{"id":64377,"date":"2008-06-26T00:00:00","date_gmt":"2008-06-25T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-shankar-finance-vs-state-of-a-p-ors-on-26-june-2008"},"modified":"2016-10-13T19:21:15","modified_gmt":"2016-10-13T13:51:15","slug":"ms-shankar-finance-vs-state-of-a-p-ors-on-26-june-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-shankar-finance-vs-state-of-a-p-ors-on-26-june-2008","title":{"rendered":"M\/S. Shankar Finance &amp; &#8230; vs State Of A.P. &amp; Ors on 26 June, 2008"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">M\/S. Shankar Finance &amp; &#8230; vs State Of A.P. &amp; Ors on 26 June, 2008<\/div>\n<div class=\"doc_author\">Author: R V Raveendran<\/div>\n<div class=\"doc_bench\">Bench: R.V. Raveendran, P. Sathasivam<\/div>\n<pre>                                                                            Reportable\n                IN THE SUPREME COURT OF INDIA\n\n              CRIMINAL APPELLATE JURISDICTION\n\n                CRIMINAL APPEAL NO.1449 OF 2003\n\n\n\n\nM\/s. Shankar Finance &amp; Investments                       ...... Appellant\n\nVersus\n\nState of Andhra Pradesh &amp; Ors.                                  .....\n\nRespondents\n\n\n\n                                 ORDER\n<\/pre>\n<p>R. V. Raveendran J.\n<\/p>\n<\/p>\n<p>      The complainant in a proceedings under section 138 of the<\/p>\n<p>Negotiable Instruments Act, 1881 (`Act&#8217; for short), challenges in this appeal<\/p>\n<p>by special leave, the order dated 21.8.2002 passed by the Andhra Pradesh<\/p>\n<p>High Court in Criminal Petition No.1737 of 2001 holding that the complaint<\/p>\n<p>signed by a Power of Attorney holder was not maintainable.<br \/>\n<span class=\"hidden_text\">                                    2<\/span><\/p>\n<p>2.    The appellant &#8211; complainant filed a complaint dated 2.4.1996 against<\/p>\n<p>respondents 2 to 4 herein (namely M\/s Speciality Aqua Ventures Ltd, its<\/p>\n<p>Managing Director and Chairman arrayed as accused 1, 2 and 3) alleging<\/p>\n<p>that a cheque for Rs.12,40,000\/- issued by the third respondent (on behalf of<\/p>\n<p>respondents 2 to 4) was dishonoured. Respondents 2 and 4 filed an<\/p>\n<p>application seeking discharge. The said petition was dismissed by the<\/p>\n<p>learned Magistrate by order dated 17.12.1998. The Revision filed by them<\/p>\n<p>against the order of the learned Magistrate was rejected by the Sessions<\/p>\n<p>Court on 12.2.2001. Thereafter, the fourth respondent herein (third accused)<\/p>\n<p>filed a petition under section 482 Cr.PC for quashing the proceedings. The<\/p>\n<p>fourth respondent contended that he could not be arrayed as an accused as<\/p>\n<p>the cheque was issued by the third respondent in his individual capacity.<\/p>\n<p>The High Court allowed the said petition on a different ground, by order<\/p>\n<p>dated 21.8.2002, and quashed the complaint as against the fourth<\/p>\n<p>respondent. It held that the complaint was not signed by the payee, that is,<\/p>\n<p>the sole proprietor of the payee concern, but was signed by his Power of<\/p>\n<p>Attorney Holder and that was not permissible.\n<\/p>\n<\/p>\n<p>3.    The said order of the High Court is challenged in this appeal by<\/p>\n<p>special leave. By interim orders dated 28.11.2003 and 2.4.2004, this Court<br \/>\n<span class=\"hidden_text\">                                    3<\/span><\/p>\n<p>stayed the operation of the order of the learned Single Judge and directed<\/p>\n<p>that the case should be proceeded with.\n<\/p>\n<\/p>\n<p>4.    The question that arises for our consideration is whether the<\/p>\n<p>complaint under section 138 of the Act signed by a Attorney holder is not<\/p>\n<p>maintainable.\n<\/p>\n<\/p>\n<p>5.    Section 190 of Code of Criminal Procedure (`Code&#8217; for short) enables<\/p>\n<p>a Magistrate to take cognizance of an offence upon receiving a complaint of<\/p>\n<p>facts which constitutes such offence. Section 200 of the Code requires the<\/p>\n<p>Magistrate taking cognizance of an offence on complaint, to examine upon<\/p>\n<p>oath the complainant and the witness present, if any. Section 142 of the Act<\/p>\n<p>provides that notwithstanding anything contained in the Code, no Court<\/p>\n<p>shall take cognizance of any offence punishable under section 138 of the<\/p>\n<p>Act except upon a complaint, in writing, made by the payee or, as the case<\/p>\n<p>may be, the holder in due course of the cheque.\n<\/p>\n<\/p>\n<p>6.    