2019 (2) TMI 1011 - HC - Indian Laws

Dishonor of Cheque - the payment in respect of the cheques was stopped as the said paddy has not been passed by the Quality Control Department - Section 138 of Negotiable Instruments Act, 1881 - Held that - The embargo put by National Company Law Board vide its order of 16th February, 2016 and of the Appellate Tribunal is for the proper functioning of the accused-company and cannot be taken to be a bar to proceed under Section 138 of Negotiable Instruments Act, 1881 in these cases, as the restraint from making withdrawal or transfer of funds is conditional one - prior permission of the National Company Law Board/Tribunal is to be obtained before the assets of the accused-company are to be diverted or transferred. The aforesaid embargo cannot be considered to be a bar to proceed under Section 138 of Negotiable Instruments Act, 1881 against petitioner - this Court is not inclined to quash the complaints or the impugned order in question - Petition disposed off.

Summary

Issues:
Quashing of complaints under Section 138 of Negotiable Instruments Act, 1881 and summoning order.

Analysis:
The petitioner sought to quash six complaints and a summoning order related to dishonored cheques. The first petition involved two cheques of ?90,00,000 each, the second petition related to six cheques of ?95,00,000 each, the third petition pertained to three cheques of ?95,00,000 each, two cheques of ?90,00,000 each, and one cheque of ?85,00,000. The fourth petition was about three cheques of ?85,00,000 each, the fifth petition involved two cheques of ?95,00,000 each, and one cheque of ?85,00,000, while the sixth petition related to sixteen cheques totaling ?13,90,00,000. The court heard all petitions together due to identical grounds.

The petitioner argued that the cheques were undated and were to be encashed once certain conditions were met. The petitioner stopped payment due to quality issues with the paddy. The petitioner claimed there was no existing debt or liability for the cheques. The petitioner also cited a restraint order by the National Company Law Board preventing fund transfers. However, the respondent contended that there was no such restraint order and the accused had confirmed an outstanding amount in writing.

The court found disputed facts regarding the stop payment communication and the outstanding amount confirmation. It held that the National Company Law Board's restraint order did not bar proceedings under Section 138 of the Negotiable Instruments Act, 1881. Quashing the complaints based on disputed documents was deemed inappropriate. The court emphasized that on disputed facts, complaints should not be quashed, and the grounds for quashing needed to be tested at trial. Therefore, the court declined to quash the complaints or the summoning order.

The parties were directed to present their arguments before the trial court during the trial. The court clarified that its decision did not imply an opinion on the case's merits.