Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A Two-Member Bench comprising of S.J. Mukhopadhaya (Chairperson) and Bansi Lal Bhat (Member-Judicial), JJ. dismissed an appeal filed against the order of National Company Law Tribunal (New Delhi).

NCLT had admitted the application filed by the respondent (operational creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016 and passed order of moratorium. The appellant (promoter of the corporate debtor) submitted that there were cases under Section 138 and 141 of the Negotiable Instruments Act, 1881 pending before the competent court of jurisdiction. The appellant relied on R. Vijayan v. Baby, (2012) 1 SCC 260 for the proposition that proceedings under Section 138 arena of recovery of money. Therefore, according to the appellant, there existed a dispute between the parties and hence the said application could not be admitted.

The Appellate Tribunal was not inclined to accept the submissions of the appellant. It referred to Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407 and was of the opinion that “pendency of the case under Sections 138 and 141, even if accepted as recovery proceeding, cannot be held to be a dispute pending before a court of law.” Therefore, the Appellate Tribunal held that the pendency of the case as aforementioned actually amounted to admission of debt endnote existence of dispute. The appeal was, thus, dismissed. [Sudhi Sachdev v. APPL Industries Ltd., 2018 SCC OnLine NCLAT 775, dated 13-11-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Jayant Nath, J., admitted a petition filed for winding up of respondent company. The petition was filed under Section 433(e) and 434(a) of the Companies Act, 1956.

The petitioner company had business dealings with the respondent company. The respondent was indebted to pay outstanding dues to the petitioner which amounted to Rs 13,58,000. Proceedings under Section 138 of the Negotiable Instruments Act were also pending before the competent court. The respondent took a plea that the claim was time-barred.

The High Court, reading the provision of Section 19 of the Limitation Act into the facts of the present case, rejected the plea of the respondent. The said section provides that if there is a part payment on account of a debt before the expiry of the prescribed period of limitation, a fresh period is to be computed. In the present case, admittedly, there was a part payment by the respondent. Thus, the claim of the petitioner was well within time. The Court noted the fact that there was clearly an outstanding liability, and the respondent failed to raise any bona fide defence for non-payment of the said dues. In such circumstances, the High Court appointed the Official Liquidator attached to the Court as Provisional Liquidator for the respondent company. The petition filed by the petitioner under the Companies Act, 1956 was thus admitted. [Tigers Worldwide (P) Ltd. v. MAL Cargo (P) Ltd.,2018 SCC OnLine Del 10106, dated 17-07-2018]

Case BriefsHigh Courts

Madras High Court: In a Single Judge Bench decision comprising of P. Kalaiyarasan, J., accused was acquitted of the charges under Section 138 of Negotiable Instruments Act, 1881, confirming the decision of the first appellate court.

The brief facts of the case states that the complainant/ appellant had given an amount of Rs. 3, 50,000 to the accused for meeting his family expenses for which the accused had issued a cheque to the complainant. On the deposit of the said cheque it was returned with an endorsement “insufficient funds”. For the same stated contention a legal notice was issued in the name of the accused.

The trial court had convicted the accused under Section 138 of the Negotiable Instruments Act, 1881, which further was reversed in the decision of the first appellate court; therefore, the complainant filed the criminal appeal. The contention of the accused was that the cheque was stolen and the same was misused in the year 2007 with some other cheques contained in a bag.

The Hon’ble High Court, on perusal of the records, in which exhibits were attached in regard to the complaint filed for the lost bag containing the cheques, held it as established that the criminal appeal stands dismissed as no evidence has been recorded against the accused and the decision of the first appellate court was confirmed. [Arul Mari Joseph v. Edward Raj, 2018 SCC OnLine Mad 1322, dated 11-04-2018]

Case BriefsHigh Courts

Allahabad High Court: A Single Judge Bench comprising of Karuna Nand Bajpayee, J. declined to quash the order passed by the Judicial Magistrate summoning the applicant in a case arising under Section 138 of the Negotiable Instruments Act.

The applicant prayed for quashing the summoning order passed by the Magistrate, and all his contentions related to disputed questions of facts. The veracity and credibility of the evidence furnished on behalf of the prosecution was questioned and false implication was alleged.

