A cheque issued as security can attract liability under Section 138 of the Negotiable Instruments Act, and a complaint for dishonour is maintainable even without the principal debtor present.

Elder ICIC Health Pvt. Ltd. and others ...Petitioners Versus Glide Chem Pvt. Ltd. and anothert ...Respondents Coram Hon’ble Mr. Justice Rakesh Kainthla, Judge.

Whether approved for reporting?¹ Yes.

For the Petitioners : Mr. Romesh Verma, Senior Advocate, with M/s Tarun Sharma h and Sumit Sharma, Advocates.

For the Respondents : Mr. Karan Singh Kanwar, Advocate, for respondent No.1 Respondent No.2 proceeded ex-parte, vide order dated

30.8.2024.

Rakesh Kainthla, Judge The petitioners have filed the present petition for quashing of the complaint under Section 138 of the Negotiable Instruments Act (in short NI Act) and consequential proceedings arising out of the same pending before the learned Additional

1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

Chief Judicial Magistrate, Court No.1, Paonta Sahib, District Sirmour, H.P. (learned Trial Court). (Parties shall hereinafter be referred to in the same manner as they are arrayed before the learned Trial Court for convenience.)

2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant is a Private Limited Company, which is engaged in the business of manufacturing, importing, exporting and trading of pharmaceutical formulations, diagnostics and speciality chemicals. Accused No.1 is a private limited company, accused No.2 to 4 are the Directors and accused No.5 is the Ex-Director of accused No.1. IND Swift Ltd. purchased the goods from the complainant in terms of tripartite supply agreement dated 14.7.2017 executed between the complainant, IND Swift Ltd. and accused No. 1. Accused No.1 agreed to pay the money to the complainant for the goods supplied by it to IND Swift Ltd. In this manner, the accused stood guarantor for the payment of the goods. IND Swift Ltd. and accused No.1 failed to pay money to the complainant, and the complainant issued a demand notice to accused No.1 asking it to repay the amount of ₹81,52,103.48 along with interest. LYKA Exports Limited also failed to pay the outstanding amount, and the complainant issued a demand notice. Accused Nos. 2 and 5, being Directors of accused No.1, induced the complainant to enter into an MoU to clear all old debts. An MoU dated 1.9.2019 was executed in which old debts were settled, and it was agreed that accuseud No.1 would make the payment of ₹72,08,831/- to the coomplainant against full and final payment of the dues. AccCused No.1 failed to pay the settled amount and paid an amount of ₹15.00 lacs to the complainant. Thus, an amount of ₹66,52,103.48 remained payable on 1.4.2021 towards the goods supplied to IND Swift Limited. An amount of H ₹13,43,630/- also remained payable towards the liability of LYKA Exports Ltd. Two security cheques for ₹58,65,201- and ₹13,43,630/- were delivered to the complainant at the time of the execution of the MoU. It was agreed that dates in the cheques would be kept blank, and if the amount was not paid, the complainant would have the right to fill in the amount and present the cheque. When the accused failed to pay the amount as per the MoU, the complainant filled the dates in the cheques and presented them before the Bank. The cheques were dishonoured with an endorsement ‘accounts closed’. The complainant served notice upon the accused asking them to pay the amount; however, they failed to do so. Hence, a complaint was filed before the learned Trial Court to take action against the accused as per the law.

3. The learned Trial Court found sufÏcient reasons to summon the accused.

4. Be