The High Court of Delhi on Wednesday ruled that a trial court’s order refusing to summon a company as an accused in a complaint under Section 138 of the Negotiable Instruments Act, 1881, is not a purely “interlocutory order” and can be challenged by way of a criminal revision petition.
Justice Swarana Kanta Sharma, while deciding the preliminary question of maintainability in a criminal revision petition, held that such an order substantially affects the complainant’s right to prosecute and forecloses proceedings against the principal offender. The Court, therefore, held the revision petition to be maintainable and issued notice to the respondents.
Background of the Case
The present criminal revision petition (CRL.REV.P. 1366/2024) was filed by petitioner Sujata Panda, assailing an order dated 12.08.2024 passed by the learned Metropolitan Magistrate, Patiala House Courts, New Delhi.
The case originates from a complaint (Complaint Case No. 6155 of 2019) filed by Ms. Panda under Section 138 of the NI Act. According to the petition, Ms. Panda had invested ₹4,30,000/- in a company named Swag Media Production Pvt. Ltd. based on representations of high returns. After initial part payments of interest, the company allegedly defaulted on further payments and the repayment of the principal.
It is stated that the company subsequently issued Cheque No. 000016 dated 17.12.2018 for a sum of ₹4,76,967/-, drawn on its account. When presented for encashment, the cheque was returned dishonoured with the remarks “insufficient funds.”
The petitioner issued a legal demand notice to the directors of the accused company. Upon their failure to pay, she filed the complaint. Initially, only the directors were arrayed as accused.
On 05.01.2024, the learned Magistrate noted that the company itself, Swag Media Pvt. Ltd., appeared to have committed the offence but had not been made a party. The court suggested considering the applicability of Section 319 of the Code of Criminal Procedure (Cr.P.C.) to implead the company.
Subsequently, the petitioner filed an amended memo of parties to implead the company. An objection was raised by the accused, Udit Oberoi, contending that the complaint was not maintainable against the company as no separate statutory notice under Section 138 of the NI Act had been served upon it.
The Trial Court’s Impugned Order
The learned Magistrate, vide the impugned order dated 12.08.2024, declined to summon the company. The Magistrate held that since no legal demand notice was addressed or served upon the company, “one of the essential ingredients of the offence under Section 138 of the NI Act remained unfulfilled.”
The trial court further reasoned that the limitation prescribed under Section 142 of the NI Act for taking cognizance had expired. Relying on the judgments in Himanshu Vs. B. Shivamurthy & Anr. and Pawan Kumar Goel vs. State of U.P. & Another, the Magistrate concluded that Section 319 Cr.P.C. was not attracted and declined to make the company a party.
Petitioner’s Arguments on Maintainability
Before the High Court, the learned counsel for the petitioner, Mr. Yajur Bhalla and Mr. Ashutosh Tiwari, argued that the revision petition was maintainable. They contended that the Magistrate’s order was not interlocutory, “as it conclusively determines the petitioner’s right to prosecute the accused company.” It was argued that the order affects the substantive rights and liabilities of the parties, thus Section 397 of the Cr.P.C. could be invoked.
High Court’s Analysis and Decision
The High Court, in its order, first addressed the question of whether the petition was barred by Section 397(2) of the Cr.P.C., which prohibits revision petitions against “interlocutory orders.”
Dr. Justice Swarana Kanta Sharma noted that the term “interlocutory order” is not defined in the Code. The Court referred to the Supreme Court’s decision in Amar Nath & Ors. v. State of Haryana (1977) 4 SCC 137, which clarified that the term is used in a “restricted sense” and “merely denotes orders of a purely interim or temporary nature which do not decide or touch the important rights or liabilities of the parties.” The Supreme Court had held, “An order which substantially affects the rights of the accused or the prosecution… cannot be said to be interlocutory…”
The High Court also cited Madhu Limaye v. State of Maharashtra (1977) 4 SCC 551, which established the concept of “intermediate orders” that are not final but also not purely interlocutory, and which substantially affect the rights of the parties.
Applying these principles, the High Court observed that the Magistrate’s order rested on two specific findings: the absence of a legal notice to the company and the expiry of the limitation period. The Court held: “The effect of such findings is that the petitioner’s right to prosecute the company, which is the drawer of the cheque and principal offender under Section 138 of the NI Act, stands foreclosed.”
The judgment further states, “Thus, the order directly and finally determines the complainant’s right to maintain proceedings against one of the principal accused persons, thereby substantially affecting the course and scope of the trial.”
The Court found the present case to be squarely covered by the rationale in Mohit v. State of U.P. (2013) 7 SCC 789, where the Supreme Court held that an order rejecting an application under Section 319 Cr.P.C. is not interlocutory because it “decides the rights and liabilities of the appellants in respect of their involvement in the case.”
Concluding its analysis, the High Court held that the trial court’s order “is not merely procedural or in aid of the progress of trial, but one that adjudicates and determines the substantive rights of the complainant as against the principal accused.”
Finding that the impugned order “cannot be treated as a purely interlocutory order within the meaning of Section 397(2) Cr.P.C.,” the Court ruled that the revision petition is maintainable.
Accordingly, the High Court admitted the petition and issued notice to the respondents, with the matter returnable on 19.02.2026.
