Section 138 N.I Act - General Power of Attorney Holder Empowered to Pursue Litigation on Company's Behalf – Supreme Court

Supreme Court held in the Criminal Appeal (Mita Indai Pvt. Ltd. Vs Mahendar Jain D.D 20 Feb 2023) that power of attorney holder can delegate his powers to another person when there is a specific clause permitting sub-delegation. The general power of attorney holder in this case was authorized to appoint special attorneys in addition to the counsel for conducting cases and doing other relevant and material acts and he is the general power of attorney holder of the company and is fully aware of the facts of the case, making him competent to pursue the litigation on behalf of the company.

The dispute arises out of a contract awarded by the appellant-company, M/s Mita India Pvt. Ltd., to the respondent, Mahendra Jain, for shifting of electrical overhead line at its plant at Dewas. The appellant-company made excess payment by mistake, and the respondent agreed to refund the excess amount. The cheques issued for the refund were dishonoured on account of instructions to stop payment.

The authorized representative of the appellant-company filed a complaint under Section 138 read with Section 141/142 of the Negotiable Instruments Act, 1881, in the Court of Chief Judicial Magistrate, Dewas. The respondent moved two applications alleging that the complaint was not filed by an authorized person and that Kavinder singh Anand cannot depose before the court. The trial court rejected the first application, and the second application was rejected on revision. These orders were challenged by the respondent under Section 482 Cr.P.C. The High Court allowed the petition filed under Section 482 Cr.P.C. and set aside the orders on the ground that the complaint was not filed by the authorized person and that Kavindersingh Anand is not authorized to depose on behalf of the company. Same is Challenged in Supreme Court.

The complaint has been filed in the name of the appellant company through its authorized representative, Ripanjit Singh Kohli, and not in the name of the power of attorney holder. The appellant company has the right to file the complaint in its own name through its power of attorney holder.

Supreme Court finds that there is a general power of attorney of the appellant company in favor of one of its directors, Kavindersingh Anand. The power of attorney was approved by the board of directors and authorized to appoint "counsel" or "special attorneys" for conducting all cases or otherwise doing all other acts and things for due prosecution or defense of legal or quasi-legal proceedings anywhere in the world. Kavinder singh Anand authorized Ripanjit Singh Kohli to lodge the complaint on the strength of the power of attorney.

Supreme Court observed that the power of attorney holder can delegate his powers to another person when there is a specific clause permitting sub-delegation. The general power of attorney holder in this case was authorized to appoint special attorneys in addition to the counsel for conducting cases and doing other relevant and material acts. Therefore, filing the complaint on behalf of the appellant company through its authorized representative Ripanjit Singh Kohli is not illegal or bad in law.

The appellant company's director Kavinder singh Anand, who was authorized to lodge the complaint and pursue it, filed a personal affidavit stating that he is the general power of attorney holder of the company and is fully aware of the facts of the case, making him competent to pursue the litigation on behalf of the company.

The Supreme Court opines that the High Court erred in ignoring the affidavit of the power of attorney holder, which clearly stated that he had personal knowledge of the transactions. As the power of attorney holder has personal knowledge about the transactions, he is deemed to have the capacity to depose, and the trial court and the Revisional Court did not commit any error in law in rejecting the respondent's applications.

The Supreme Court holds that the High Court was wrong in interfering with the orders of the trial court in passing the impugned order dated 04.04.2019. Consequently, the aforesaid order dated 04.04.2019 is set aside, and the orders of the trial court and the revisional court are restored. Appeal is allowed.

Mita Indai Pvt. Ltd. Vs Mahendar Jain