Vishnoo Mittal vs. M/S Shakti Trading Company
The case between “Vishnoo Mittal and M/S. Shakti Trading Company” deals with the applicability of Cheque Dishonor cases instituted under Section 138 Negotiable Instruments Act, 1881 during the moratorium period imposed by the NCLT due to insolvency proceedings initiated against the accused company. Furthermore, the case also establishes that cheque dishonor alone does not invoke Section 138 of NI Act but the offence arises only when the borrower fails to pay the said amount within 15 days of the issuance of Legal Demand Notice by the complainant.
The Appellant issued eleven cheques to the respondent in the discharge of the contractual obligations among them. The said cheques dishonored on 07.07.2018 ,subsequently, a legal notice was issued to the appellant on 06.08.2018. Meanwhile, a moratorium vide dated 25.07.2018, was imposed upon the accused company and an Insolvency Resolution Professional was also appointed accordingly.
The main contention of the Appellant for the quashing of the criminal complaint under Section 138 NI Act, 1881 was that according to the statutory provisions of the NI Act, 1881, the borrower is liable to pay the money within 15 days after the issuance of the legal notice. In the present case, the borrower received the legal notice on 06.08.2018 thereby the period for repayment is till 21.08.2018-during the moratorium period imposed from 25.07.2018 as mentioned hereinbefore. The Hon’ble Supreme court agreed with the view of the appellant and accordingly allowed the appeal. The court relied upon its own judgement in the case of Jugesh Sehgal v. Shamsher Singh Gogi (2009) 14 SCC 683, wherein it was held that the cause of action in a NI Act, 1881 case, arises only when the amount remains unpaid even after the expiry of fifteen days from the date of receipt of the demand notice.
The judgement serves as a landmark decision in light of the applicability of NI Act proceedings during the moratorium period. The Judgement also ensures that Section 138 of NI Act should not be misused and for proceedings to commence the cooling off period of 15 days must be completed, mere dishonor of cheque is not sufficient for the case to proceed.
JUDGEMENT LINK – https://indiankanoon.org/doc/49366878/