Essar Projects had purchased cement from Digvijay Cement for construction of its oil refinery at Vadinar. The six cheques issued by Essar carried signatures of vice-president JK Singh and joint general manager GS Rao.

Essar Project requested Digvijay Cements to postpone the presentation of the cheques in their bank. However, since the validity period of the cheques was nearing the expiry date, Digvijay Cement presented the cheques to its bankers which were, however, returned by Essar's bank.

Digvijay Cement then issued notices to Essar asking them to pay up the money. Since Essar did not makeany payment, Digvijay Cement filed a case in a Jamnagar court under section 138 of the Negotiable Instruments Act seeking recovery of its money and punishment to the officials involved.