TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 357
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....E Limited, for an offence under Section 138 read with Section 141 Negotiable Instruments Act, 1881 (hereinafter referred to as the "NI Act"), and also for the quashing of the Summoning Order dated 20.10.2016 of the learned Metropolitan Magistrate, New Delhi and all consequential proceedings emanating therefrom. 2. Briefly stated, the dispute centers around two primary Agreements between the Petitioner/Claimant, International Public School Ltd. & Ors. (IPS Ltd.), and the Respondent/Counter-Claimant, FIITJEE Ltd. & Ors. pertaining to the establishment and development of a school in Bhopal, Madhya Pradesh. 3. A Joint Venture Agreement (JVA) was initially signed on 19.10.2010, between International Public School Ltd. (Petitioner No. 1 in Crl. M.C. 4195/2017) and FIITJEE Foundation for Education, Research & Training (referred to as the 'FIITJEE'). 4. The JVA was for the establishment of a "FIITJEE World School" on approximately 17 acres of land earmarked for an educational Institute at Kaushalpura, near the Kerva Dam in Bhopal. The Agreement stipulated that IPS Ltd. would be responsible for securing all necessary permissions and approvals, including Change of Land Use (CLU). Cl....
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....ty stood against them, and instructed their Bankers to "stop payment" of the Security Cheques. 13. FIITJEE Ltd. then presented the first cheque for Rs. 1 crore on 02.04.2015, and it was dishonoured on 07.04.2015, with the remark "payment stopped by drawer". 14. On 08.04.2015, FIITJEE Ltd. formally recalled the Loan Agreement under Clauses 6 & 7, which stipulated refund of granted loan with 18% interest, if the Project failed and demanded the immediate return of the Rs. 2.5 crores which were already paid. 15. FIITJEE Ltd. subsequently initiated a Criminal Complaint (CC No. 1276/2016) under Section 138 NI Act, before the Ld. MM, Saket Court, New Delhi, regarding the dishonored cheque. 16. The Ld. MM Court took cognizance and directed summons to be issued against IPS Ltd. vide Order dated 20.10.2016. 17. The Petitioner (IPS Ltd.) subsequently filed CRL.M.C. 4195/2017 before this Court for quashing of the criminal proceedings. 18. FIITJEE Ltd., in the meanwhile, presented the second security cheque No. 532244 for Rs. 1.5 crores, which was encashed on 19.04.2016. IPS Ltd. claims this was permitted as an "effort for settlement". 19. IPS Ltd. invoked the Arbitration C....
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....failure to meet its obligations. This claimed loss, which arguably exhausted the Rs. 2.5 crores paid by the Respondent, negates any subsisting liability. 26. It is submitted that the cheque was dishonored due to "payment stopped by drawer," not "insufficiency of funds", which rebuts the statutory presumption under Section 139 of the Negotiable Instruments Act, by showing a valid reason i.e. non-existence of a legally enforceable debt, for the stop payment. 27. It is submitted that the underlying dispute concerning the breach of the Loan Agreement, the interpretation of its clauses, the determination of outstanding liability and the alleged non-fulfillment of reciprocal obligations, is purely civil in nature. 28. It is claimed that the Respondent misused the criminal process under Section 138 NI Act with an ulterior motive to harass the Petitioners and extort money, and the Complaint is a "blatant abuse of process". 29. The Respondent/Complainant allegedly approached the Trial Court with unclean hands by suppressing their Letter dated 26.3.2013, in which they demanded new post-dated Cheques for the months of April and May 2013 for the Rs. 2.5 crores loan, contradicting t....
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.... Mayoor School. 35. The Petitioners caused wrongful loss to the Respondent by unilaterally selling the Mayoor School land for Rs. 9 crores, on 24.03.2015, despite the Loan Agreement creating a first right/charge over the property in favor of the Respondent, until the principal and interest were repaid. The Respondent asserted that the Petitioners thereby, made a huge profit of Rs. 4.25 crores and enriched themselves. 36. The Respondent thus, claims that the matter was not merely a civil dispute, but a criminal offense involving cheating and misappropriation, which required investigation and trial. 37. Regarding the liability of the Directors, FIITJEE maintains that the Complaint contains specific averments that all Directors were in charge of and responsible for the conduct of the business of the Company. The authorized representative, Mr. Ashok Nanda, acted pursuant to a Board Resolution, thereby making the entire Board liable for the transaction and the consequent offence. 38. Thus, the Petitions are liable to be dismissed. Submissions Heard and Record Perused. 39. The dispute hinges on the commercial relationship between the parties, which is governed by two su....
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.... the grant of the Loan Facility of Rs. 10 Crores, the Lender has already granted Rs. 2.50 (Two and Half) crores through: (i) Cheque No. 014425 dated 29th November, 2011 drawn on Kotak Mahindra Bank, M043. A.M. Block Market, Greater Kailash-ll, New Delhi (into Borrower's RTGS A/c No. 50038712344. Allahabad Bank, Misrod, Bhopal) for an amount of Rs. 1 (One) Crore) and (ii) Cheque No. 965512 dated 31st December, 2011 (into Borrower's A/c No. 50038712344, Allahabad Bank, Misrod Bhopal, for an amount of Rs. 1.50 (One and Half) Crore, drawn on Indian Bank, Hauz Khas Branch 106 & 107, Aurobindo Road DDA Commercial Complex, Delhi-1100016. And the Borrower hereby acknowledges the receipt of Rs. 2.50 (Two and Half) Crores and detailed above." 45. From the bare perusal of the expressed terms of the Loan Agreement, it is evident that Rs. 2.5 crores that was paid under the JVC was acknowledged as a part loan payment for the first phase of Rs. 10 crores. 46. As per Clause 6 of the Loan Agreement, if the Project "is delayed or do not happen as per the specifications/satisfaction of the lender or for any reason whatsoever," the loan facility already granted becomes....
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....efore, even if it is accepted that both the parties had together gone to China to purchase the furniture, but that was not a part of execution of the Loan Agreement and therefore, the Petitioners cannot claim that Rs. 1 crore which was given under JVC, got utilized under it. Had it been so, this amount of Rs. 2.5 crores would not have found mention in the second Loan Agreement. Prima facie this contention of the Petitioners that there existed no legally enforceable liability is not tenable. 54. In this context, it is also significant to refer to the Arbitration proceedings which were initiated and an Arbitration Award dated 24.05.2025, was made. 55. The fact that the loan of Rs. 2.5 crores became the subject matter of the second Loan Agreement, stands established by the findings of the learned Arbitral Tribunal, which by the Majority Award held the Petitioner liable to pay the remaining amount along with interest, under the Loan Agreement. 56. It is, therefore, concluded that prima facie it cannot be said that the cheque in dispute, was not issued for a legally enforceable liability and the Complaint under S.138 NI Act, is not liable to be quashed on this ground. II. Li....
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....Ashok Nanda/Accused No. 2 as the Chairman & Managing Director, is that he fraudulently and dishonestly induced the Complainant to release the initial amount. He signed the initial JVA and subsequently the Loan Agreement. He was the key individual making representations throughout the contractual negotiations. Moreover, the ultimate action leading to dishonor of Cheque due to the stop payment instruction, was given to the accused Company and acknowledged by the Chairman/MD. Prima facie, his involvement in the day to day affairs of the Company is writ large from the role in the affairs of the Company. 65. The Apex Court in the case of National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330, laid down certain principles including qua the Managing Director. The same is as under: "... 39. From the above discussion, the following principles emerge: ... (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with...." 66. The same has also been recently recognised by....