High Court

1. Heard Sri Namit Kumar Sharma, learned counsel for the applicants in leading, connected-C1, connected C-2 and connected C-2 applications and Sri Moti Lal, learned A.G.A.

2. The facts of the leading application are that a complaint was lodged by O.P. No.2 against the applicant on 20.11.2023 under Section 138 read with Section 142 of N.I. Act, with an allegation that certain amount of loan was being advanced to the Firm M/s Navyug Industries (partnership firm) and subsequently, said firm became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant, who happened to be the partner of the firm and the Director of the Company in order to discharge the liability had drawn two cheques bearing number "00841" dated 11.10.2023 for an amount of Rs.4,75,000/- and "000842" dated 12.10.2023 for an amount of Rs.4,90,000/- in favour of O.P. No.2, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient" followed by a statutory demand notice dated 30.10.2023 and despite deemed service of the notice upon the applicant when no payment was made, the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

3. Questioning the summoning order dated 15.03.2024, the leading application has been preferred.

4. As regards the connected C-1 application, a complaint was preferred by the O.P. No.2 against the applicant with an allegation that certain advances were being extended to the partnership firm M/s Navyug Industries and thereafter, it became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein, who happened to be the partner of the firm and the Director of the Company in order to discharge the liability had drawn a cheque for an amount of Rs.4,85,000/- bearing number "104022" dated 13.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023, followed by a statutory demand notice dated 30.10.2023 and despite deemed service of the notice upon the applicant when no payment was made, the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

5. Questioning the summoning order, the connected-C1 application has been preferred.

6. In so far as the connected C-2 application is concerned, a complaint stood lodged by the O.P. No.2 against the applicant who happened to the a guarantor / surety with an allegation that with respect to certain amount of loan being advance were being extended to the partnership firm M/s Navyug Industries, which became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein in the capacity of the guarantor / surety had drawn two cheques bearing "000012" dated 09.10.2023 for an amount of Rs.15,50,000/- and another bearing number "000013" for an amount of Rs.4,50,000/- dated 10.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient", followed by a statutory demand notice and the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

7. Questioning the summoning order, the connected C-2 application has been preferred.

8. With respect to the connected C-3 application, a complaint stood preferred by the O.P. No.2 against the applicant who happened to the a guarantor / surety with an allegation that with respect to certain amount of loan being advance was being extended to the partnership firm M/s Navyug Industries, which became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein in the capacity of the guarantor / surety had drawn three cheques bearing "000014" for an amount of Rs.11,00,000/-, dated 14.10.2023 "000015" for an amount of Rs.15,00,000/- dated 16.10.2023 and cheque bearing number "000016" for an amount of Rs.4,75,000/- dated 17.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient", followed by a statutory demand notice and the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 20.01.2025.

9. Questioning the summoning order, the connected-C3 application has been preferred.

10. Learned counsel for the applicants in the applications have sought to argue that firstly, there is no legal enforceable debt or liability so as to attract the provisions of Section 138 of the N.I. Act, as in the complaint so lodged against the applicants there is no detail about the total amount which has been settled between the parties, pursuant whereto the cheques were issued, which came to be dishonoured. Secondly, the proceedings before the NCLT under the IBC Code is itself pending consideration, in which an order came to be passed by the National Company Law Tribunal, Chandigarh Bench on 21.08.2024, whereby now IRP has been appointed and thus, according to him, the proceedings under the N.I. Act cannot be continued. Thirdly, the civil suit has already been instituted by O.P. No.2 against the applicants as well as the Company before the Court of District Judge (Commercial Court), Karkardooma, of District Court (East), which is pending, thus the proceedings under section 138 of the N.I. Act cannot be continued, particularly when already the remedy has been availed under the Common Law. It is contended that in the connected C-2 application, there has been no statement/ affidavit submitted under Section 200 CrPC, and thus, the entire proceedings are bound to fail.

11. Learned A.G.A. on the other hand has submitted that none of the contentions so sought to raised by learned counsel for the applicants is liable to be sustained, particularly when the cheque stood drawn and dishonoured, then the presumption under Section 139 of the N.I. Act would always be in favour of the holder. He further submits that the protection of IBC is only applicable to corporate debtors and not to the applicants, who had drawn the cheques in their individual capacity. Further submission is that mere pendency of a suit would not be a ground to make the summoning order bad as it is always open for the complainant to pursue proceedings which are permissible under law, particularly when there is no prohibition.

12. At this stage, learned counsel for the applicants Sri Namit Kumar Sharma, as per the specific instructions received from his client submits that the applicants shall be raising all questions either legal or factual while contesting the trial and thus liberty be accorded to the applicants to raise all the said questions, which may be directed to be decided in correct perspective.

13. Having heard the submissions so made across the Bar as well as the stand taken by the learned counsel for the applicants as per the instructions received from his client, this Court is not entering into the merits of the summoning order while leaving it open for the applicants to raise all contentions, legal or factual, before the court below while contesting the proceedings and this Court has no reason to disbelieve that the same shall be considered in correct perspective.

14. In view of the above observations, applications stand disposed of. Order Date :- 16.7.2025 N.S.Rathour (Vikas Budhwar, J)

1. Heard Sri Namit Kumar Sharma, learned counsel for the applicants in leading, connected-C1, connected C-2 and connected C-2 applications and Sri Moti Lal, learned A.G.A.

