Who Can File a Cheque Bounce Complaint for a Company in 2026? Section 142 NI Act, Power of Attorney, Authorised Representative & Naresh Potteries

The reportable judgment is available at Naresh Potteries v. Aarti Industries. This article should be read with our main Section 138 guide and quashing guide.

1. What Section 142 requires

Section 142 requires a complaint by the payee or holder in due course. Where the payee is a company, firm or other juristic entity, the entity cannot physically enter the witness box or sign documents without acting through a human representative. The real questions are therefore: is the complaint in the name of the legal payee, is the person prosecuting it authorised, and does that person have sufficient knowledge for the acts he or she proposes to perform?

2. Company as complainant

If a company is the payee, the complaint should be titled in the company’s name, represented through its authorised officer or representative. The representative does not replace the company as complainant. The representative acts for the company.

A complaint filed in the representative’s own personal name, when the cheque is payable to the company, creates a different and more serious maintainability problem.

3. Naresh Potteries, 2025 INSC 1

In Naresh Potteries, the Supreme Court restored a Section 138 proceeding that had been quashed by the High Court. The Court drew from A.C. Narayanan and TRL Krosaki Refractories and emphasised that, for a corporate complainant, a prima facie indication in the complaint and sworn statement that the company is represented by an authorised person having knowledge is sufficient for cognizance and process.

The accused can still contest actual authorisation or knowledge during trial. But the High Court should not normally terminate the complaint at the threshold where those matters require factual examination.

4. A.C. Narayanan: the foundational POA principles

The Supreme Court in A.C. Narayanan v. State of Maharashtra clarified five core propositions:

1. a Section 138 complaint through a power-of-attorney holder is legally competent;
2. the POA holder may verify and depose if he or she witnessed the transaction or possesses due knowledge;
3. the complaint should expressly indicate the POA holder’s knowledge where the payee is an individual acting through an attorney;
4. affidavit evidence can be relied upon for process under Section 145;
5. sub-delegation depends on the terms of the power of attorney and requires authority permitting it.

5. Company employee vs individual POA holder

The law distinguishes between an individual payee appointing an attorney and a company acting through its authorised employee. For a company, the Supreme Court has taken a practical approach: the company remains the complainant, and an authorised employee with knowledge may represent it. Courts do not require ritualistic wording if authority and knowledge are clear from the complaint and supporting material.

6. What authority document should a company use?

Depending on corporate practice and the company’s constitutional documents, authority may flow from:

• a board resolution;
• a specific power of attorney;
• a general power of attorney;
• a delegation under an existing board-approved authority structure;
• an office order or authorisation letter traceable to competent corporate authority.

The safest file contains both the source of power and the specific authority relied upon by the person signing, filing and deposing.

7. Is a board resolution mandatory in every case?

The legal issue is authority, not a mechanical label. A board resolution is a strong and conventional source of authority, but corporate authority can sometimes be established through other valid instruments. The representative should be able to show how his or her authority traces back to the company.

8. Personal knowledge of transaction

A representative who merely possesses an authorisation letter but has no knowledge of the transaction may be able to perform some procedural acts, but evidentiary deposition becomes more vulnerable. The complaint should identify the representative’s connection with the transaction, records, account or business process.

For institutional lenders or large companies, personal knowledge may include knowledge derived from records maintained in the ordinary course of business, depending on the evidence led and the role of the witness.

9. Can one employee file and another employee depose?

Yes, it may be possible for the company to change its authorised representative or lead evidence through another competent officer, provided proper authority is placed on record and the witness can prove the relevant facts. The company is the complainant; its human representative can change.

However, continuity documents should be filed so that the record clearly shows who is authorised at each stage.

10. Sub-delegation of power

A power-of-attorney holder cannot automatically delegate the authority further. The Supreme Court’s line of cases, including Mita India Pvt. Ltd. v. Mahendra Jain, makes the position clear: sub-delegation is valid where the original instrument expressly permits it.

If the document contains no such power, counsel should not assume that one attorney can create another attorney for the complaint.

