While dismissing a petition filed by a company in a cheque dishonour case, the Delhi High Court has held that if a cheque is drawn on the personal account of one of the directors in accordance with the Deed of Personal Guarantee whereby the said director had stood guarantee for performance by the petitioner-company of certain obligations, it cannot be inferred that the cheque was not issued in discharge of a debt or liability owed by the petitioner-company.

The High Court was considering a Petition filed under section 482 of the Code of Criminal Procedure 1973 (CrPC) in a case registered under section 138 of the Negotiable Instruments Act, 1881 (NI Act). The petitioner also challenged the order dismissing an application filed by the Official Liquidator of the petitioner company seeking a stay of proceedings.

The Single Bench of Justice Anup Jairam Bhambhani held, “The subject cheque, though admittedly drawn on the personal account of one of the directors-Mr. Subhash Chand Aggarwal, was drawn inter alia in accordance with the Deed of Personal Guarantee dated 31.03.2017, whereby the said director had stood guarantee for performance by the petitioner-company of certain obligations. Therefore, it is not possible to infer, least of all at this stage, that the subject cheque was not issued in discharge of a debt or liability owed by the petitioner-company.”

Advocate Chandra Shekhar Yadav represented the Petitioner, while Advocate Shaswat Awasthi represented the Respondent.

Arguments

As per the petitioner, the Corporate Insolvency Resolution Process (CIRP) was initiated against the petitioner company and its liquidation was ordered. In view of section 33(5) of the Insolvency & Bankruptcy Code, 2016 (IBC), the institution of any suit or other legal proceedings against the company was barred. The cheque that was the basis of the criminal complaint under section 138 of the NI Act, viz., for Rs. 2 crore, was drawn on the personal account of the second Accused and not on the petitioner company’s bank account. It was thus claimed that the company could never have been arrayed as an accused in the criminal complaint.

It was the case of the respondent that, due to continued non-appearance on behalf of the petitioner-company, the Magistrate was constrained to issue bailable warrants against the directors of the company, followed by non-bailable warrants and process was also issued under section 82 of the Cr.P.C. against the directors of the petitioner-company.

Reasoning

On a perusal of the facts of the case, the Bench noted that the petitioner company went under moratorium in CIRP proceedings on January 3, 2020, and thereafter, went into liquidation on February 26, 2021. Therefore, the CIRP proceedings and the liquidation proceedings happened more than about 2 years after the issuance and dishonour of the subject cheque.

The Bench was of the view that the liability of the petitioner-company under section 138 of the NI Act, as may come to be determined in the course of the trial, arose well before the CIRP or liquidation proceedings, and therefore, whether or not that liability would be effaced by subsequent events, would have to be seen in the course of the trial, subject to the provisions of the IBC inter-alia sections 33(5) and 35(1)(k) of that statute.

“Furthermore, testing the summoning order on the anvil of the settled law as per the judicial precedents discussed above, would show that that though the Magistrate is required to consider the averments in the complaint and the material and evidence that comes on record, the Magistrate is not required to give detailed reasons at the stage of issuing summons in proceedings under section 138 of the NI Act”, it stated.

The Bench refrained from interfering with the impugned summoning order. Thus, dismissing the petition, the Bench vacated the stay of proceedings before the Magistrate qua the petitioner-company.

Cause Title: SRK Devbuild Pvt Ltd v. Government of Nct of Delhi & Anr (Neutral Citation:2026:DHC:1710)

Appearance

Petitioner: Advocates Chandra Shekhar Yadav, Astitva Srivastava

Respondent: Advocate Shaswat Awasthi

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Delhi High CourtJustice Anup Jairam Bhambani

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.