Can a Company Replace Its Power of Attorney Holder in a Pending Section 138 Cheque Case

Businesses frequently prosecute cheque dishonour cases through authorised representatives rather than directors or proprietors personally. This raises a practical and recurring question: whether the power of attorney of a company can be changed, revoked, or re-issued in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The short answer is that it can — but the manner in which that change is made, and the scope of authority under the new instrument, determine whether the prosecution survives judicial scrutiny.

Complaints Through a Power of Attorney Holder Are Legally Competent

It is settled law that a complaint alleging an offence under Section 138 can be initiated by a duly appointed power of attorney holder on behalf of the payee or holder in due course. The holder may file the complaint, depose on oath, and verify its contents before the Magistrate 2022 3 Supreme 147 and 2015 3 Supreme 516.

Where the complainant is a company, Section 142 of the NI Act does not prescribe who must represent it. A company, being a juristic person, acts through human agency and may authorise an employee or even a non-employee through a board resolution or a power of attorney. Once an averment of such authorisation is made in the complaint, the Magistrate may take cognizance, and any dispute over authority is a matter to be decided at trial rather than a ground for dismissal at the threshold 2022 0 Supreme(J&K) 251 and 2026 0 Supreme(Ker) 537.

Revocation, Cancellation, and Re-Issuance of the Power of Attorney

Courts have recognised two distinct principles governing changes to a power of attorney in ongoing Section 138 proceedings 2013 6 Supreme 705:

1. The general power of attorney itself can be cancelled and given to another person. The principal retains the right to revoke the instrument and appoint a fresh representative. When this happens, the change should be formally brought on record before the court, and the new instrument of authorisation must be produced to avoid challenges to the representative's locus standi.

2. Functions under the general power of attorney cannot be sub-delegated unless the instrument contains an explicit clause permitting it. The Latin maxim delegata potestas non potest delegari applies: an agent cannot delegate his powers or duties to another, in whole or in part, without express authority of the principal or authority derived from statute. In one case, a Regional Manager who was a delegate of the Board of Directors could not further appoint an Assistant Area Manager to institute proceedings, and the complaint filed through that sub-delegate was held not maintainable

   J. K. Industries Ltd. , rep. by its Assistant Area Manager, Madurai VS Babu, Babu Tyres, Dindigul

   K. V. Sridhar VS N. Krishnasamy

   2008 0 Supreme(Mad) 1009.

So while the company may substitute its attorney, a chain of delegation created without an express sub-delegation clause is vulnerable.

The Personal Knowledge Requirement

Even a properly authorised power of attorney holder must have personal knowledge of the underlying transaction. The holder must have witnessed the transaction as an agent of the payee or possess due knowledge of it in order to depose and prove the contents of the complaint 2022 3 Supreme 147 and 2023 0 Supreme(Ker) 833. A complaint filed by a power of attorney holder is legally infirm unless the complaint itself contains a specific assertion of the holder's direct knowledge of the transactions leading to the offence 2026 Supreme(Online)(Ker) 58924.

If, during cross-examination, it is established that the attorney holder had no knowledge of the transaction, the complaint itself may fail — a risk the complainant assumes by appointing an attorney holder 2022 0 Supreme(Kar) 363.

Authorisation Defects Are Generally Curable

A recurring defence tactic is to attack the complaint at the outset for defective authorisation. Courts have consistently rejected this approach:

• Where the deed of power of attorney or an affidavit proving its execution was not produced initially, the defect can be rectified by producing the documents at a later stage of the proceedings

  K. Gopala Krishnan VS Karunakarann rep. by Power of Attorney holder

  2006 0 Supreme(Mad) 2106.
• Where the requirements of authorisation were not satisfied at the time of lodging the complaint, a subsequent board resolution and power of attorney were deemed valid, and the initial defect was treated as curable through post-initiation ratification 2025 0 Supreme(Gau) 1997.
• A complaint should not be dismissed solely for a technical defect in authorisation; the court should grant the complainant an opportunity to produce the necessary documents 2014 0 Supreme(SC) 280.

Notably, a complaint signed by the attorney holder in his own name — rather than on behalf of the complainant — has also been held maintainable, since Section 2 of the Powers of Attorney Act, 1882 permits an attorney to execute instruments in his own name with the same legal effect

K. Gopala Krishnan VS Karunakarann rep. by Power of Attorney holder

Practical Steps When Changing a Company's Power of Attorney

• Draft carefully: Include an explicit sub-delegation clause if any downstream delegation is contemplated.
• Record the change: Notify the court formally and place the new or revoked power of attorney on record promptly.
• Plead knowledge: Assert the attorney holder's personal knowledge of the transaction in the complaint or accompanying affidavit.
• Verify execution: Ensure the power of attorney is properly executed and, where executed by a firm, affixed with its seal, since doubts about execution have previously undermined prosecutions 2024 0 Supreme(Ker) 1315.
• Rely on board resolutions: Companies should act through the Board of Directors, as individual directors lack independent authority to bind the company 2025 0 Supreme(Gau) 1997.

Key Takeaways

A company's power of attorney in a Section 138 proceeding can be cancelled, revoked, and re-issued to another person, but the new holder must be properly authorised, must possess personal knowledge of the transaction, and cannot sub-delegate without an express clause. Defects in authorisation are typically curable and rarely justify dismissal at the threshold. This article reflects general judicial principles and is informational in nature; outcomes in a specific matter may vary based on the facts and the terms of the instrument involved.