CANARA WORKSHOPS LIMITED Vs. SHRI MANTESH

JUDGEMENT

(1.) THIS appeal is filed by the complainant, who had alleged an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (Hereinafter referred to as 'NI Act' for brevity), against the respondent. The appellant is a company incorporated under the Companies Act, 1956. It is engaged in the business of manufacturing automobile spring leaves in the name and style of M/s. Canara Springs. Its head office is at Mangalore and one of its branch offices is at Hubli. The respondent - accused was said to be a dealer in automobile spare parts, having his place of business at Athani and was purchasing the goods manufactured by the appellant on credit basis. That as per the books of account maintained by the appellant, the accused was said to be due in a sum of Rs. 70,294/ - payable towards the credit purchases, as on 31.8.2004 Since there was delay in making payments, the complainant had issued a notice seeking prompt payment. It transpires that a part payment was made in cash and the respondent had issued a cheque for the balance amount of Rs. 65,294/ - in discharge of the amount outstanding. The cheque when presented for collection was dishonoured for want of funds. When the respondent was informed of the same, he had requested for time to pay the amount and ultimately issued a cheque endorsed in blank with instructions to the appellant to present the same for collection in the third week of February, with due information to the respondent. Therefore, the same was presented as per the instructions of the respondent while indicating the date of the cheque as 22.2.2006 and presented the same through the appellant's banker and the same was dishonoured. Therefore, a notice was issued in terms of Section 138 of the NI Act within the time prescribed and since there was non -compliance with the demand, a complaint was filed. The same was contested. One of the objections raised was that the complaint was not brought by an authorised person to represent the company and therefore the complaint could not be entertained apart from raising contentions as to the validity of the transaction, etc.

(2.) THE court below while addressing the complaint on merits, has considered the point whether the complaint was filed and prosecuted by a person competent to represent the complainant -company' and has answered the same in the negative, while also answering other questions, as regards the transaction, also in favour of the respondent and consequently acquitted the accused - respondent. It is that which is under challenge in the present appeal.

(3.) INSOFAR as this court is concerned, there are three reported decisions, namely, Menon Ventures Vs. Birla 3M Limited, ILR (2005) KAR 3167 ; Director Maruti Feeds and Farms Pvt. Ltd. Vs. Basanna Pattekar, (2008) CriLJ 157 and Om Shakthi SC/ST and Om Shakthi SC/ST and Minority Credit Co -Operative Society Ltd. rep. by its President, A. Harikrishnan Vs. M. Venkatesh S/o M. Muniyappa, (2008) CriLJ 998 , holding the view that the company being a juristic person, any person on behalf of the company would have to be authorised by the company in the Articles of Association or by a separate resolution to depose on behalf of the company. Section 142 of the NI Act lays down that 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 cheque. If the payee is a corporate body or a company incorporated under the Companies Act, in terms of Section 291 of the Companies Act, 1956, it is the Board of Directors who are entitled to exercise all powers as the company is authorised to exercise and do. Thus, a company, though a legal entity, can act only through its Board of Directors (See: National Small Industries Corp. Ltd. Vs. Harmeet Singh Paintal and Another, (2010) 2 BomCR 565 ). Under Section 291 of the Companies Act, except where express provision is made, that the powers of a company in respect of a particular matter, are to be exercised by the company in a general meeting. The individual directors have such powers only as are vested in them by the Memorandum and Articles of Association. The question of authority to institute a suit or other proceeding on behalf of a company is therefore not a technical matter as it often affects the policy and finances of the company and unless the power to institute a proceeding is specifically conferred on a particular director, he would have no authority to institute a suit or other proceeding on behalf of the company and such power can be conferred by the Board of Directors only by passing a resolution in that regard. It may also be seen that even in respect of civil suits, under Order XXIX Rule 1 of the Code of Civil Procedure, 1908 (Hereinafter referred to as the 'CPC', for brevity), in a suit by a Corporation, any pleading may be signed and verified on behalf of the Corporation by the Secretary or by a Director or other principal officer of the Corporation, who is able to depose to the facts of the case. This would indicate that the said provision merely prescribes that any pleading on behalf of a Corporation may be signed and verified by its Secretary or by its Director or by any other principal officer, who is able to depose to all the facts of the case. It does not empower such a officer to conduct the case on behalf of the Corporation, for which, such officer must be authorised by the Board of Directors by a resolution or must be empowered under the Memorandum and Articles of Association to bring a suit.