In CRL. R.C. 297 & 305 of 2020- MADR HC- One cannot legally represent a firm in an individual capacity without authorisation, says Madras High Court while setting aside trial court order holding the accused guilty of offence under Sec 138 of NI Act
Justice G.Jayachandran [18-05-2023]

Read More: M.C. Baby v Sastha Home Tech

Simran Singh

New Delhi, May 29, 2023: The Madras High Court, while reiterating the settled position of law by way of multiple judicial decisions, said that in the absence of the required documents of the partnership deed along with authorisation to represent the partnership firm, the Courts below could not presume that the respondent was a partner who was duly authorised to represent the said firm. The High Court, accordingly allowed the revision petitions and set aside the impugned judgment passed by the Metropolitan Magistrate as well as the Additional Sessions Judge

In the matter at hand, two revision petitions were preferred by the accused who was held guilty of offence under Section 138 of Negotiable Instruments Act, 1881 (NI Act) by Metropolitan Magistrate, Saidapet and the same on appeal was confirmed by Additional Sessions Judge, Chennai.

Issue for consideration before the Court was whether a complaint under Section 138 of the NI Act by a partner of the firm without authorisation was maintainable.

The accused being a railways contractor had placed orders for supply of materials which were delivered to the construction site by the respondents. When the respondents demanded repayment of dues, the accused gave two cheques, dated 31-12-2004 for INR 7, 41, 923 and another dated 31-03-2005 for INR 14,20,235 to partially discharge the dues. Both the cheques were bounced on 27-06-2005 and 08-08-2005, respectively for the reason ‘insufficient funds’. The respondent therefore, had caused statutory notice on 27-07-2005 and 04-09-2005, respectively calling upon the accused to make payment of the cheque amount within 15 days. It was alleged that despite the receipt of the notice, the accused neither paid the cheque amount nor replied within 15 days. Hence the respondent had filed a case before the Metropolitan Magistrate, Saidapet.

The accused contested the case on the premise that the cheques were issued as security for the goods supplied. Though payment made, the cheques were presented and misused by the respondents. More so, no statutory notice was served upon the accused and there was no proof that the respondent was authorised to prefer the complaint against the accused. Hence, the complaints were alleged to be not maintainable.

Both the Courts below had held that the signatures on the cheques were not disputed and the business relationship was also admitted. There was no rebuttal evidence led by the accused to shift the burden of presumption. Thus, the complaints were held to be maintainable.

However, the Bench stated that the Metropolitan Magistrate had failed to address the plea of maintainability of the complaint by the respondent without the authorisation of partners. Further the Additional Sessions Judge failed to not only apply the correct law, but also erred in misquoting the facts while considering the plea of maintainability. The Court was of the view that there was no record to show that M/s Sastha Home Tech was a partnership firm and the respondent was one of the partner of the firm. It was noted that during the cross examination, the respondent had stated to have filed the partnership deed, which later he retracted and said that he will produce the required document.  However, the required documents were neither produced before the Metropolitan Magistrate nor before the Additional Sessions Judge.

The Court scrutinised the complaints, and found that the respondent had signed the complaint not on behalf of M/s Sastha Home Tech, but as an individual which was contrary to the observations made by the Additional Sessions in its order, hence perverse.

The Bench while relying on BSI Limited v. Gift Holdings Private Limited stated that in the absence of the required documents of the partnership deed along with authorisation to represent the partnership firm, the Court could not presume that the responder was a partner who was duly authorised to represent the said firm.