In MMTC Ltd. vs. MEDCHL Chemicals &amp; Pharma (P) Ltd. &#8211; 2002<\/p>\n<p>(1) SCC 234, a complaint was filed by MMTC Ltd. through the Manager of<\/p>\n<p>its Regional Office. Subsequently, the Manager was substituted by Dy.<\/p>\n<p>General Manager who was duly authorized. The High Court held that the<br \/>\n<span class=\"hidden_text\">                                          4<\/span><\/p>\n<p>complaint was not maintainable as it was signed and presented by a person,<\/p>\n<p>who was neither an authorized agent nor a person empowered under the<\/p>\n<p>articles of association or by any resolution of the Board to do so. It held that<\/p>\n<p>only the Executive Director of MMTC Ltd had the authority to institute<\/p>\n<p>legal proceedings. Reversing the said decision, this Court held :\n<\/p>\n<blockquote><p>      &#8220;In our view the reasoning given above cannot be sustained. Section 142<br \/>\n      of the Negotiable Instruments Act provides that a complaint under section<br \/>\n      138 can be made by the payee or the holder in due course of the said<br \/>\n      cheque. The two complaints, in question, are by the appellant company<br \/>\n      who is the payee of the two cheques.<\/p>\n<blockquote><p>      This Court has as far back as in the case of <a href=\"\/doc\/281882\/\">Vishwa Mitter v. O.P. Poddar<\/a> &#8211;<br \/>\n      (1983) 4 SCC 701, held that it is clear that anyone can set the criminal law<br \/>\n      in motion by filing a complaint of facts constituting an offence before a<br \/>\n      Magistrate entitled to take cognizance. It has been held that no court can<br \/>\n      decline to take cognizance on the sole ground that the complainant was not<br \/>\n      competent to file the complaint. It has been held that if any special statute<br \/>\n      prescribes offences and makes any special provision for taking cognizance<br \/>\n      of such offences under the statute, then the complainant requesting the<br \/>\n      Magistrate to take cognizance of the offence must satisfy the eligibility<br \/>\n      criterion prescribed by the Statute. In the present case, the only eligibility<br \/>\n      criteria prescribed by Section 142 is that the complaint must be by the<br \/>\n      payee or the holder in due course. This criteria is satisfied as the<br \/>\n      complaint is in the name and on behalf of the appellant company.&#8221;\n<\/p><\/blockquote>\n<blockquote><p>                                                            (Emphasis supplied)<\/p>\n<p>      Referring to the decision in Associated Cement Co. Ltd. v.\n<\/p><\/blockquote>\n<p>Keshvanand [1998 (1) SCC 687], this Court held :\n<\/p>\n<\/p>\n<blockquote><p>             &#8220;It has further been held that no Magistrate shall insist that the particular<br \/>\n             person, whose statement was taken on oath at the first instance, alone can<br \/>\n             continue to represent the company till the end of the proceedings. It has<br \/>\n             been held that there may be occasions when different persons can<br \/>\n             represent the company. It has been held that it is open to the de jure<br \/>\n             complainant company to seek permission of the court for sending any<br \/>\n<span class=\"hidden_text\">                                       5<\/span><\/p>\n<p>            other person to represent the company in the court. Thus, even presuming<br \/>\n            that initially there was no authority, still the company can, at any stage,<br \/>\n            rectify that defect. At a subsequent stage the company can send a person<br \/>\n            who is competent to represent the company. The complaints could thus not<br \/>\n            have been quashed on this ground.&#8221;\n<\/p><\/blockquote>\n<p>7.    The payee of the cheque is M\/s Shankar Finance &amp; Investments. The<\/p>\n<p>complaint is filed by &#8220;M\/s Shankar Finance &amp; Investments, a proprietary<\/p>\n<p>concern of Sri Atmakuri Sankara Rao, represented by its power of Attorney<\/p>\n<p>Holder Sri Thamada Satyanarayana&#8221;. It is therefore evident that the<\/p>\n<p>complaint is in the name of and on behalf of the payee. Section 142(a) of the<\/p>\n<p>Act requires that no Court shall take cognizance of any offence punishable<\/p>\n<p>under section 138 except upon a complaint made in writing by the payee.