Delhi High Court Allows Revision Petition on Impleading Accused Company in Cheque Bounce Case

Court rules that refusal to summon company in Section 138 NI Act complaint substantially affects complainant's prosecution rights, not merely interlocutory.

In a significant ruling, the Delhi High Court has allowed a revision petition filed by Sujata Panda, challenging an order by the Metropolitan Magistrate that refused to implead Swag Media Production Pvt. Ltd. as an accused in a cheque bounce case. The High Court determined that the order, which bars the complainant from proceeding against the company, substantially affects her rights and cannot be deemed interlocutory, thus permitting the revision petition under Section 397 of the Criminal Procedure Code (CrPC).

The case originated when Panda invested Rs. 4,30,000 in Swag Media Production Pvt. Ltd., based on assurances from its directors. However, the company defaulted on its payments, leading Panda to file a complaint under Section 138 of the Negotiable Instruments Act (NI Act) after a cheque issued by the company bounced due to insufficient funds.

Initially, the complaint named only the directors as accused, and an attempt to include the company as an accused was denied by the Magistrate on the grounds that no legal demand notice was served to the company, a mandatory requirement under Section 138 of the NI Act. Furthermore, the Magistrate cited the expiration of the limitation period under Section 142 of the NI Act as a barrier.

Panda's revision petition argued that the Magistrate's order effectively decided her right to prosecute the company, thereby impacting her substantive rights. The High Court concurred, referencing Supreme Court precedents, which delineate that orders affecting significant rights or liabilities are not purely interlocutory.

The High Court's decision underscores the balance between procedural compliance and substantive justice, emphasizing that procedural lapses should not unduly hinder the prosecution of principal offenders in cheque bounce cases. This ruling enables Panda to pursue legal action against Swag Media Production Pvt. Ltd., potentially holding the company accountable for the financial discrepancies.

Bottom Line:

Revisional jurisdiction under Section 397 of Cr.P.C. can be exercised against orders that substantially affect the rights or liabilities of the parties, and are not purely interlocutory in nature.

Statutory provision(s): Section 138, Negotiable Instruments Act, 1881; Section 319, Section 397, Criminal Procedure Code, 1973; Section 142, Negotiable Instruments Act, 1881.

Sujata Panda v. Udit Oberoi, (Delhi) : Law Finder Doc Id # 2802852