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Informist, Monday, Jan. 19, 2026

 

NEW DELHI – The Delhi High Court has quashed check bounce proceedings initiated by Kotak Mahindra Bank Ltd. against Future Retail Ltd.'s former directors, Kishore Laxminarayan Biyani, Ravindra Dhariwal and others in 2022. The high court said the former directors were not in charge of Future Retail at that time as the company was admitted into insolvency, and therefore, they did not have any authority to operate its bank accounts and prevent dishonour of the cheques, said the court. 

 

The former directors did not have any control over the bank accounts of Future Retail as the power to operate the same was vested in the insolvency resolution professional of the company in accordance with the provisions of Section 17 of the Insolvency and Bankruptcy Code, 2016, said Justice Vikas Mahajan. Therefore, the former directors could not have been summoned under section 138 of the Negotiable Instruments Act, 1881, and holding them guilty of the alleged offence does not arise, he said.

 

The case has its genesis from Future Retail availing credit facilities from Kotak Mahindra Bank, against which undated cheques were issued to the latter for amounts of INR 500 million and INR 34.84 million. However, when these cheques were presented for encashment, the same were returned unpaid twice with the remark, "Kindly contact drawer/drawee bank and present again". 

 

Consequently, the bank issued a demand notice to Future Retail and its directors, which was received between Jul. 23, 2022 and Jul. 26, 2022. Since no payments were received by the bank in 15 days, it filed a cheque bounce case against the former directors. In 2023, a lower court in Delhi issued summons to Future Retail's former directors in the case. The former directors challenged the summons and proceedings by Kotak Mahindra Bank in the high court. 

 

The former directors said the Mumbai bench of the National Company Law Tribunal on Jul. 20, 2022 had admitted Future Retail into insolvency and an interim resolution professional was appointed to look after the affairs of the company. The petitioners said that during the 15 days and when the cause of action arose to file a cheque bounce complaint, they were not in charge of Future Retail as they had been suspended from their position as directors, and hence it was not possible for them to ensure the payment of the two cheques in compliance with the demand made.

 

At 1304 IST, shares of Kotak Mahindra Bank were up 2.8% at INR 430.00 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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