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IN THE HIGH COURT OF ALLAHABAD
RAJEEV MISRA, J.
Mrs. Binita Shah Ashishbhai And Others – Applicants
Versus
State Of U.P. and Another – Opposite Parties
Application U/S 482 No. 31893 Of 2022
Decided On : 11-11-2022
Summoning Order Challenge - Negotiable Instruments Act - 138 - Summary
Fact of the Case:
The applicants challenged the summoning order issued by the Chief Judicial Magistrate, Court No. II, Gautam Buddh Nagar, in a complaint case under Section 138 of the Negotiable Instruments Act 1881. The dispute arose from the termination of a construction contract, leading to the issuance of three cheques by the applicants, which were subsequently requested to be stopped. The complainant filed a legal notice, and the court summoned the applicants, leading to the present challenge.
Finding of the Court:
The court found that the summoning order and the entire proceedings of the complaint case were not manifestly illegal or in excess of jurisdiction. It noted that the court below had conducted an inquiry as required under Section 202(1) Cr.P.C. and had recorded prima facie satisfaction regarding the allegations made in the complaint. The court also rejected the argument that no offence under Section 138 N.I. Act was made out due to the stop payment of the disputed cheques, citing relevant case law. Additionally, the court found that the plea regarding the responsibilities of the applicants in the company was a factual plea that required evidence and could not be decided at this stage.
Issues: The issues involved the legality of the summoning order, compliance with the mandatory provisions of Section 202(1) Cr.P.C., the applicability of Section 138 N.I. Act in the case of stop payment, and the factual plea regarding the responsibilities of the applicants in the company.
Ratio Decidendi: The court's decision was based on the compliance with legal provisions, including the conduct of an inquiry as required under Section 202(1) Cr.P.C., the applicability of Section 138 N.I. Act in cases of stop payment as established by relevant case law, and the requirement for evidence to support factual pleas.
Final Decision: The court dismissed the application, finding that the summoning order and the entire proceedings of the complaint case were not manifestly illegal or in excess of jurisdiction.
JUDGMENT :
(Rajeev Misra, J.)
1. Heard Mr. Anurag Khanna, the learned Senior Counsel assisted by Mr. Haridesh Batra, the learned Counsel for applicants and the learned AGA for State.
2. Perused the record.
3. This application under section 482 Cr.PC has been filed challenging Summoning Order dated 20.06.2022 passed by Chief Judicial Magistrate, Court No. II, Gautam Buddh Nagar in Complaint Case No. 36 of 2021 (M/s Ascent Construction Pvt. Ltd. Vs. M/s Manav Infrastructure Pvt. Ltd.), under Section 138 of Negotiable Instruments Act 1881, Police Station-Sector-20, District- Gautam Buddh Nagar now pending in the court of Chief Judicial Magistrate, Court No. II, Gautam Buddh Nagar
4. Record shows that M/s Manav Infrastructure Pvt. Ltd. (hereinafter referred to as “the company”) is a Company duly incorporated under the Companies Act 1956. The Company is registered with the Registrar of Companies having its registered Office at 2 Kalyan Bhuvan, Abu Street, Ramnagar, Sabarmati, Gujrat. The company is engaged in Bululding Construction.
5. Applicant-1 is the Director of the Company. Applicant-2 is the appointed Company Secretory of the Company, whereas applicant-3 is the finance Head of the Company.
6. It transpires from the record that applicant-4 i.e. M/S Manav Infrastructure Pvt. Ltd. i.e. the company invited tenders for construction of Agora City Center comprising of ( 2 Basement + Ground Floor +Superstructure) and measuring an area of 17,00,000 Sq. Ft. at a site situate at Mangal Pandy Road, Ratri Bazar, Sama Vadodra in the year 2017.
6. The bid offered by the complainant company i.e. M/s Ascent Construction Private Ltd. was accepted. After due deliberation, the parties aggreed to enter into a contract. Accordingly, the tendered document (contract) was executed on 25.8.2017.
7. However, subsequently dispute arose between the parties. Ultimately, the contract was terminated vide notice dated 18.05.2021.
8. In spite of the fact that the contract stood terminated, three cheques dated 17.05.2021 valued at Rs.6,39,458/- dated-31.05.2021 valued at Rs. 6,39,858/- and dated 19.05.2021 valued at Rs.6,39,858/- were issued under the signatures of applicant-1 in favour of complainant/opposite party-2.
9. Subsequent to above, a letter dated 17.05.2021 was issued by applicant-1- Binita Shah Ashishbhai to the Branch Manager, Alkapuri Branch of HDFC Bank requesting therein that payment of aforementioned cheques be stopped.
10. It is the case of applicants- that subsequently, an email dated 18.05.2021 was also sent by applicant-3 Mr. Milan Ratnani to complainant/opposite party-2 and his Bank with the request that aforesaid cheques be not encashed on account of the request for stop payment by applicants- 1 and 3.
11. In view of above, the disputed cheques were not encashed on account of above i.e. the request for stop payment made by drawer. Accordingly, Return Memo dated 31.05.2021 was issued by the concerned Bank with the remark that cheque not encashed on account of stop payment.
12. As the disputed cheques were not enchashed, the complainant/opposite party-2 sent a legal notice dated 16.06.2021 through his counsel to the applicants.
13. Aforesaid notice was replied by applicants through their counsel by means of a counter notice dated 24.06.2021. However, inspite of above, the amount payable under the disputed cheque were not paid.
14. Ultimately after expiry of the statutory period, the complainant/opposite party-2 filed a complaint dated 04.08.2021 in the Court of Chief Judicial Magistrate, Court No. 11, Gautam Buddh Nagar. After undertking the necessary exercise, Court below summoned the applicants vide summoning order dated 20.06.2022.
15. Thus feeling aggrieved by the Summoning Order dated 22.06.2022 as well as entire proceedings of aforementioned complaint case, applicants have now approached this court by means present application under Section 482 Cr.P.C.
16. Mr. Anurag Khanna, the learned Senior Counsel for applicants, in support of this applicati
The main legal point established in the judgment is that compliance with legal provisions, including the conduct of an inquiry as required under Section 202(1) Cr.P.C., and the applicability of Secti....
A director's personal endorsement of a cheque can implicate a company in liability under the NI Act, reinforcing the scrutiny necessary in summoning orders.
For maintaining a prosecution under Section 138 of the Negotiable Instruments Act, arraigning of the company as an accused is imperative. The person in charge of the company cannot be held liable if ....
The burden to prove that a cheque was not issued in discharge of any debt or liability lies on the issuer during the trial, and the presumption in favor of the holder of the cheque can be rebutted by....
The main legal point established in the judgment is the requirement of a legally enforceable debt or liability for an offence under Section 138 of the N.I. Act, the strict construction of penal provi....
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