The Court referred to various decisions of the Supreme Court and observed that

“the law regarding sufficiency of evidence is well settled. The court has to eschew itself from embarking upon a roving enquiry into the last details of the case. It is also not advisable to adjudge whether the case shall ultimately end in conviction or not. Only a prima facie satisfaction of the court about the sufficient ground to proceed in the matter is required.”

The Court held that the submissions made by the appellant calls for adjudication on pure questions of facts, an exercise that has to be extensively undertaken by the trial court. The High Court could not be persuaded to have a pre-trial before the actual trial commences. Further, the material placed on record made out a prima facie case against the applicant. In such a case, the instant application filed under Section 482 of CrPC praying for quashing the summoning order passed by the Magistrate, was dismissed while allowing the applicant to file an application before the trial court for compounding of offence. [Manoj Kumar v. State of U.P., 2018 SCC OnLine All 559, order dated 05-03-2018]

Case BriefsHigh Courts

Karnataka High Court: A Single Judge Bench comprising of K. Somashekar, J., decided a criminal appeal filed under Section 378(4) CrPC, wherein the order of acquittal under Section 138 of Negotiable Instruments Act, passed in favour of the respondent by the trial court was upheld.

The respondent took a loan from the complainant Bank and issued a blank cheque as a security for the said loan. The respondent defaulted in re-payment of the loan and when the bank presented the said cheque for collection, they were returned with the endorsement ‘insufficient funds in the account’. Subsequently, the bank initiated proceedings under Section 138 of NI Act. However, the respondent was acquitted by the trial court holding that there was no liability existing at the time of issuing the cheque. The appellant Bank assailed the order of the trial court.

After evaluating the material on record, the High Court was of the view that there was no illegality committed by the trial court. The Court observed that the said cheque was not issued by the respondent towards a legally recoverable debt; it was only issued as a security for the loan which he had borrowed from the complainant. The Court relied on the Supreme Court decision in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458 wherein it was held that “if on the date of the cheque, liability or debt exists or the amount has become legally enforceable, the section is attracted and not otherwise”. In the facts and circumstances of the instant case, the Court found that at the time of issuance of the blank cheque, there was no legal liability of the respondent to pay any amount to the complainant; it was a security for a loan, the re-payment of which was to arise in future.

Accordingly, the Court dismissed the appeal finding it sans merit. [PCA and RD Bank Ltd. v. Suresh Das,  2018 SCC OnLine Kar 492, dated 27.2.2018]

Case BriefsHigh Courts

Orissa High Court: A petition under Section 482 of CrPC was decided by a Single Judge Bench comprising of S.K. Sahoo, J., wherein it was held that in order to provide a better opportunity to the accused to prove his case, it was necessary to send the documents concerned to handwriting expert for his opinion as prayed for by the petitioners-accused before the Trial Magistrate.

The matter related to Section 138 of Negotiable Instruments Act, 1881. The petitioners were prosecuted under the said section. They filed a petition before the Trial Magistrate to send the cheques in question to a hand writing expert. They denied the filling of details in the cheque although they did not deny their signatures on the same. Petitioners’ case was that they gave the blank cheques in question to the complainant to keep them in safe custody and use them as and when required and directed by the petitioners. However, the complainant misused the said cheques by filling up the blank entries in the cheques. In the said factual scenario as claimed by them, the petitioners prayed to send the cheques to a handwriting expert for comparison of the handwriting on the cheques with the one admitted by the petitioners. However, such prayer of the petitioners was rejected by the Trial Magistrate. Hence, the instant petition was filed.

The High Court perused the record and held that in view of the specific stand taken by the accused during trial, it was necessary in the interest of justice that there should have been a direction for examination of the entries other than the signatures appearing in the cheques with the admitted handwritings of the accused persons as well as the complainant in order to ascertain the truth. The Court also observed that the observation of the learned Magistrate that sending of the exhibits to the handwriting expert would in no way be helpful to the Court for proper adjudication of the dispute was a pre-determination of the issues involved.

Accordingly the order of the Trial Magistrate mentioned above was set aside and he was directed to send the cheques in question for opinion of handwriting expert and proceed with the case in accordance with law after receiving such report. [Survika Distributors (P) Ltd. v. S.R. Retail Zone (P) Ltd., 2018 SCC OnLine Ori 92, dated 05-02-2018]