M/s TRL Krosaki Refractories Ltd. vs M/s SMS Asia Private Limited & Anr.
2022 SCC Online SC 217
Coram: Hon’ble Chief Justice of India (Former) N.V. Ramana, Hon’ble Justice A. S. Bopanna & Hon’ble Justice Hima Kohli
Forum: Hon’ble Supreme Court of India
Case No.: Criminal Appeal No. 270 of 2022 Arising out of SLP (Crl.) No.3113 of 2018
Date of Decision: February 22, 2022
Conclusion
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Facts:

  • M/s TRL Krosaki Refractories Ltd was the Appellant.
  • M/s SMS Asia Private Limited and Another were the Respondents.
  • The Respondent issued 7 cheques, totalling Rs. 1,10,00,000, dated 13.03.2015, in favour of the Appellant company. The Bank dishonored them with the endorsement 'account closed.'
  • The Appellant sent notices dated 14.04.2015 through registered post, which was acknowledged on 16.04.2015, but the Respondent failed to comply with or respond to these notices.
  • The Appellant filed a complaint under Sections 138 and 142 of the Negotiable Instrument Act, 1881 (Hereinafter referred to as NI Act) before the Sub-Divisional Judicial Magistrate (SDJM) Jharsuguda which took cognizance and issued summons to the Respondent on 05.11.2015.
  • The Respondent challenged the SDJM's order dated 05.11.2015 before the High Court of Orissa at Cuttack in CRLMC No.1210 of 2017, which the High Court quashed.
  • Hence, the Appellant raised an appeal before the Supreme Court.

Background:



Sub-Divisional Judicial Magistrate (I.C.C. Case No.422 of 2015)

The Appellant filed a complaint before the Sub-Divisional Judicial Magistrate (SDJM) under Sections 138 and 142 of the N.I. Act. Based on an affidavit, the SDJM found sufficient material to take cognizance of the Section 138 complaint and issued summons on 05.11.2015.


High Court of Orissa (CRL. MC. No. 1210 of 2017):

  • The Respondent filed a petition under Section 482 Cr.P.C. before the High Court of Orissa at Cuttack, challenging the SDJM's order. The petition stated that an unauthorised person filed the complaint, Mr. Subhasis Kumar Das (General Manager, Accounting at Appellant’s Company), who neither knew the transaction nor witnessed it.
  • The High Court relied on A.C. Narayanan vs. State of Maharashtra (2014) 11 SCC 790 and held that the complaint and affidavit lacked details about the General Manager's authorisation and knowledge of the transaction.
  • No board resolution or valid authorisation was filed except for a letter from the Managing Director that didn’t explicitly indicate a transfer of authority. (Paragraph 4)
  • On these grounds, the High Court disposed of the Petition and quashed the SDJM's order dated 05.11.2015.


Supreme Court of India

Aggrieved by the High Court's judgment dated 14.12.2017, the Appellant approached the Supreme Court seeking to overturn the quashing of the SDJM's order and the summons issued in I.C.C. Case No. 422 of 2015.

Main Issue:

Does the Appellant's complaint filed under Section 138 of the Negotiable Instruments Act,1881, comply with the requirements of Section 142 of the NI Act? (Paragraph 7)

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