The HC set aside summoning orders against three petitioners in a...

The HC set aside summoning orders against three petitioners in a Section 138 NI Act case involving dishonoured security cheques. The court held that security cheques given to secure future liabilities were validly presented when debt existed, rejecting claims of misuse since the debtor company had provided signed cheques. Crucially, the court found no cause of action existed when the complaint was filed in August 2017, as Corporate Insolvency Resolution Process had commenced in January 2017 with moratorium imposed. The board of directors' powers were suspended under Section 17 IBC and vested in the Resolution Professional, eliminating their managerial authority to authorize repayment. Consequently, no vicarious liability could attach to the directors in the company's absence, and they were entitled to discharge from proceedings.