Complaint Filed by Power of Attorney Holder in Their Own Name Not Maintainable Under Section 138 N.I. Act: Allahabad High Court

A Power of Attorney Holder May File a Complaint Only on Behalf of the Payee or Holder in Due Course, Not in Their Own Name - Allahabad High Court issued a significant judgment clarifying the legal position on the role of power of attorney holders in filing complaints under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The Court held that a power of attorney holder cannot file a complaint in their own name but must do so on behalf of the payee or holder in due course.

The Court quashed the proceedings in Application U/S 482 No. 28869 of 2024 for non-compliance with this principle but dismissed the plea in Application U/S 482 No. 23721 of 2024, where the power of attorney holder had validly acted on behalf of the payee.

The cases arose from separate complaints under Section 138 of the N.I. Act involving dishonored cheques issued by the accused, Jitendra Kumar Mangla.

In Application U/S 482 No. 23721 of 2024, Mukund Goyal, the husband and power of attorney holder of the complainant Vineeta Goyal, filed the complaint on her behalf. The accused challenged the proceedings on the ground that the power of attorney holder lacked sufficient knowledge of the transaction.

In Application U/S 482 No. 28869 of 2024, Ranveer Singh, the power of attorney holder and father of the payee Pankaj Singh, filed the complaint in his own name rather than on behalf of the payee. The accused argued that the complaint was legally unsustainable as it was not filed in the name of the payee.

The Court considered the following key issues:

Whether a power of attorney holder can file a complaint under Section 138 N.I. Act in their own name.

What level of knowledge and authority is required for a power of attorney holder to file and prosecute a complaint on behalf of the payee.

A Power of Attorney Holder Cannot File a Complaint in Their Own Name

The Court, relying on the Supreme Court’s judgment in A.C. Narayanan v. State of Maharashtra [(2014) 11 SCC 790], held that a power of attorney holder cannot initiate proceedings under Section 138 in their own name. The complaint must be filed on behalf of the payee or holder in due course.

In Application U/S 482 No. 28869 of 2024, the Court noted that Ranveer Singh had filed the complaint in his own name instead of on behalf of the payee Pankaj Singh. The Court held this to be impermissible and quashed the proceedings. However, it granted liberty to the payee to file a fresh complaint in accordance with the law.

Power of Attorney Holders May Act on Behalf of the Payee, Provided They Demonstrate Knowledge of the Transaction

The Court upheld the validity of complaints filed by power of attorney holders on behalf of the payee, provided they possess sufficient knowledge of the transaction. Referring to A.C. Narayanan and Janki Vashdeo Bhojwani v. IndusInd Bank Ltd. [(2005) 2 SCC 217], the Court emphasized that:

The power of attorney holder must explicitly aver their knowledge of the transaction in the complaint or supporting affidavit.
The complaint must be supported by a valid power of attorney document and other evidence demonstrating the holder’s authority.

In Application U/S 482 No. 23721 of 2024, the Court found that the power of attorney holder Mukund Goyal had clearly averred his knowledge of the transaction and acted within his authority. The complaint was filed on behalf of his wife, Vineeta Goyal, the payee, and was supported by sufficient documentation, including an affidavit and power of attorney. The Court held the proceedings to be valid and dismissed the plea seeking their quashing.

Disputes Regarding Knowledge or Authority Must Be Addressed at Trial

The Court clarified that procedural challenges, such as whether the power of attorney holder had sufficient knowledge of the transaction or was properly authorized, are issues to be determined during trial. Such disputes cannot ordinarily form the basis for quashing proceedings under Section 482 of the Criminal Procedure Code (Cr.P.C.).

In M/s TRL Krosaki Refractories Ltd. v. M/s SMS Asia Private Ltd. [(2022) 7 SCC 612], the Supreme Court had observed that:

“If there is a dispute about the knowledge or authorization of the power of attorney holder, it can be raised during trial. However, this cannot form a ground for quashing the complaint at the threshold.”

The Allahabad High Court applied this principle in both applications, noting that the accused in Application U/S 482 No. 23721 of 2024 had failed to appear before the trial court, thereby delaying the examination of evidence.

The Court found that the complaint, filed by Mukund Goyal on behalf of the payee, was valid and maintainable. It noted that the power of attorney document clearly authorized him to act, and the supporting affidavit demonstrated his knowledge of the transaction. The proceedings were allowed to continue, and the application seeking their quashing was dismissed.

The Court held that the complaint filed by Ranveer Singh in his own name instead of on behalf of the payee Pankaj Singh was legally unsustainable. The proceedings were quashed, with liberty granted to the payee to file a fresh complaint in accordance with the law.

The Allahabad High Court’s judgment reinforces the principle that complaints under Section 138 of the N.I. Act must strictly comply with procedural requirements regarding the role and authority of power of attorney holders. While power of attorney holders may act on behalf of payees, they cannot file complaints in their own name. Additionally, disputes over the knowledge or authorization of the power of attorney holder must generally be resolved during trial rather than through pre-trial challenges.

Date of Decision: December 13, 2024