Supreme Court Stays Section 138 NI Act Cases Instituted By NBFCs In Different States For Loans Availed In Another State

It was put forth by the petitioner that the entire cause of action arose in Hyderabad, however, the cases were filed in Calcutta, Jaipur and Gurugram to harass the petitioners.

The bench while directing to tag the matter with other transfer petitions has further stayed the proceedings pending before different trial courts with respondents- Incred Financial Services Ltd., Poonawalla Fincorp Limited, Shriram City Union Finance Limited, Ugro Capital Limited, Aditya Birla Finance Limited, Indiabulls Housing Finance Limited etc.

In the present case, it was the case of the Firm involved in procurement of Maize that after incurring a major loss due to COVID pandemic, two subsequent requests to consider the Moratorium for the month of September-November-2020 and restructuring of the loan for a period of 12 months were turned down by the financial assistance companies-respondents.

However, all of a sudden, the NBFCs and finance companies, allegedly with malafide intentions, presented cheque and issued a legal notice to the petitioners under Sections 138(b) and 141 of the NI Act. Further just before the pandemic got over, the respondents initiated separate cases, seeking different relief at different forums.

Therefore, it was averred that the Respondent opened the pandora’s box of multifarious proceedings against the Petitioners.

A bench of Justice Prashant Kumar Mishra of the Supreme Court observed in the order, “the learned counsel for the petitioners submits that the subject loan agreement consequent upon which the cheque was issued by the petitioners, was executed at Hyderabad and the respondents have their offices at Hyderabad. The entire cause of action for filing the present complaints under Section 138 of the Negotiable Instruments Act 1881 has accrued at Hyderabad yet the complaint has been submitted before the Court at Calcutta, Jaipur and Gurugram only to harass the petitioners. Issue notice. Tag with Transfer Petition (Crl.) No.26/2024. In the meantime, there shall be stay of further proceedings”.

Advocate Vishal Arun appeared for the petitioner.

In the present matter, through a Transfer Petition under Section 406 of CrPC read with Order XLI of the Supreme Court Rules, 2013 for transferring of a complaint pending before the Court of 11th Metropolitan Magistrate, Calcutta to the Court of Learned 2nd Additional Junior Civil Judge cum 9th Additional Metropolitan Magistrate at Medchal, District Malkajgiri Telangana or any other in the complex of Medchal, District Malkajgiri Telangana.

The petitioners ran a business of procurement of popcorn maize from the open market and also through its sister concern and for that the procured maize is processed, conditioned and made marketable where more than 2000 maize farmer families around the Hyderabad, Telangana are dependent on this said business activities. Respondent is the NBFC provides financial assistance for the business establishments having its registered office at office at Mumbai and branch office at Somajiguda, Hyderabad, Telangana.

It was further submitted that the petitioners were to return all the loan amount which was taken from the Respondent and with the other NBFC’s. That only due to unprecedented covid-19, business of petitioners got stuck in loss and could not return the loan amount in due time.

As per the petitioners, due to the lockdown, the entire business was affected very badly as the theatres, shopping malls & public places were closed for several months. In this process, they had requested for restructuring of the said loan account. However, with hardship, they were trying to re-establish the business. After the first wave of the Pandemic, COVID-19 second wave had taken away the opportunity to rebuild said business and it became even more difficult for the Petitioners.

Appearance: For the Petitioners: Vishal Arun, Adv. Mr. Abhinav Krishna Uppaluri, Adv. Mr. Aman Shukla, Adv. Mr. M. Chandrakanth Reddy, Adv. Mr. Lakkaraju Ashok Kumar, Adv. Ms. Ekta Swarup, Adv. Mr. Sandeep Singh, AOR Mr. Tadimalla Bhaskar Gowtham, Adv. Mr. P. S. P. Suresh, Adv. Mr. Vishal Arun, Adv. Mr. Abhinav Krishna Uppaluri, Adv. Mr. Aman Shukla, Adv. Mr. M. Chandrakanth Reddy, Adv. Mr. Lakkaraju Ashok Kumar, Adv. Ms. Ekta Swarup, Adv. Mr. Sandeep Singh, AOR

Cause Title: Venagro & Ors. v. Incred Financial Services Ltd (Erstwhile Known As Visu Leasing Finance Private Limited)

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