<\/p>\n<p>Thus the two requirements are that (a) the complaint should be made in<\/p>\n<p>writing (in contradistinction from an oral complaint); and (b) the<\/p>\n<p>complainant should be the payee (or the holder in due course, where the<\/p>\n<p>payee has endorsed the cheque in favour of someone else). The payee, as<\/p>\n<p>noticed above, is M\/s Shankar Finance &amp; Investments. Once the complaint<\/p>\n<p>is in the name of the `payee&#8217; and is in writing, the requirements of section<\/p>\n<p>142 are fulfilled. Who should represent the payee where the payee is a<\/p>\n<p>company, or how the payee should be represented where payee is a sole<\/p>\n<p>proprietary concern, is not a matter that is governed by section 142, but by<\/p>\n<p>the general law.\n<\/p>\n<p><span class=\"hidden_text\">                                      6<\/span><\/p>\n<p>8.    As contrasted from a company incorporated under the Companies<\/p>\n<p>Act, 1956 which is a legal entity distinct from its shareholders, a proprietary<\/p>\n<p>concern is not a legal entity distinct from its proprietor. A proprietary<\/p>\n<p>concern is nothing but an individual trading under a trade name. In civil law<\/p>\n<p>where an individual carries on business in a name or style other than his<\/p>\n<p>own name, he cannot sue in the trading name but must sue in his own name,<\/p>\n<p>though others can sue him in the trading name. Therefore, if the appellant in<\/p>\n<p>this case had to file a civil suit, the proper description of plaintiff should be<\/p>\n<p>&#8220;Atmakuri Sankara Rao carrying on business under the name and style of<\/p>\n<p>M\/s Shankar Finance &amp; Investments, a sole proprietary concern&#8221;. But we<\/p>\n<p>are not dealing with a civil suit. We are dealing with a criminal complaint to<\/p>\n<p>which the special requirements of section 142 of the Act apply. Section 142<\/p>\n<p>requires that the complainant should be payee. The payee is M\/s Shankar<\/p>\n<p>Finance &amp; Investments. Therefore in a criminal complaint relating to an<\/p>\n<p>offence under section 138 of the Act, it is permissible to lodge the<\/p>\n<p>complaint in the name of the proprietary concern itself.<\/p>\n<p>9.    The next question is where a proprietary concern carries on business<\/p>\n<p>through an attorney holder, whether the attorney holder can lodge the<br \/>\n<span class=\"hidden_text\">                                     7<\/span><\/p>\n<p>complaint? The attorney holder is the agent of the grantor. When the grantor<\/p>\n<p>authorizes the Attorney Holder to initiate legal proceedings and the<\/p>\n<p>attorney holder accordingly initiates legal proceedings, he does so as the<\/p>\n<p>agent of the grantor and the initiation is by the grantor represented by his<\/p>\n<p>attorney holder, and not by the attorney holder in his personal capacity.<\/p>\n<p>Therefore where the payee is a proprietary concern, the complaint can be<\/p>\n<p>filed : (i) by the proprietor of the proprietary concern, describing himself as<\/p>\n<p>the sole proprietor of the `payee&#8217;; (ii) The proprietary concern, describing<\/p>\n<p>itself as a sole proprietary concern, represented by its sole proprietor; and<\/p>\n<p>(iii) the proprietor or the proprietary concern represented by the attorney-<\/p>\n<p>holder under a power of attorney executed by the sole proprietor. It follows<\/p>\n<p>that in this case the complaint could have been validly filed by describing<\/p>\n<p>the complainant in any one of the following four methods :<\/p>\n<blockquote><p>      &#8220;Atmakuri Shankara Rao, sole proprietor of M\/s. Shankar<br \/>\n      Finance &amp; Investments&#8221;\n<\/p><\/blockquote>\n<blockquote><p>                                      Or<\/p>\n<p>      &#8220;M\/s. Shankar Finance &amp; Investments a sole proprietary<br \/>\n      concern represented by its proprietor Atmakuri Shankara Rao&#8221;\n<\/p><\/blockquote>\n<blockquote><p>                                      Or<\/p>\n<p>      &#8220;Atmakuri Shankara Rao, sole proprietor of M\/s. Shankar<br \/>\n      Finance &amp; Investments, represented by his Attorney Holder<br \/>\n      Thamak Satyanarayana&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">                                     8<\/span><\/p>\n<blockquote><p>                                     Or<\/p>\n<p>      &#8220;M\/s. Shankar Finance &amp; Investments, a proprietary concern of<br \/>\n      Atmakuri Shankara Rao, represented by his Attorney Holder<br \/>\n      Thamada Satyanarayana&#8221;.\n<\/p><\/blockquote>\n<p>What would have been improper is for the Attorney holder Thamada<\/p>\n<p>Satyanarayana to file the complaint in his own name as if he was the<\/p>\n<p>complainant.\n<\/p>\n<\/p>\n<p>10.   