Ajay Gupta Vs Can Bank Factors Limited (Punjab and Haryana High Court)
The Punjab and Haryana High Court considered a petition under Section 482 Cr.P.C. seeking quashing of Criminal Complaint No. 6614 dated 29.09.2015, the summoning order dated 31.05.2016, and all consequential proceedings initiated under Section 138 of the Negotiable Instruments Act, 1881. The complaint had been filed by M/s Can Bank Factors Limited against M/s Supreme Tex Mart Limited and its Directors/persons in charge of its affairs.
According to the complaint, the respondent company had extended a factoring credit facility of ₹5 crore to the accused company. After availing the facility, the accused company allegedly defaulted in repayment, resulting in its account being classified as a Non-Performing Asset. Towards discharge of the outstanding liability, the accused company issued eight cheques of various amounts. Upon presentation within their validity period, all the cheques were dishonoured with the remark “Exceeds Arrangement.” A statutory demand notice dated 21.07.2015 was issued, but payment was not made, leading to the filing of the complaint under Section 138 read with Section 420 IPC. After recording preliminary evidence, the Magistrate summoned the accused to face trial under Section 138 of the Negotiable Instruments Act.
The petitioners contended that the complaint and summoning order had become unsustainable because insolvency proceedings had subsequently been initiated against the company under the Insolvency and Bankruptcy Code, 2016. They submitted that the National Company Law Tribunal admitted a petition under Section 7 of the IBC on 29.09.2017, imposed a moratorium under Section 14, appointed an Interim Resolution Professional, and later, on 08.08.2018, ordered liquidation of the company. According to the petitioners, the Board of Directors ceased to exercise control over the company, all powers vested in the Liquidator, and continuation of proceedings under Section 138 of the Negotiable Instruments Act became impermissible. They further argued that the respondent itself was participating in the insolvency proceedings and had also initiated proceedings under Section 94 of the IBC against the petitioners concerning the same liability. They submitted that parallel continuation of insolvency proceedings and criminal prosecution could result in conflicting decisions and prejudice.
