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IN THE HIGH COURT OF ALLAHABAD
Vikas Budhwar, J.
Mohnish Jain and another – Applicants
Versus
State of U.P. and another - Opposite Parties
APPLICATION U/S 528 BNSS No. - 30850 of 2024(Leading), APPLICATION U/S 528 BNSS No. - 30822 of 2024
Decided On : 27-05-2025
| Table of Content |
|---|
| 1. the court discusses the procedural aspects of the applications. (Para 1 , 2) |
| 2. factual background regarding the dishonor of cheques and subsequent legal actions. (Para 3 , 4 , 5) |
| 3. interim orders and proceedings related to the applications. (Para 6 , 7) |
| 4. arguments presented by the applicants regarding the maintainability of the complaint. (Para 8 , 9 , 10) |
| 5. arguments presented by the opposite party regarding the authority to file the complaint. (Para 11 , 12) |
| 6. court's observations on the legal principles governing partnership and authority. (Para 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 24 , 25 , 26 , 27) |
| 7. analysis of the legal implications of the complaint under the negotiable instruments act. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55) |
| 8. the court's ruling regarding the applications and the implications of the ibc. (Para 56 , 57 , 58) |
| 9. final observations and conclusion of the court. (Para 59 , 60 , 61) |
| 10. conclusion and dismissal of the applications. (Para 62) |
JUDGMENT :
Vikas Budhwar, J.
1. Impugned in the present proceedings by way of leading application preferred by Mohnish Jain, Pawan Kumar Jain and connected application by Siddharth Jain is an order dated 21.07.2023 passed by the Court of Additional Civil Judge (J.D.), Court No. 4, Agra in Complaint Case No 18168 of 2023, whereby the applicants in both the applications have been summoned under Section 138 of the Negotiable Instrument Act, 1881 and the order dated 24.07.2024 passed by the Court of Additional Sessions Judge, Court No. 17, Agra in Criminal Revision Case No. 628 of 2023 (Pawan Kumar Jain and others Vs. State of U.P.) whereby the revision preferred by the applicants herein in leading application against the summoning order dated 21.07.2023 has been dismissed.
2. A joint statement has been made by the learned counsel for the parties that they do not propose to file any additional affidavit and the application be decided on the basis of the documents available on record. With the consent of the parties, the applications are being decided at the fresh stage.
3. Broadly, the facts are that the opposite party no. 2, Rohit Agarwal, claims himself to be a partner of a firm by the name of M/s. Metal Products which is engaged in manufacturing and supplying of Bare/Insulated Copper and Aluminium Wire. According to the opposite party no. 2, it had supplied bare/insulated copper and Aluminium wire to M/s. Kotsons Pvt. Ltd. which is a company registered under the Companies Act. Allegation is that for the discharge of liability which had accrued on account of purchase of the bare/aluminium wire, four cheques bearing no. 598081, 598082, 598083 and 598084 dated 01.12.2022 of Rs. 50,00,000/- each was drawn on behalf of the company Kotsons Pvt. Ltd. by one of the Director, Siddharth Jain who is the applicant in the connected application. The said cheques are stated to have been presented in the bank of the drawee/holder on 22.02.2023 which came to be dishonored on 23.02.2023 on account of insufficient funds. Statutory notices were issued to the company, Kotsons Pvt. Ltd. as well as the Director namely Mohnish Jain, Pawan Kumar Jain (applicants in the leading application) and Siddharth Jain (the applicant in the connected application) on 20.03.2023 which is stated to have been served upon the company as well as the applicants in both the applications who are Directors on 22.03.2023. Despite service of the statutory notice, when the said payments were not made so on 21.04.2023, a complaint under Section 138 of the NI Act came to be filed. The same led to issuance of the order dated 21.07.2023 passed by Additional Civil Judge (J.D.), Court No. 4, Agra in Complaint Case No. 18163 of 2023.
4. Assailing the summoning order dated 21.07.2023 passed by the Court of Additional Civil Judge (J.D.), Court No. 4, Agra, revision came to be filed by the applicants i
A partner of a firm can file a complaint under Section 138 of the Negotiable Instruments Act if authorized, as they act as agents of the firm, and the moratorium under IBC does not protect directors ....
The imposition of moratorium under Sec. 14 of the I.B. Code applies to the corporate debtor, while the natural persons mentioned in Sec. 141 of the N.I. Act continue to be statutorily liable.
Directors cannot be prosecuted under Section 138 of the NI Act without the company being joined as an accused, as vicarious liability requires the company to be a party to the proceedings.
IBC moratorium applies solely to corporate debtor, not shielding directors from Section 138 NI Act criminal proceedings, which continue independently despite company liquidation.
The interim moratorium under the Insolvency and Bankruptcy Code does not protect individuals from criminal liability for dishonouring cheques under the Negotiable Instruments Act.
(1) Dishonour of cheque – Offence by company – For fastening criminal liability, there is no legal requirement for complainant to show that accused partner of firm was aware about each and every tran....
The moratorium provisions under Section 14 IBC apply only to the corporate debtor, and natural persons continue to be liable under the NI Act, and personal insolvency proceedings do not absolve natur....
Prosecution against a partner of a partnership firm under Section 138 of the N.I. Act is not maintainable without including the firm as an accused, affirming the principle of vicarious liability.
(1) Dishonour of cheque – Offence by company – By operation of provisions of IBC, criminal prosecution initiated against the natural persons under Section 138 read with 141 of NI Act read with Sectio....
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