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The High Court of Delhi in the matter titled as Farhad Suri & Anr. v. Praveen Choudhary & Ors.1, through its judgment dated 16.12.2025, quashed multiple summoning orders and criminal complaints under Section 138 of the NI Act, after observing that the dishonour of cheques was due to statutory prohibition on payments during the winding up proceedings and appointment of Interim Resolution Professional ("IRP") under the Insolvency and Bankruptcy Code, 2016 ("IBC").
The Court held that the initiation of the Corporate Insolvency Resolution Process ("CIRP") and the consequent imposition of moratorium under Section 14 of the IBC, followed by liquidation, renders the directors divested of all authority and control over the company's bank accounts. The Court further held that dishonour of cheques with the remark "account blocked" is a direct consequence of statutory prohibition and not attributable to insufficiency of funds or any deliberate act of the drawer and therefore does not attract the provisions of Section 138 of the NI Act.
Thus, having observed that the essential ingredients contemplated under Section 138 of the NI Act were absent, the High Court quashed the summoning orders and criminal complaints arising therefrom as being unsustainable in law.
Footnote
1 CRL.M.C. 1347/2021, CRL.M.A. 7877/2021.
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