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Some more ambiguities with bounced cheques settled by the Supreme Court

The Supreme Court decided on two important questions relating to bounced cheques last week. Resolving the apparent conflict in views between high courts and different benches of the Supreme Court, a larger bench of the apex court laid down that (i) a complaint about a bounced cheque can be filed by a power of attorney holder, and (ii) the power of attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint if he had witnessed the transaction as an agent of the payee/holder in due course or possesses due knowledge regarding the transactions.

The court was deciding two appeals against the judgments of the Bombay and Andhra Pradesh high courts. The Mumbai case, A C Narayanan vs State of Maharashtra, started when a firm launched a scheme of investment and collected amounts from various persons in the form of loans. It, then, issued post-dated cheques in the managing director's personal capacity. The cheques were dishonoured leading to criminal complaint under the Negotiable Instruments Act.

The complaint was filed by a person on behalf of several others. The MD moved courts for quashing the complaint, but without success. The Andhra case was similar. The main issue was whether a power of attorney holder could file a complaint. The Supreme Court said yes, and referred all such cases back to the courts where they came from to decide on them, according to the facts in each case.

The second issue settled in the judgment, Escorts Ltd vs Rama Mukherjee, was whether the court within whose jurisdiction the bounced cheque was presented had jurisdiction to entertain the complaint. The court stated that a complaint could be filed in any of the jurisdictions where transactions took place, including the place of issue and the place of dishonour.

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