Sanchayita Lahkar

The Gauhati High Court Single Bench of Justice Sanjeev Kumar Sharma dismissed a petition by a company facing cheque-dishonour proceedings seeking to quash a complaint filed under Section 138 of the Negotiable Instruments Act on the ground that the complainant’s representative lacked proper authorisation when the complaint was instituted. The Court upheld the trial court’s decision permitting the complainant to place on record a subsequent board resolution and fresh authority document to support institution and prosecution of the case. The Bench held that an authorisation lapse at the initiation stage does not, by itself, invalidate such a complaint, since the defect is capable of being cured and may be corrected during trial or even at the appellate stage.

The petitioner company invoked Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of a complaint under Section 138 of the Negotiable Instruments Act, 1881 pending before the Judicial Magistrate, Kamrup (Metro). The complaint was filed by the respondent company through its Marketing Manager alleging dishonour of a cheque issued by the petitioner company. Cognizance was taken and summons were issued.

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After completion of prosecution evidence and closure of defence evidence, the complainant filed a petition seeking to adduce additional evidence to introduce a Board Resolution and a General Power of Attorney. The Trial Court allowed the prayer under Section 311 CrPC, holding that the defence would have due opportunity to cross-examine the witness upon re-examination.

The petitioner contended that the original Power of Attorney was executed in the personal capacity of a Director and that there was no resolution of the Board authorizing institution of the complaint, thereby violating Section 291 of the Companies Act. It was further contended that permitting subsequent documents amounted to filling up lacunae. The respondent submitted that the defect was curable and had been rectified by subsequent Board ratification.

The Court recorded that the central issue was whether the initial defect regarding authorization could be cured subsequently and whether allowing additional evidence amounted to filling lacunae.

While considering A.C. Narayanan, the Court observed, “the Court was not considering the issue at hand in the instant case, i.e. whether the initial defect in lodging of the complaint could be subsequently cured and therefore, this decision does not help the petitioner.”

Referring to Samrat Shipping Co. Pvt. Ltd., the Court recorded that dismissal of a complaint at the threshold on the ground of non-production of a Board resolution was “too hasty an action.”

The Court recorded: “Learned counsel for the respondent has virtually conceded that the said power of attorney suffered from infirmities, but the same have been subsequently cured by the resolution of the Board of Directors and fresh power of attorney.”

On the nature of the defect, the Court stated, “even if there was initially no authority, the company can at any stage rectify that defect by sending a competent person.” It further observed, “any initial defect at the time of institution of the complaint, whether with regard to the natural person instituting the complaint or with regard to the presence or absence of proper authority is a curable defect.”

While relying on TRL Krosaki Refractories Ltd., the Court observed, “all that is necessary is to demonstrate before the learned Magistrate that the complaint filed is in the name of the payee and if the person who is prosecuting the complaint is different from the payee, the authorisation therefore and that the contents of the complaint are within his knowledge.” The Court also recorded, “entertaining a petition under Section 482 to quash the order taking cognizance by the Magistrate would be unjustified when the issue of proper authorisation can only be an issue for trial.”

With regard to the effect of ratification, the Court stated, “the initial absence of a Board Resolution or authorization for filing a complaint under Section 138 N.I Act is a curable defect and not a ground to quash the proceedings and that a company acts through natural persons and subsequent ratification validates the complaint.”

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The Court held, “I do not find any infirmity in the impugned order of the Magistrate permitting the complainant to adduce additional evidence to bring on record the subsequent resolution of the Board of Directors and General Power of Attorney authorizing the complainant to institute the complaint. Accordingly, the instant criminal petition is found to be devoid of merit and is dismissed accordingly.”

Advocates Representing the Parties:

For the Petitioners:  Mr. K. Bhattacharjee, Senior Advocate; Ms. A. Barman, Advocate; Ms. B. Talukdar; Mr. M. Saikia

For the Respondents:  Ms. P. Gupta ; Mr. M.J. Hazarika, Additional Public Prosecutor, Assam

Case Title: M/S Amprolisa Construction and Marketing Pvt. Ltd. vs. Gupta Hardware Private Limited and Another

Neutral Citation: 2025: GAU-AS:16578

Case Number: Crl.Pet./1263/2022

Bench: Justice Sanjeev Kumar Sharma