2. The facts of the leading application are that a complaint was lodged by O.P. No.2 against the applicant on 20.11.2023 under Section 138 read with Section 142 of N.I. Act, with an allegation that certain amount of loan was being advanced to the Firm M/s Navyug Industries (partnership firm) and subsequently, said firm became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant, who happened to be the partner of the firm and the Director of the Company in order to discharge the liability had drawn two cheques bearing number "00841" dated 11.10.2023 for an amount of Rs.4,75,000/- and "000842" dated 12.10.2023 for an amount of Rs.4,90,000/- in favour of O.P. No.2, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient" followed by a statutory demand notice dated 30.10.2023 and despite deemed service of the notice upon the applicant when no payment was made, the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

3. Questioning the summoning order dated 15.03.2024, the leading application has been preferred.

4. As regards the connected C-1 application, a complaint was preferred by the O.P. No.2 against the applicant with an allegation that certain advances were being extended to the partnership firm M/s Navyug Industries and thereafter, it became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein, who happened to be the partner of the firm and the Director of the Company in order to discharge the liability had drawn a cheque for an amount of Rs.4,85,000/- bearing number "104022" dated 13.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023, followed by a statutory demand notice dated 30.10.2023 and despite deemed service of the notice upon the applicant when no payment was made, the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

5. Questioning the summoning order, the connected-C1 application has been preferred.

6. In so far as the connected C-2 application is concerned, a complaint stood lodged by the O.P. No.2 against the applicant who happened to the a guarantor / surety with an allegation that with respect to certain amount of loan being advance were being extended to the partnership firm M/s Navyug Industries, which became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein in the capacity of the guarantor / surety had drawn two cheques bearing "000012" dated 09.10.2023 for an amount of Rs.15,50,000/- and another bearing number "000013" for an amount of Rs.4,50,000/- dated 10.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient", followed by a statutory demand notice and the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 15.03.2024.

7. Questioning the summoning order, the connected C-2 application has been preferred.

8. With respect to the connected C-3 application, a complaint stood preferred by the O.P. No.2 against the applicant who happened to the a guarantor / surety with an allegation that with respect to certain amount of loan being advance was being extended to the partnership firm M/s Navyug Industries, which became a Company in the name of Newgen Ecotronics Pvt. Ltd. and the applicant herein in the capacity of the guarantor / surety had drawn three cheques bearing "000014" for an amount of Rs.11,00,000/-, dated 14.10.2023 "000015" for an amount of Rs.15,00,000/- dated 16.10.2023 and cheque bearing number "000016" for an amount of Rs.4,75,000/- dated 17.10.2023, which on presentation in the bank stood dishonoured on 21.10.2023 with the remarks "funds insufficient", followed by a statutory demand notice and the complaint stood preferred under Section 138 read with Section 142 of N.I. Act on 20.11.2023, pursuant whereto the applicant came to be summoned under Section 138 of the N.I. Act on 20.01.2025.

9. Questioning the summoning order, the connected-C3 application has been preferred.

10. Learned counsel for the applicants in the applications have sought to argue that firstly, there is no legal enforceable debt or liability so as to attract the provisions of Section 138 of the N.I. Act, as in the complaint so lodged against the applicants there is no detail about the total amount which has been settled between the parties, pursuant whereto the cheques were issued, which came to be dishonoured. Secondly, the proceedings before the NCLT under the IBC Code is itself pending consideration, in which an order came to be passed by the National Company Law Tribunal, Chandigarh Bench on 21.08.2024, whereby now IRP has been appointed and thus, according to him, the proceedings under the N.I. Act cannot be continued. Thirdly, the civil suit has already been instituted by O.P. No.2 against the applicants as well as the Company before the Court of District Judge (Commercial Court), Karkardooma, of District Court (East), which is pending, thus the proceedings under section 138 of the N.I. Act cannot be continued, particularly when already the remedy has been availed under the Common Law. It is contended that in the connected C-2 application, there has been no statement/ affidavit submitted under Section 200 CrPC, and thus, the entire proceedings are bound to fail.

11. Learned A.G.A. on the other hand has submitted that none of the contentions so sought to raised by learned counsel for the applicants is liable to be sustained, particularly when the cheque stood drawn and dishonoured, then the presumption under Section 139 of the N.I. Act would always be in favour of the holder. He further submits that the protection of IBC is only applicable to corporate debtors and not to the applicants, who had drawn the cheques in their individual capacity. Further submission is that mere pendency of a suit would not be a ground to make the summoning order bad as it is always open for the complainant to pursue proceedings which are permissible under law, particularly when there is no prohibition.

12. At this stage, learned counsel for the applicants Sri Namit Kumar Sharma, as per the specific instructions received from his client submits that the applicants shall be raising all questions either legal or factual while contesting the trial and thus liberty be accorded to the applicants to raise all the said questions, which may be directed to be decided in correct perspective.

13. Having heard the submissions so made across the Bar as well as the stand taken by the learned counsel for the applicants as per the instructions received from his client, this Court is not entering into the merits of the summoning order while leaving it open for the applicants to raise all contentions, legal or factual, before the court below while contesting the proceedings and this Court has no reason to disbelieve that the same shall be considered in correct perspective.

14. In view of the above observations, applications stand disposed of. Order Date :- 16.7.2025 N.S.Rathour (Vikas Budhwar, J)