11. Proprietorship concerns

A proprietorship is not a separate legal person in the same way as a company. The complaint may be filed by the proprietor, by the proprietary concern represented through its proprietor, or through a competent attorney acting on behalf of the proprietor. Drafting should make the identity of the payee and proprietor explicit.

12. Partnership firms and LLPs

Where the payee is a partnership firm or LLP, examine the instrument, partnership/LLP records and internal authority. The complaint should clearly name the payee entity and show that the person filing is authorised to act for it.

Do not confuse complainant-authorisation issues with Section 141 vicarious liability of accused directors and partners. They are different questions.

13. Can an accused seek quashing because the authorisation is defective?

Yes, but the strength of the ground depends on the defect. If the complaint is not in the payee’s name at all, or the representative clearly had no authority, the objection may be fundamental. If the complaint, affidavit and documents show prima facie authority and the dispute concerns factual details of knowledge or internal delegation, Naresh Potteries cautions against threshold quashing.

14. Ratification of authority

Courts often distinguish between a complete absence of legal entitlement to institute a complaint and a curable defect in proof of corporate authorisation. Whether later ratification cures a particular defect depends on the nature of the defect, the document relied upon and the stage of proceedings. The safer course is to establish authority at filing rather than rely on later cure.

15. What should the complaint plead?

A company complaint should ordinarily state:

• the company is the payee/holder in due course;
• name and designation of the representative;
• source of authority;
• that the representative is acquainted with or has knowledge of the transaction and records;
• cheque particulars and underlying liability;
• dishonour and bank memo;
• statutory notice and service;
• failure to pay within fifteen days;
• cause of action, limitation and territorial jurisdiction.

16. What should be annexed?

1. board resolution/POA/authority letter;
2. company master data if relevant;
3. cheque and return memo;
4. invoices, ledger, loan or settlement documents;
5. statutory notice and postal/electronic service record;
6. representative’s affidavit under Section 145;
7. document showing substitution if representative changed.

17. POA holder for an individual complainant

Where an individual payee is unable to personally prosecute the complaint and acts through a POA holder, the complaint should be in the payee’s name represented through the attorney. The attorney’s knowledge of the transaction should be explicitly pleaded if he or she is to depose.

18. Can a lawyer be the POA holder and witness?

Professional-role issues should be considered separately from the NI Act’s technical permissibility. If the person is expected to become a material fact witness, ethical and evidentiary concerns arise. A company should normally use a knowledgeable business officer rather than structure the case around counsel as a fact witness.

19. Current quashing lesson from Naresh Potteries

The key 2025 lesson is not that authorisation can be ignored. It is that a High Court should not convert a disputed internal-authority question into a threshold dismissal where the complaint is in the payee’s name and there is prima facie material showing authority and knowledge.

20. Practical corporate checklist

• name the company itself as complainant;
• attach authority traceable to competent corporate power;
• identify the representative by designation;
• state knowledge of transaction and records;
• avoid unexplained sub-delegation;
• if representative changes, file fresh authority immediately;
• ensure the witness can prove invoices, ledger and communications;
• keep the originals and certified corporate records ready for trial.

21. Frequently asked questions

Can a manager file a cheque-bounce complaint for a company?

Yes, if the company is the complainant and the manager is duly authorised and has the required knowledge for the role being performed.

Is a power of attorney valid for Section 138?

Yes. A.C. Narayanan expressly recognises filing through a POA holder, subject to authority and knowledge requirements.

Can a POA holder further delegate?

Only if the original power expressly permits sub-delegation.

Can a complaint be quashed because the accused disputes the board resolution?

Not automatically. Under Naresh Potteries and TRL Krosaki, a genuine factual dispute about authority or knowledge may need to be tested at trial where prima facie material exists.

Can the authorised representative be replaced during trial?

Generally yes, because the company remains the complainant, but proper fresh authority and continuity documents should be filed.

22. Conclusion

Most authorisation failures in Section 138 company complaints are avoidable. The complaint should be in the payee company’s name, the representative’s power should be traceable, and the representative’s knowledge should be apparent. Naresh Potteries strengthens properly instituted corporate complaints against technical threshold attacks, but it does not excuse careless authority documents or a witness who cannot prove the transaction.