Proof of Knowledge Mandatory for Power of Attorney in NI Act Cases: Kerala HC

The Kerala High Court has delivered a significant blow to mechanical criminal prosecutions by ruling that a Power of Attorney holder cannot maintain a complaint under the Negotiable Instruments Act, 1881 without explicitly asserting direct knowledge of the underlying transaction. This judgment reinforces that the mere legal authority to file a complaint does not bypass the evidentiary requirement of personal knowledge, effectively shielding defendants from prosecutions based on hearsay-style verification.

A Single Bench of Justice G. Girish set aside the concurrent conviction of a man in a cheque dishonour case, emphasizing that the absence of specific assertions regarding the Power of Attorney holder's personal witnessing of the transaction constitutes a fatal legal infirmity.

Key Takeaways

Strict Assertion of Knowledge

Complaints filed through a Power of Attorney must explicitly state that the representative has direct knowledge of the transactions or witnessed the execution of the cheque.

Evidentiary Competency of Agents

While an agent can depose on behalf of a payee, they must possess personal knowledge or have witnessed the transaction to qualify as a valid witness.

Fatal Procedural Anomalies

Failure to establish the representative's competence at the threshold of the complaint is a ground for acquittal, even if there are concurrent findings of guilt by lower courts.

Mandatory Assertion of Representative's Knowledge

The court scrutinized the complaint filed by the second respondent, a chit fund company, finding that it lacked the essential requirements for institution by a Power of Attorney holder. It noted that the complaint only mentioned the representative's authority to sign and file, but remained silent on whether he had seen the petitioner execute the cheque or hand it over.

The Court, in its reasoning, observed: "There is absolutely no averment anywhere in the complaint that the Power of Attorney Holder (PW1) who is the signatory to that complaint, was having direct knowledge regarding the transactions which constituted the offence under Section 138 of the NI Act alleged in that complaint. It is not possible to discern from the complaint as to whether the Power of Attorney Holder had the occasion to see the petitioner executing Ext P8 cheque or handing over the duly executed Ext P8 cheque to any of the officers of the second respondent company. Therefore, the basic requirement to be fulfilled for the institution of a complaint by a Power of Attorney Holder, is conspicuously absent in the complaint lodged before the learned Magistrate."

The Court has following directions:

"(i) The concurrent verdicts of the courts below, convicting and sentencing the petitioner for the commission of offence under Section 138 of the Negotiable Instruments Act, 1881, are hereby set aside.

(ii) The petitioner/accused is acquitted of the aforesaid offence.

(iii) The bail bond executed by the petitioner/accused stands cancelled and he is set at liberty."

Ratio

To maintain a criminal prosecution under Section 138 of the Negotiable Instruments Act, 1881 through a Power of Attorney, the complainant must explicitly make specific assertions in the complaint regarding the knowledge of the Power of Attorney holder in the specific transactions that led to the offence. A representative who lacks personal knowledge of the transaction or who did not witness the transaction as an agent cannot be examined as a witness to prove the complaint.

Background

The revision petitioner was originally convicted by the Judicial First Class Magistrate Court-II, Pala, for a cheque dishonour involving Rs. 8,75,000, a verdict later upheld by the Additional Sessions Court-II, Kottayam. The dispute arose from chitty transactions between the petitioner and the second respondent company. The petitioner contended that signed blank cheques were misused and challenged the competence of the company's Power of Attorney holder to file the complaint.

The High Court relied on the precedent set in Narayanan A.C & Anr. v. State of Maharashtra & Ors., which established that specific assertions of knowledge are mandatory. The Court also noted that this principle was followed by the Kerala High Court in Shibu L.P. v. Neelakantan & Another. Finding that the trial and appellate courts ignored this "fatal legal anomaly," the Court allowed the revision petition and acquitted the accused.

Case Details:
Case No.: CRL.REV.PET NO. 266 OF 2025
Neutral Citation: 2026:KER:67547
Case Title: SHIBU P.S v. STATE OF KERALA & ANR.
Appearances:
For the Petitioner(s): SRI.JAI GEORGE, SMT.DAISY A.PHILIPOSE, SHRI.DARSHAN A.D.
For the Respondent(s): SRI.RAJESH CHAKYAT, SRI. GITHESH.R, SR. PUBLIC PROSECUTOR

Source: 2026 CaseBase(KER) 19592