Power Of Attorney Holder Can Represent Company In Cheque Dishonour Case Only If Witnessed Transaction Or Has Direct Knowledge: Kerala High Court
Sanchayita Lahkar
The High Court of Kerala Single Bench of Justice P. V. Balakrishnan held that a company prosecuting a cheque dishonour case can act through a power of attorney holder only where the representative either witnessed the underlying transaction or has direct knowledge of it. In the matter, a complainant company alleged that the accused company and its directors issued a cheque towards payment for cement supplies, which was later returned unpaid for insufficient funds. Finding that the complainant’s witnesses relied only on company records and lacked first-hand knowledge, the Court set aside the conviction and sentence and acquitted the accused.
The revision petition arose from a conviction under Section 138 of the Negotiable Instruments Act in a complaint filed by a company engaged in the manufacturing and sale of cement. The first accused, a private limited company, along with its directors, was prosecuted on the allegation that, in discharge of liability arising from purchase of cement, a cheque dated 21.08.2001 for Rs.8,71,695/- drawn on Canara Bank, Kadavanthra Branch was issued. The cheque was dishonoured for insufficiency of funds. A statutory notice was issued, which did not evoke any response.
The trial court convicted the accused and imposed fine on the company and simple imprisonment and compensation on the directors. The appellate court dismissed the appeal.
Before the High Court, the revision petitioners contended that the complaint had been filed through a power of attorney holder without producing the power of attorney, and that the person prosecuting the complaint had no direct knowledge of the transaction or execution of the cheque. It was submitted that none of the witnesses examined had direct knowledge of the transaction and that the complainant had failed to discharge the initial burden of proving execution of the cheque.
The Court observed, “The company, being a juristic person, cannot act on its own and it must necessarily function through a human agency.” It further stated, “A company is competent to initiate proceedings under Section 138 of NI Act and it can do so, through an authorised person.”
On the role of a power of attorney holder, the Court recorded, “Even though, a power of attorney holder, being an authorised representative of the company, can file a complaint and give evidence, he must have either witnessed the transaction or must possess direct knowledge of the transaction.” It added, “A person, who only became associated with the company after the transaction and who relies purely on records, cannot prove the execution of the cheque or the transaction.”
Regarding proof of execution, the Court stated, “It is to be kept in mind that merely because the complainant is a juristic entity, it will not dilute the rigour of proof required for proving the execution of the cheque and the execution cannot be presumed merely on the production of a cheque.” It continued, “It must be proved either by the admission of the accused or the evidence of a competent witness, who had seen the execution.”
The Court observed, “A witness, who is totally unaware as to how, when and why the cheque was issued cannot prove the execution by merely producing records or by giving evidence through information gathered from the records available.” It further stated, “The presumptions under Sections 118 and 139 of the NI Act will arise only after the execution of the cheque is proved and if the complainant's witness has no direct knowledge or did not witness the execution, the prosecution will fail at the threshold itself and there will be no burden upon the accused to rebut anything.”
On the facts of the case, the Court recorded, “In the instant case, as stated earlier, it can be seen that there is no substantive evidence at all to prove the issuance and execution of the cheque by the accused to the complainant.” It further stated, “This in turn means that the complainant has even failed to discharge the initial burden cast upon it to prove the execution and issuance of the cheque.”
The Court directed, “The conviction and sentence rendered against the revision petitioners/accused Nos. 1 to 3 under Section 138 of the NI Act in C.C.No.2764 of 2001 by the Judicial First Class Magistrate Court-II, Ernakulam, and as confirmed in Crl.A.No.360 of 2012 by the Additional Sessions Court-VIII, Ernakulam, are set aside, and the revision petitioners/accused Nos. 1 to 3 are set at liberty.”
Advocates Representing the Parties:
For the Petitioners: Adv. Varghese C. Kuriakose
Case Title: Pattasseril Private Ltd & Ors v State of Kerala & Anr
Neutral Citation: 2026: KER:7065
Case Number: Crl.R.P. No.541 of 2017
Bench: Justice P. V. Balakrishnan
