Summons in Cheque‑Dishonour Trial Restored as Manager's Power‑of‑Attorney and Knowledge Are Held Sufficient

A bench of Justices B.R. Gavai and K.V. Viswanathan heard an appeal arising out of an Allahabad High Court order which had quashed the summoning order in a complaint under Section 138 of the Negotiable Instruments Act. The appeal challenged the Single Judge’s finding that the power‑of‑attorney holder who filed and verified the complaint lacked the requisite personal knowledge and therefore the complaint did not satisfy Section 142 of the NI Act.

The Court allowed the appeal, set aside the High Court order and restored the complaint to the file of the trial court for adjudication on merits. The Supreme Court held that where the payee was a firm and the complaint was filed in its name through an authorised manager who was in charge of day‑to‑day affairs, the requirement of Section 142 was satisfied so long as the pleading and supporting documents prima facie conveyed that the representative was authorised and had knowledge of the transactions. The Court cited and followed the line of authorities including A.C. Narayanan and TRL Krosaki, stressing that dismissal at the threshold was not justified where authorisation and knowledge were prima facie shown. The Court, in its reasoning, observed: “What can be treated as an explicit averment, cannot be put in a straitjacket but will have to be gathered from the circumstance and the manner in which it has been averred and conveyed, based on the facts of each case… 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 therefor and that the contents of the complaint are within his knowledge.” The Court further found that the High Court had quashed the case on an incorrect factual basis and described the impugned reasoning as “completely perfunctory and erroneous”.

Background The dispute arose after M/s Naresh Potteries supplied polymer insulator scrap to M/s Aarti Industries for about Rs. 1.70 crore in June–July 2021. The supplier received cheque No. 086295 dated 10 July 2021 drawn on Central Bank of India for Rs. 1,70,46,314/-, which was deposited on 12 July 2021 but was returned on 13 July 2021 with the memo “exceeds arrangement”. The firm’s sole proprietor issued a Letter of Authority on 31 August 2021 authorising the manager, Neeraj Kumar, to file proceedings. A legal notice preceded the complaint. Kumar filed Complaint No. 701 of 2021 under Section 138 NI Act on 8 September 2021 and submitted an affidavit of evidence under Section 200 Cr.P.C.; the trial court found sufficient grounds and summoned the accused on 22 November 2021.

Respondent No.1 challenged the summoning order under Section 482 Cr.P.C. before the High Court, contending that the power‑of‑attorney holder had no personal knowledge and that the pleadings lacked a specific averment of knowledge as required by A.C. Narayanan. The High Court allowed the petition and quashed the summoning order and proceedings.

On appeal the Supreme Court examined Section 142 NI Act and the settled jurisprudence: a company or firm (the payee) must be the complainant, but it may be represented by an authorised employee or agent; a power‑of‑attorney holder could file and verify the complaint provided he had witnessed or had personal knowledge of the transactions and that such knowledge was prima facie reflected in the pleadings and supporting documents. The Court reviewed the Letter of Authority and the verifying affidavits: the Letter of Authority stated that the manager “takes care of general and day‑to‑day managerial business of the firm and is very well conversant with everyday affairs, financial transactions and sale‑purchase of the firm” and that “Sh. Neeraj is well aware of this case and is given necessary instructions also.” The verifying affidavit and the affidavit of evidence averred that the deponent “is well conversant with the facts and circumstances of the case.” Applying TRL Krosaki and related precedents, the Court concluded that the documents cumulatively showed prima facie authorisation and knowledge and that the High Court ought not to have quashed the complaint at threshold; it restored the complaint to the trial court to be heard on merits. The appeal was allowed and the High Court order dated 12 April 2023 was set aside; Complaint No. 701 of 2021 was restored for trial. No interim directions beyond restoration were issued.

Case Details: Case No.: 2025 INSC 1 (Criminal Appeal arising out of SLP (Crl.) No. 8659 of 2023) Case Title: M/s Naresh Potteries v. M/s Aarti Industries & Another Appearances: For the Petitioner(s): Mr. Navin Pahwa, Senior Counsel For the Respondent(s): Mr. Shailesh Sharma, Advocate (for Respondent No.2); none appeared for Respondent No.1