Kerala High Court Refuses To Quash Cheque Dishonour Complaint Over Defect In Cause Title

The Kerala High Court has held that a cheque dishonour complaint cannot be quashed merely because the authorised representative's name appears before the complainant society's name in the cause title.

Holding that such an objection was only technical, the court observed, "As held by the Hon'ble Supreme Court in Bhupesh Rathod's case (supra), such a defect, if at all, is merely technical and cannot defeat an otherwise maintainable prosecution."

Justice C.S. Dias delivered the ruling while dismissing a petition filed by an accused challenging a complaint pending before the Judicial First Class Magistrate-I, Kannur.

The complaint had been instituted by Ratheesh K., Secretary of the Educational Empowerment and Welfare Co-operative Society, Kannur, on behalf of the Society under Section 138 of the Negotiable Instruments Act. It alleged that a cheque for ₹3.16 crore, issued by the accused towards discharge of a legally enforceable liability, was dishonoured due to insufficient funds.

The accused approached the high court seeking to quash the complaint. It was argued that the proceedings had not been instituted by the payee of the cheque, the society, but by its secretary in his individual capacity.

The accused relied on earlier decisions to contend that an authorised representative or office-bearer could not maintain a complaint in his own name merely by referring to his designation.

The society opposed the plea. It submitted that its bye-laws expressly empowered the Secretary to institute legal proceedings on its behalf. It also relied on a Managing Committee resolution dated September 29, 2021, which specifically authorised the Secretary to file the complaint.

According to the Society, the cheque had been issued in its favour and the proceedings had been instituted by the payee through its authorised Secretary.

After hearing both sides, the court examined the complaint and the documents produced along with it. These included the agreement executed between the parties, the Society's registration certificate, its bye-laws, amended bye-laws and the Managing Committee resolution authorising the Secretary to institute the proceedings.

The court noted that the transaction was between the accused and the Society. It also found that the cheque had admittedly been drawn in favour of the Society.

The court then considered the Supreme Court's decision in Bhupesh Rathod v. Dayashankar Prasad Chaurasia, which dealt with a similar objection. The Supreme Court had held that a complaint does not suffer from a fundamental defect merely because the authorised representative's name appears before the company's name in the cause title. What is important is whether the complaint has been filed on behalf of the payee by a duly authorised person.

Applying that principle, the court found that a reading of the complaint left no doubt that Ratheesh K. had instituted the proceedings as Secretary of the Society and not in his personal capacity.

The court observed, "A holistic reading of the complaint explicitly reveals that Ratheesh K. has instituted the proceedings in his capacity as the Secretary of the Society and not in his individual capacity. The cheque in question was admittedly issued in favour of the Society; the statutory notice was also issued by the Society; and the agreement produced with the complaint was executed between the petitioner and the Society."

The court further noted that the Society's bye-laws and the Managing Committee resolution expressly authorised the Secretary to institute legal proceedings. It therefore rejected the contention that the complaint had been filed by the Secretary in his individual capacity.

Instead, it held that the complaint had been instituted by the Society, the payee of the cheque, through its duly authorised Secretary.

Addressing the objection to the cause title, the court observed that the challenge was confined to the drafting format and not to the Secretary's authority or competence to institute the proceedings.

It observed, "The challenge raised by the petitioner is founded solely on the form in which the cause title has been drafted and not on the competence or authority of the person who instituted the complaint. Such a hyper-technical objection cannot be permitted to defeat a legitimate prosecution."

Finding no merit in the petition, the court dismissed it. It also directed the trial court to dispose of the cheque dishonour complaint, which has been pending since 2022, as expeditiously as possible in accordance with law.

For Petitioner: Advocates P. Sathisan, Shibu B.S, Razak M, Biju P Paul, Alvin Jewel S.S, Vidhya T.U, Abhirami S, Leena Varghese, Daniel A.J and Sreekarthik S Menon

For Respondents: Advocates Suresh Kumar Kodoth and Devadas H Mallan, Public Prosecutor