The Chhattisgarh High Court has set aside an acquittal order passed by the Sessions Court, ruling that a complaint under Section 138 of the Negotiable Instruments Act (NI Act) filed through a Power of Attorney (PoA) holder is maintainable if the complaint and affidavit explicitly state that the PoA holder is aware of the transaction details.
Justice Narendra Kumar Vyas allowed the appeal, holding that the lower appellate court committed a “material irregularity” by ignoring specific averments regarding the PoA holder’s knowledge of the facts.
Background of the Case
The appeal was filed by Smt. Monalisa Agrawal, proprietor of M/s Mahalxmi Tractors, through her Power of Attorney holder, Brij Mohan Agrawal. The case involved the sale of a tractor and accessories to the respondent, Devanand Patel, on credit. After previous payment defaults, the accused executed an agreement on July 18, 2011, and issued a cheque of Rs. 7,75,000.
When the cheque was dishonoured, a legal notice was issued, which the accused refused to accept. The complainant then filed a case under Section 138 of the NI Act. The Judicial Magistrate First Class (JMFC), Raigarh, convicted the accused on February 27, 2018.
However, the accused challenged the conviction before the 5th Additional Sessions Judge, Raigarh. The Sessions Court allowed the appeal and acquitted the accused on July 30, 2018. The appellate court held that there was no mention that the PoA holder was aware of the transaction and that the complainant failed to prove proprietorship. Aggrieved by this acquittal, the complainant moved the High Court.
Arguments of the Parties
Mr. Ayush Lal, counsel for the appellant, argued that the PoA holder had explicitly stated in the complaint and the affidavit filed under Section 145 of the NI Act that he was managing the business and was well-acquainted with the facts of the transaction. He contended that the Sessions Court ignored these material facts.
Mr. Arvind Shrivastava, counsel for the respondent-accused, supported the acquittal. He argued that the complaint and PoA did not sufficiently aver that the facts were within the personal knowledge of the attorney holder. Relying on the Supreme Court judgment in A.C. Narayanan vs. State of Maharashtra, he argued that the evidence adduced by the PoA holder was not acceptable.
Court’s Analysis
Justice Vyas examined the Power of Attorney, the complaint, and the affidavit of Brij Mohan Agrawal. The Court noted that the documents clearly stated that the PoA holder was running the business on behalf of the complainant and was “well acquainted with the facts of the case.”
The Court observed:
“From perusal of the power of attorney, complaint and affidavit filed under Section 145 of the N.I. Act, it is quite vivid that the power of attorney holder is competent to file complaint, he is well aware about the transaction relates to execution of agreement, cheque issued by the accused… and also that he is well aware with not only this transaction but entire business is run and managed by him only on the strength of power of attorney.”
Reliance on Supreme Court Precedent
The High Court relied on the recent Supreme Court judgment in Naresh Potteries vs. Aarti Industries and another (2025). The Apex Court in that case clarified that when a complaint is prosecuted by someone other than the payee, it must be demonstrated that they have knowledge of the contents.
Applying this principle, the High Court held that the finding of the Sessions Court that the evidence of the PoA holder was unacceptable suffered from “perversity or illegality.” The Court stated that the witness, Brij Mohan Agrawal, had categorically stated in his cross-examination that he was the PoA holder, a fact not diluted by the defense.
On Service of Notice
Regarding the service of legal notice, the Court observed that the notice was returned with the endorsement “refused to accept.” Citing Section 27 of the General Clauses Act, the Court held that service is presumed unless rebutted, which the accused failed to do.
Decision
The High Court allowed the acquittal appeal filed by the complainant. The judgment dated July 30, 2018, passed by the Additional Sessions Judge was set aside, and the conviction order passed by the JMFC was affirmed.
However, the Court modified the sentence. Instead of the original sentence, the Court directed the accused to pay Rs. 8,75,000 (comprising the cheque amount of Rs. 7,75,000 and compensation) within two months. Failure to pay within the stipulated time would result in simple imprisonment for one month.
Case Details:
- Case Title: Smt. Monalisa Agrawal vs. Devanand Patel & Another
- Case Number: ACQA No. 84 of 2019 (2026:CGHC:5631)
- Coram: Justice Narendra Kumar Vyas
