Allahabad High Court Quashes Summoning Order in Rs. 10 Crore Cheque Dishonor Case, Observes ‘Prima Facie Signatures Differ – Remands Matter for Fresh Adjudication”

In a significant judgement, the Allahabad High Court, presided over by Hon’ble Justice Shamim Ahmed, has quashed the summoning order in the Rs. 10 Crore cheque dishonor case involving Mehrab Logistics And Aviation Ltd. The Court observed discrepancies in signatures on the cheques and remanded the matter for fresh adjudication, emphasizing the need for strict interpretation of Section 138 of the Negotiable Instruments Act.

The primary legal point in this judgement revolves around the application of Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonor of cheques due to insufficiency of funds or the amount exceeding the arrangement with the bank. The case also highlighted the distinction between civil wrongs and criminal offences in the context of cheque dishonor.

Mehrab Logistics and its Managing Director were accused of issuing two dishonored cheques worth Rs. 5 Crores each, under allegations of fraudulent dealings in a hotel sale transaction. The complainant alleged that the cheques were issued as a fee for services rendered in a Memorandum of Understanding (MoU). The applicants contended that the cheques were stolen and presented with forged signatures.

The Court thoroughly assessed the discrepancies in cheque transactions, including the allegations of lost cheques and forged signatures. Justice Ahmed observed significant differences in signatures on the cheques and the sale deed. A forensic report supported the applicants’ claim of signature mismatch.

The Court emphasized the necessity of a legally enforceable debt or liability for an offense under Section 138 of the N.I. Act. It was observed that the present case predominantly constituted a civil wrong, lacking ingredients for a criminal offense under the Act. The Court also noted the trial court’s failure to properly assess evidence while issuing the summoning order.

The High Court set aside the summoning order and entire proceeding, directing the trial court to pass a fresh order within four months, considering the Supreme Court’s judgments and observations made.

Date of Decision: 13.02.2024

Mehrab Logistics And Aviation Ltd. vs State Of U.P.