HC Rejects Plea to Quash Summon Order as Disputes Relating to Cheque & Its Dishonour by Director Were Triable Issues

Case Details: Ambika Narang v. Shivam Shubham Fashions (P.) Ltd. - [2023] 152 taxmann.com 672 (HC-Delhi)

Judiciary and Counsel Details

• • Ms Swarana Kanta Sharma, J.
  • Ms Aakansha Nehra & Shalaka Garg, Advs. for the Petitioner.
  • Ms Mansoor Ansari, Adv. for the Respondent.

Facts of the Case

In the instant case, the complainant supplied various types of laces and embroidery items to the accused company and raised bills. An amount of Rs. 35 lakhs was still due for payment by the accused. In order to discharge the part liability, the accused issued a cheque for Rs. 19 lakhs. However, when the complainant presented the said cheque for encashment with its bank, it was returned unpaid vide the memo with remarks, ‘Funds Insufficient’.

As a result, the complainant filed a complaint u/s 138 of the Negotiable Instruments Act, 1881. The Trial Court summoned the accused company and its directors including the petitioner. The petitioner challenged the said order of the Trial Court on the ground that she had resigned from the office of the director of the company vide a resignation letter dated 13-10-2017, with effect from 25-10-2017, i.e. before cheques were even allegedly issued.

It was noted that the certified copy of Form DIR-11 duly filed by the petitioner with the Ministry of Corporate Affairs, prima facie reflected the date of filing a resignation with the MCA as 5-12-2017 which was after the issuance of the cheque in question i.e. on 31-11-2017.

Moreover, after the resignation was forwarded to the company by the petitioner, no Board Meeting took place or no Board Resolution was passed to accept her resignation. Further, in the Company Master Data, the petitioner’s term was shown as beginning 23-8-2012 and continuing till date, while the term of another director started from 7-2-2018.

High Court Held

The High Court observed that considering the proximity of time in the alleged resignation of the petitioner and issuance of the cheque in question and its dishonour, the date of appointment of a new director in the place of the petitioner, the absence of any board resolution to strengthen the case of the petitioner, it could not be concluded that, as to when had petitioner actually resigned and as to whether or not she was involved in the issuance of the cheque.

The High Court held that these were all triable issues, especially in view of the lack of relevant documents and therefore, it was not a fit case to quash the summoning order at the very threshold. Therefore, the instant petition seeking to quash the summoning order was to be dismissed.

List of Cases Referred to

• • S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan [2022] 142 taxmann.com 317/[2023] 175 SCL 242 (SC) (para 8).