Query on section 138 of the negotiable instruments act


Please help me resolving the below query-

  • Company A  ( a Pvt Ltd company ) supplies materials to compnay B ( a Pvt Ltd company )
  • Company B issues a cheque to company A against supply of materials 
  • The cheque is signed by Mr X , one of the directors of Company B . The other 2 directors of company B are Mr Y and Mr Z
  • Before the cheque is deposited , Mr X expires
  • Company A deposits the cheque on due date , the cheque is dishonored on the ground of " Insufficient fund "
  • Company A issues a notice under Section 138 of the Negotiable Instruments Act to  Company B and its other Directors  Mr Y and Mr Z
  • Since Compamy B does not pay against the dishonoured cheque within the stipulated date , Company A files a case against Compnay B under NI Act

The query is as below :

1. Since Mr X had expired , Company A did not include his name in the notice u/s 138 . Is it legally right ?

2. Since Mr X had expired before the cheque was presented for payment , can section 138 be enforced?

 
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Advocate

Filing of the complaint against Company B is quite right.

Other issues are irrelevant, in the facts and circumstances of the case.

Apart from that Company "A" should also simultaneously file a summary suit under Order 37 for recovery of money.  That is a sure way to recover the money.

 

 
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