Company Files a Cheque Bounce Case: Board Resolution Rules

A company cheque bounce complaint board resolution is usually the last item on the filing checklist and the first thing a magistrate asks about. The complaint is typed, the dishonour memo is stapled behind it, and then someone wants to know who authorised the person who signed it. Under Section 138 of the Negotiable Instruments Act, 1881, only the payee or the holder in due course can complain, and a company can act only through a human being it has authorised. Without that authorisation on record, the court is left guessing.

Why a Company Must Authorise the Complaint

A company is a juridical person. It supplies goods, raises invoices and receives cheques in its own name, but it cannot walk into a magistrate's court. Somebody must sign the complaint, verify it and depose. The question the court asks is not whether the signatory is honest, but whether he is the company.

Section 142(1) of the Act is the gateway. No court takes cognizance of an offence under Section 138 except on a written complaint by the payee or holder in due course. When the payee is a company, the complaint belongs to the company, not to the officer. The authorisation does two jobs: it records that the company has decided to prosecute, and it identifies the natural person who may sign, verify, engage counsel, lead evidence and pursue the case.

The Act itself treats companies as capable of committing this offence. Section 141 deals with a company as accused and with the officers in charge of its business. The same logic runs in reverse when the company is the complainant. A director does not become the company merely by holding office. He can sign if the board has authorised him, or if the articles of association or a subsisting power of attorney already confers that power.

Board Resolution, Power of Attorney or Letter of Authority

Board resolution — the default

There is no prescribed form. A resolution passed at a board meeting, or by circulation under Section 175 of the Companies Act, 2013, is the cleanest evidence. Check the articles first: some articles require a meeting for litigation decisions, and a resolution by circulation will then be vulnerable.

The resolution should do more than say "the company shall file a complaint". It should identify the cheque — number, date, amount, drawee bank and the account it was drawn on — name the accused, authorise a specific officer by name and designation, and confer power to sign and verify the complaint, execute a vakalatnama, engage an advocate, file and withdraw proceedings, give evidence on affidavit and pursue appeals. If the officer may change during the case, add a clause allowing the board to substitute the authorised representative later.

Power of attorney

The Negotiable Instruments (Amendment) Act, 2018 amended Section 142 so that a complaint may be filed by a person holding a power of attorney on behalf of the payee. For companies, a power of attorney in favour of an accounts head, a regional manager or a retainer helps where the authorised signatory travels or leaves. It usually takes two documents: a board resolution authorising a director to execute the power of attorney, and the power of attorney itself, executed on stamp paper of the value required by the state stamp law and notarised.

A power of attorney does not cure an unclear chain. If the board has not authorised the director who signed the power of attorney, the instrument rests on nothing.

Letter of authority

A plain letter on company letterhead signed by a director is the weakest option. It has no statutory recognition and its acceptance depends on the magistrate. Where the amount is significant, do not rely on it.

Who Signs and Verifies the Complaint

The complaint must be signed by the authorised person, and the verification should be by someone who knows the facts of the transaction: the supply, the invoice, the presentation, the dishonour and the notice. Under the Bharatiya Nagarik Suraksha Sanhita, 2023, which replaced the Code of Criminal Procedure, 1973 from 1 July 2024, the magistrate examines the complainant on oath at the first hearing. Section 145 of the Act allows the complainant's evidence to be given on affidavit.

The practical rule is simple: one person should sign, verify and swear the affidavit. Splitting the roles creates two separate questions of authority. Where the signatory is a director in another city and the accounts head verifies, both must be authorised, and the verifying officer must be able to speak to the transaction, not merely to office records. The designation of the deponent should appear on the complaint and in the affidavit, along with the date of the resolution.

Defects That Get a Company Cheque Bounce Complaint Returned

The law and the filing counter are not the same thing. The Supreme Court has held that the absence of a board resolution is not, by itself, a ground to quash a complaint at the threshold — see M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234. In Associated Cement Co. Ltd. v. Keshvanand, (1998) 1 SCC 687, the Court treated a defective authorisation as a curable irregularity. That is the legal position, and it is worth knowing.

It is also worth knowing that many magistrates still return the complaint at the filing stage for want of authority. A return costs you weeks of time. If the one-month window under Section 142(1)(b) has closed by then, you need a condonation application with sufficient cause, and you have handed the accused a preliminary argument.

Common mistakes

• A resolution dated after the complaint was filed, which reads as an afterthought.
• A resolution authorising an officer "to appear and represent the company" but not to file the complaint.
• A resolution that names the officer but not the cheque or the accused, leaving the link to the transaction unproved.
• An uncertified copy, or a copy unsigned and unsealed, produced without the original for verification.
• A power of attorney executed by an officer who was never authorised to execute it.
• A payee name on the complaint that does not match the name on the invoice or the cheque — common after a rebranding or a merger.
• Verification sworn by the advocate instead of the authorised officer.
• Authorisation issued by a group company rather than by the payee company itself.
• Where the payee has since amalgamated or been struck off, no document showing which entity now holds the right to realise the cheque.

A ₹14.5 lakh complaint returned for want of authority

Sundaram Polytex Private Limited supplied fabric to Kaveri Textiles LLP and received a cheque for ₹14,50,000 dated 12 March 2026, drawn on the LLP's account. The company presented it on 20 March; it came back on 23 March with a "funds insufficient" memo. Notice under Section 138 was sent by registered post on 2 April and delivered on 6 April. The fifteen-day period expired on 21 April 2026 and the cause of action arose the next day.

The accounts head, who had handled the ledger, signed and verified the complaint, and it was filed on 30 April 2026, comfortably within the one month allowed. But the board resolution produced with it, passed on 28 April, authorised "the Company Secretary or any Director" to represent the company. The accounts head was neither. The magistrate returned the complaint on 8 May for want of authorisation.

The company passed a fresh resolution on 15 May naming the accounts head, and also executed a notarised power of attorney in his favour. It re-filed on 20 May with a condonation application, since the one-month window had closed on 21 May. The re-filing was just inside that window, but only because the return happened quickly. A second return would have pushed the matter past it entirely.

The lesson is not that the accounts head was the wrong choice. He had the facts. The lesson is that the resolution must name the person who actually signs, and must be passed before the complaint is drafted, not after it is returned.

Checklist Before the Complaint Is Filed

• Board resolution passed and dated before the complaint, naming the cheque, the amount, the accused and the authorised officer by name and designation

• Certified true copy signed by a director or the company secretary, with the seal, and the original available at the first hearing

• Power of attorney, if used, executed by a properly authorised director, stamped and notarised, with the backing resolution attached

• Complaint, verification and Section 145 affidavit signed by the same authorised person

• Payee name in the complaint matching the invoice, the cheque and the certificate of incorporation, with merger or rebranding documents if the name has changed

• Dishonour memo, returned cheque, notice with postal receipt and acknowledgement, and ledger extracts filed as annexures

• Diary note of the date the cause of action arose and the last date for filing under Section 142(1)(b)

Before your next cheque bounce filing, pull the draft complaint and read the name of the person who has signed it. Then read the resolution. If the two do not match, pass a fresh resolution today. The merits of the dishonour will not save a complaint that the wrong person signed.

This article is for general information only and is not legal advice. Consult a qualified professional for your specific facts.