This Court has always recognized that the power of attorney holder<\/p>\n<p>can initiate criminal proceedings on behalf of his Principal. In Ram<\/p>\n<p>Chander Prasad Sharma v. State of Bihar and Anr. [AIR 1967 SC 349], the<\/p>\n<p>prosecution was commenced in regard to tampering of electric meter seals,<\/p>\n<p>with a charge sheet submitted by the police after investigation on a first<\/p>\n<p>information report by one Bhattacharya, Mains Superintendent of Patna<\/p>\n<p>Electric Supply Co. (`PES Co.&#8217; for short). An objection was raised by the<\/p>\n<p>accused that the prosecution was incompetent as it was not launched by a<\/p>\n<p>person competent to do so. The said objection was based on section 50 of<\/p>\n<p>the Indian Electricity Act, 1910, which provided that no prosecution shall<\/p>\n<p>be instituted against any person for any offence against that Act or any rule,<br \/>\n<span class=\"hidden_text\">                                         9<\/span><\/p>\n<p>licence or order thereunder, except at the instance of the Government or an<\/p>\n<p>Electric Inspector, or of a person aggrieved by the same. This Court held :\n<\/p>\n<blockquote><p>        &#8220;&#8230; The P.E.S. Co., however, is a body corporate and must act only<br \/>\n        through its directors or officers. Here we have the evidence of<br \/>\n        Ramaswami to the effect that he held a general power of attorney from<br \/>\n        the P.E.S. Co., and that he was specifically empowered thereunder to<br \/>\n        act on behalf of P.E.S. Co., in all legal proceedings. The evidence shows<br \/>\n        that it was at his instance that Bhattacharya launched that first<br \/>\n        information report and, therefore, it would follow that the law was set in<br \/>\n        motion by the &#8220;person aggrieved&#8221;. The objection based on Section 50<br \/>\n        must, therefore, be held to be untenable.&#8221;\n<\/p><\/blockquote>\n<blockquote><p>                                                   (emphasis supplied)<\/p>\n<\/blockquote>\n<blockquote><p>11.   The assumption of the High Court that where the payee is a<\/p>\n<p>proprietary concern, the complaint can be signed only by the proprietor of<\/p>\n<p>the proprietary concern and not by a Power of Attorney holder of the<\/p>\n<p>proprietor, is not sound. It is not in dispute that in this case a power of<\/p>\n<p>attorney has been granted by Atmakuri Shankara Rao, as Proprietor of M\/s<\/p>\n<p>Shankar Finance &amp; Investments in favour of Thamada Satyanarayana and<\/p>\n<p>the same was produced along with the complaint. The description of the<\/p>\n<p>complainant is as under :\n<\/p><\/blockquote>\n<blockquote><p>      &#8220;M\/s Shankar Finance and Investments, (a proprietary concern of Sri<br \/>\n      Atmakuri Sankara Rao S\/o Late Sri A. B. Rama Murthy, Hindu, aged<br \/>\n      about 65 years), having its office at Flat No.3B, Third Floor, Maharaja<br \/>\n      Towers. Vishakhapatnam &#8211; 3 represented by its Power of Attorney Holder<br \/>\n      Sri Thamada Satyanarayana, S\/o Late Adinarayana, Hindu, aged 50 years,<br \/>\n      Service, residing at MIG-B-230, Sagarnagar, VUDA Layout,<br \/>\n      Vishakhapatnam &#8211; 43.&#8221;\n<\/p><\/blockquote>\n<\/blockquote>\n<p><span class=\"hidden_text\">                                     10<\/span><\/p>\n<blockquote><p>The said description is proper and therefore, the complaint has been duly<\/p>\n<p>filed by the payee.\n<\/p><\/blockquote>\n<p>12.   The High Court has referred to the fact that the sworn statement<\/p>\n<p>before the learned Magistrate was of the attorney holder of the payee and<\/p>\n<p>not by the payee in person. According to the tenor of the order of the High<\/p>\n<p>Court, this was also irregular. But we find nothing irregular in such a<\/p>\n<p>procedure. It is now well settled that the object of section 200 of the Code in<\/p>\n<p>providing for examination of the complainant and his witnesses by the court<\/p>\n<p>is to satisfy itself about the existence of a prima facie case against the<\/p>\n<p>person accused of the offence and to ensure that such person is not harassed<\/p>\n<p>by false and vexatious complaints by issue of process; <a href=\"\/doc\/1379027\/\">(See Nirmaljit Singh<\/p>\n<p>Hoon v. State of West Bengal<\/a> &#8211; 1973 (3) SCC 753). Where the proprietor of<\/p>\n<p>the proprietary concern has personal knowledge of the transaction and the<\/p>\n<p>proprietor has signed the complaint, he has to be examined under section<\/p>\n<p>200 of the Code. A power of attorney holder of the complainant who does<\/p>\n<p>not have personal knowledge, cannot be examined. But where the attorney<\/p>\n<p>holder of the complainant is in charge of the business of the payee-<\/p>\n<p>complainant and the Attorney holder alone is personally aware of the<\/p>\n<p>transactions, and the complaint is signed by the attorney holder on behalf of<br \/>\n<span class=\"hidden_text\">                                         11<\/span><\/p>\n<p>the payee-complainant, there is no reason why the attorney holder cannot<\/p>\n<p>be examined as the complainant. We may, in this connection, refer to the<\/p>\n<p>decision of this Court in <a href=\"\/doc\/888686\/\">Janki Vashdeo Bhojwani v. Indusind Bank Ltd.