An individual cannot be prosecuted under Section 138 of the NI Act if they did not issue the cheque drawn on their account. Liability regulations do not extend to directors not involved with the cheque's issuance.

JUDGMENT

1. The respondent No. 1/complainant has filed a complaint under section 138 Negotiable Instrument Act (for short „the NI Act‟) against the petitioner as well respondent Nos. 2 and 3, which is pending adjudication before the court of Special Excise Mobile Magistrate, Jammu (hereinafter to be referred as „the trial court‟). In the complaint, it is stated by the respondent No. 1 that respondent No. 2 is a company, involved in the business of event management whereas respondent No. 3 and the petitioner are the directors of respondent No. 2-company. The respondent No.1 and the petitioner & the respondent No. 3 are known to each other for the past many years and in the month of August 2018, the petitioner approached the respondent No. 1 on behalf of respondent Nos. 2 and 3 for establishing flea market in various malls of National Capital Territory (NCT) of Delhi and Noida and requested a friendly loan for an amount of Rs. 9,50,000/- for purpose of paying an advance rent for opening flea market in Greater India Place Mall, Noida. As the respondent No. 1/complainant knew the petitioner for the last many years therefore, the respondent No. 1-complainant agreed to pay the said amount to them.

2. In the year, 2019, the petitioner and the respondent No. 3 again approached the complainant and sought an additional loan of Rs. 2,00,000/- which was also provided to them. Similarly, on the request of petitioner and respondent No. 3, an additional loan amount of Rs. 5,00,000/- for the survival of respondent No. 2-company, was also provided to the petitioner in presence of respondent No. 3.

3. Further, in the year, 2021, due to COVID pandemic, the respondent No. 1/complainant suffered financial losses and requested petitioner and respondent No. 3 for the payment of Rs. 16.50 lacs. However, the petitioner and respondent No. 3 sought time to pay the loan amount. Yet again in the month of June 2021, the petitioner and respondent No. 3 requested the respondent No. 1/complainant to pay an amount of Rs. 3.66 lacs as the same was to be deposited as an earnest money for an event tender, as such, the total amount became due was Rs. 20.16 lacs and in order to tender his personal assurance, the respondent No. 3 issued a cheque bearing No. 243538 drawn on Yes Bank, Village, Badshahpur, PO Gurgaon-122001. Respondent No. 1/complainant presented the cheque for encashment before the concerned bank but the same was dishonored. The respondent No.1 therefore, served a legal notice dated 29.09.2021 upon the petitioner and respondent Nos. 2 and 3. Thereafter, as the amount due in lieu of dishonored cheque was not paid, the respondent No. 1 filed the complaint against the petitioner and respondent Nos. 2 and 3 under section 138 of the NI Act.

4. The petitioner has filed the present petition for quashing of the order dated 26.11.2021 passed by the learned trial court, whereby the process has been issued against the petitioner for commission of offence under Section 138 NI Act and respondent Nos. 2 and 3 and also for quashing of the proceedings pending before the trial court, to the extent of the petitioner.

5. It is urged by the petitioner that the petitioner has been falsely implicated in the complaint by the respondent No. 1 as the respondent No. 1was fully aware of the fact that he had ceased to be the Director of the respondent No.2-company with effect from 25.03.2021 and respondent No. 1 deliberately concealed the said fact from the trial court. It is also urged by the petitioner that the cheque has been issued by the respondent No. 3 from his personal account and the