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2019 (2) TMI 393 - HC - Indian LawsDishonor of Cheque - cheque bearing the signature of petitioner - liability of petitioner to make the payment - case of petitioner is that the petitioner was not a Director at the time of issuance/ signing of the cheque and the same was without consideration, therefore, he is not liable to make the payment or even to be summoned in the matter - whether the Trial Court was justified or not in issuing summons to the petitioner vide the impugned order dated 17.11.2014? Held that - It is a well settled law that the Trial Court is only expected to consider the prima facie case at this stage to proceed against the accused and not whether the case would result in conviction - It needs no elaboration that at this stage the Court is required to evaluate the material and documents which have been placed on record by the petitioner and taken at the face value thereof, whether existence of the ingredients constituting the alleged offence or offences are prima-facie disclosed or not. The cheque clearly bears the signature of the petitioner. The contentions raised by the learned counsel for the petitioner that the petitioner was not a Director at the time of signing of the cheque or the same is without consideration cannot be evaluated, appreciated or decided at this stage which requires recording of the oral and documentary evidence which can be recorded only in accordance with law at the appropriate stage. Section 58(4) of The Limited Liability Partnership Act, 2008 makes it clear that there was no ground made out for the Trial Court to discharge the petitioner from the present case at that stage and the Trial Court was right in holding that sufficient material is on record to frame notice against the petitioner - petition dismissed - decided against petitioner.
Issues Involved:
1. Challenge to the legality of the proceedings and orders dated 17.11.2014, 06.05.2017, and 01.06.2018 by the Trial Court. 2. Validity of the issuance of summons under Section 138 of the Negotiable Instruments Act, 1881. 3. Evaluation of the petitioner's liability and role in the transaction and the issuance of the cheque. 4. The impact of the conversion of Lotus Floriculture Pvt. Ltd. into Lotus Floriculture LLP on the liabilities and obligations. Detailed Analysis: 1. Challenge to the Legality of Proceedings and Orders: The petitioner sought to set aside the proceedings and specific orders from the Trial Court. The High Court dismissed the challenge to the order dated 17.11.2014 due to an inordinate delay of over four years without any plausible explanation. The court emphasized that ignoring delay and laches could lead to endless litigation, preventing trials from proceeding or concluding. Citing precedents such as *Rajesh Chetwal v. State* and *Inder Mohan & Ors. vs. The State*, the court held that the challenge to the order dated 17.11.2014 was barred by delay and laches. 2. Validity of Issuance of Summons: The High Court examined whether the Trial Court was justified in issuing summons to the petitioner. It reiterated that at the stage of issuing summons, the Trial Court is only required to establish a prima facie case, not to evaluate the likelihood of conviction. The court referenced *Rajiv Thapar & Ors. v. Madan Lal Kapoor*, emphasizing that the High Court should exercise caution when invoking its inherent jurisdiction under Section 482 of the Cr.PC to quash proceedings at preliminary stages. The material must be of such impeccable quality that it clearly refutes the allegations without needing further evidence. 3. Petitioner's Liability and Role in the Transaction: The petitioner argued that he was not a Director at the time of signing the cheque and that the cheque was issued without consideration. The High Court noted that such contentions require evaluation of oral and documentary evidence, which can only be done at the appropriate stage of the trial. The cheque bearing the petitioner's signature was a significant factor, and the Trial Court had prima facie found that an offence under Section 138 of the NI Act was committed. The High Court found no infirmity in the Trial Court's order based on the material on record. 4. Impact of Conversion into LLP: The conversion of Lotus Floriculture Pvt. Ltd. into Lotus Floriculture LLP and its implications on liabilities were addressed. The Trial Court had held that the petitioner's liability continued as all assets and liabilities of the company were transferred to the LLP by operation of law. The court cited Section 58(4) of The Limited Liability Partnership Act, 2008, which states that all property, rights, liabilities, and obligations of the firm or company vest in the LLP upon conversion. The High Court concurred with the Trial Court's finding that there was sufficient material to frame notice against the petitioner, and no ground was made out to discharge him at that stage. Conclusion: The High Court dismissed the petition, finding no flaw or infirmity in the impugned orders dated 17.11.2014, 06.05.2017, and 01.06.2018. The court upheld the Trial Court's decisions, emphasizing the need for a trial to evaluate the evidence and the petitioner's defenses. The petition was dismissed with no orders as to costs.
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