Cheque bounce case: Dindoshi Sessions Court sets aside the order of magistrate court

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The Dindoshi Sessions Court has set aside the order of the magistrate court in a cheque bounce case, where the magistrate has issued proceedings against a private firm under Section 138 and 141 of the Negotiable Instruments (NI) Act. The court has also said that the order passed by the magistrate is illegal, and it has also referred to the recent judgement of the Supreme Court, which says that "a cheque cannot be presented for encashment without recording the part payment, and the offence u/s 138 of the N.I. Act would not be attracted if the unendorsed cheque is dishonoured on presentation since the cheque does not represent legally enforceable debt at the time of encashment."

A real estate company, Hubtown, has moved to the Dindoshi Sessions Court against the proceedings issued by the Andheri magistrate in connection with a 7.55 crore cheque bounce complaint filed against them by a private firm, International Assets Reconstruction Company (IARC) Pvt. Ltd. Initially, the complaint was filed by Dena Bank, but later it was taken over by the private firm IARC.

The complaint was filed by IARC against Hubtown limited company and its directors and, alleging that the company obtained the credit from the loan facility of Rs 35.10 from the complainant during the normal course of its banking business. Later, there was an amicable settlement between the complainant and the accused company, and the accused company agreed to pay RS 30.22 crore as a full and final settlement, and a check for RS 7.55 crore was issued by the accused company, but the same was returned due to insufficient funds, and the complaint was filed with the Andheri magistrate after the due procedure under the N.I. Act on June 30, 2018, and the process was issued by the magistrate court in August 2018.

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The accused company, through adv. Sujay Kantawala, moved to the sessions court, saying that "the company has paid the amount of Rs. 1.75 crores as against the installment amount of Rs. 7.55 crores after June 30, 2018, but the complainant filed the complaint for the amount of Rs. 7.50 crores without recording the part payment, whereby the complaint of the complainant is not maintainable and tenable in the eye of the law."

The session court agreed with the arguments of the defence lawyer and stopped the proceedings issued by the magistrate, saying that the order is not legal. "The complainant concealed all these facts and misled the learned trial court, whereby the process was issued against the present applicants and accused, and the order passed by the learned trial court on November 5, 2019 is illegal and incorrect as per the principle and ratio laid down by the Hon'ble Supreme Court in supra." Said A.Z. Khan, additional session judge of Dindoshi Sessions Court, while passing the order on December 22, The order was uploaded to the court's website on December 18.