The Delhi High Court has quashed the summoning order and the criminal complaints, holding that the cheques were dishonoured with remarks of “ACCOUNT BLOCKED” during winding-up proceedings, and do not satisfy the ingredients of Section 138 of the Negotiable Instruments Act, 1881 (hereinafter “NI Act”). Justice Neena Bansal Krishna held that the once the bank accounts were operating under the Interim Resolution Professional (“IRP”) or liquidator, director cannot be held liable for dishonour of a cheque.

The case arose from a complaint alleging dishonour of the cheque issued by M/s Sumeru Processors Pvt. Ltd., and its directors towards repayment of a friendly loan and rental dues. The three cheques dated September 7, 2020, were returned unpaid with the remark “ACCOUNT BLOCKED”. Subsequently, the Respondents filed a Complaint under Section 138 of the NI Act before the trial court, where the court had issued summons, leading to the invocation of the High Court’s inherent jurisdiction under Section 482 of the CrPC by the Petitioner.

The Court notedthat the Company entered the insolvency process by virtue of the NCLT Order passed in 2019, and all the cheque books and bank operations were handed over to the IRP. Subsequently, on December 3, 2019, the company went into liquidation, and a Liquidator assumed complete control. In light of these circumstances, the court held that any cheque said to have been issued in September 2020 could not be treated as a valid instrument The court noted that cheques dishonoured due to “ACCOUNT BLOCKED” are a direct consequence of the moratorium and liquidation process and not attributable to the Petitioners.“There was no “valid issuance of cheque by the drawer”, and no “dishonour due to insufficiency of funds,as required under Section 138 NI Act”, the Court held.

Referring to earlier precedents including P. Mohanraj v. Shah Brothers Ispat (2021) 6 SCC 258, Ganesh Chandra Bamrana v. Rukmani Gupta (2024:DHC:9923), Rajesh Meena v. State of Haryana CRM-M-14537-2018, and Vishnoo Mittal v. Shakti Trading 2025 SCC OnLine SC 558, the Court reiterated that an offence under Section 138 of the NI Act does not arise where dishonour of cheque results from the bank account being blocked by operation of law.

Accordingly, the High Court quashed all three Complaints along with the summoning Orders.

Appearance:

For the Petitioners: Advocates Nalin Tripathi with Shivansh Pandey.

For the Respondents: Advocate Ankit Tandan.