<\/a><\/p>\n<p>[2005 (2) SCC 217], where the scope of an attorney holder `acting&#8217; on<\/p>\n<p>behalf of the principal in a civil suit governed by Code of Civil Procedure<\/p>\n<p>was examined. This Court observed:\n<\/p>\n<\/p>\n<blockquote><p>      &#8220;Order 3 Rules 1 and 2 CPC empower the holder of power of attorney to<br \/>\n      &#8220;act&#8221; on behalf of the principal. In our view the word &#8220;acts&#8221; employed in<br \/>\n      Order 3 Rules 1 and 2 CPC confines only to in respect of &#8220;acts&#8221; done by<br \/>\n      them power-of-attorney holder in exercise of power granted by the<br \/>\n      instrument. The term &#8220;acts&#8221; would not include deposing in place and<br \/>\n      instead of the principal. In other words, if the power-of-attorney holder<br \/>\n      has rendered some &#8220;acts&#8221; in pursuance of power of attorney, he may<br \/>\n      depose for the principal in respect of such acts, but he cannot depose for<br \/>\n      the principal for the acts done by the principal and not by him. Similarly,<br \/>\n      he cannot depose for the principal in respect of the matter of which only<br \/>\n      the principal can have a personal knowledge and in respect of which the<br \/>\n      principal is entitled to be cross-examined.&#8221;\n<\/p><\/blockquote>\n<blockquote><p>                                                            [Emphasis supplied]<\/p>\n<p>      The principle underlying the said observations will apply to cases<\/p>\n<p>under section 138 of the Act. In regard to business transactions of<\/p>\n<p>companies, partnerships or proprietary concerns, many a time the authorized<\/p>\n<p>agent or attorney holder may be the only person having personal knowledge<\/p>\n<p>of the particular transaction; and if the authorized agent or attorney-holder<\/p>\n<p>has signed the complaint, it will be absurd to say that he should not be<\/p>\n<p>examined under section 200 of the Code, and only the Secretary of the<br \/>\n<span class=\"hidden_text\">                                     12<\/span><\/p>\n<p>company or the partner of the firm or the proprietor of a concern, who did<\/p>\n<p>not have personal knowledge of the transaction, should be examined. Of<\/p>\n<p>course, where the cheque is drawn in the name of the proprietor of a<\/p>\n<p>proprietary concern, but an employee of such concern (who is not an<\/p>\n<p>attorney holder) has knowledge of the transaction, the payee as complainant<\/p>\n<p>and the employee who has knowledge of the transaction, may both have to<\/p>\n<p>be examined. Be that as it may. In this case we find no infirmity.\n<\/p><\/blockquote>\n<p>13.   We, accordingly, allow this appeal, set aside the impugned order<\/p>\n<p>dated 21.8.2002 and direct the learned Magistrate to proceed with the<\/p>\n<p>complaint as already directed by the interim order.\n<\/p>\n<\/p>\n<p>                                                        &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.J<br \/>\n                                                              [R. V. Raveendran]<\/p>\n<p>                                                      &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;J<br \/>\n                                                                  [P. Sathasivam]<br \/>\nNew Delhi;\n<\/p>\n<p>June 26, 2008.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India M\/S. Shankar Finance &amp; &#8230; vs State Of A.P. &amp; Ors on 26 June, 2008 Author: R V Raveendran Bench: R.V. Raveendran, P. Sathasivam Reportable IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1449 OF 2003 M\/s. Shankar Finance &amp; Investments &#8230;&#8230; Appellant Versus State of Andhra Pradesh [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-64377","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>M\/S. 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