Procedure Code.