Section 138 NI Act | Unauthorised company secretary’s testimony invalid; POA complaint void if representative absent : CGHC

The Chhattisgarh High Court reaffirmed that a company cannot rely on an unauthorised employee to prove a cheque-dishonour claim under Section 138 of the Negotiable Instruments Act, and that a complaint filed through a power of attorney may be deemed discontinued if the authorised representative fails to appear.

Background & Facts

The Dispute

• The appellant, Vandana Global Limited, a company incorporated under the Companies Act, 1956, placed an order (No. VGL/RM/10/39/00104) on 06.10.2007 for 3,600 metric tons of iron ore with the respondent, then known as M/s Cheery Commercials (later M/s Minal Traders).
• The respondent accepted the order on 10.10.2007 and the appellant paid an advance of Rs.81,00,000.
• Only 1,880 metric tons were delivered. A settlement meeting was held on 28.05.2008, where the respondent agreed to pay Rs.79,92,612 in phased installments.
• To discharge part of the liability, the respondent issued Cheque No.005532 dated 14.06.2008 for Rs.3,00,000 drawn on State Bank of India, Bhilai.
• The cheque was presented by the appellant in its Oriental Bank of Commerce account and was dishonoured on 24.11.2008 with the remark “not arranged for”.
• A demand notice dated 01.12.2008 was served, which the respondent refused.
• The appellant filed a criminal complaint under Section 138 on 20.01.2009 (some records note 22.01.2009) through its power of attorney holder, Shri Rabindra Nath Shahi, a General Manager of the company.
• The Board of Directors passed a resolution on 20.01.2009 authorising Shahi to file the complaint and a power of attorney (Ex.P-7) was executed the same day.

Key Facts

• Advance payment: Rs.81,00,000
• Outstanding settlement amount: Rs.79,92,612
• Cheque amount in dispute: Rs.3,00,000
• Cheque dishonour date: 24.11.2008
• Demand notice date: 01.12.2008
• Complaint filing date: 20.01.2009 (via power of attorney)
• Authority letter for Ajay Tipte (Company Secretary): Ex.P-8, dated 30.05.2013
• Application for production of authority letter: 13.12.2013
• Last opportunity order for evidence: 25.02.2014 (Ajay Tipte appeared)
• Subsequent hearing date noted: 07.04.2014

Procedural History

• 03.04.2017: Trial Court convicted the respondent, sentencing him to six months simple imprisonment and a fine of Rs.5,00,000, with a default clause of an additional four months imprisonment.
• 16.08.2017: Fourth Additional Sessions Judge, Raipur, in Criminal Appeal No.119/17, acquitted the respondent, reversing the conviction.
• 06.08.2026: Appeal filed before the High Court of Chhattisgarh (ACQA No. 295 of 2017).
• 17.08.2026: Single Bench of Hon'ble Shri Sanjay S. Agrawal, J delivered the judgment.

The Parties' Positions

• Appellant (Vandana Global Limited): Asserted that Shri Ajay Tipte, the Company Secretary, was duly authorised by the Managing Director via an authority letter and that his testimony should be admissible. Relied on TRL Krosaki Refractories Ltd. v. SMS Asia Pvt. Ltd. (2022) 7 SCC 612.
• Respondent (Subhash Chouhan): Contended that Ajay Tipte was neither a director-appointed representative nor aware of the 2008 transaction, rendering his evidence inadmissible. Relied on A.C. Narayanan v. State of Maharashtra (2014) 11 SCC 790.

Relief Sought

The appellant sought reversal of the appellate acquittal, reinstatement of the conviction and sentence, and an order directing the respondent to pay the fine and serve the imprisonment term.