SICA stay on recovery proceedings does not bar cheque dishonour prosecution under the Negotiable Instruments Act.

Section 22(1) of SICA does not bar prosecution under section 138 of the Negotiable Instruments Act because that prosecution is penal in nature and is not a suit for recovery of money or enforcement of security. The embargo in SICA applies only to the proceedings specifically listed in the section, and the absence of any express exclusion for cheque dishonour prosecutions supports maintainability. Section 22A also gave no protection because no prohibitory order was operating during the statutory payment period after notice. The complaint was therefore maintainable.

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Issues: Whether the embargo under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends or bars prosecution under section 138 of the Negotiable Instruments Act, 1881 for a cheque dishonour offence completed before the commencement of proceedings under SICA.

Analysis: Section 22(1) of SICA suspends specified proceedings, namely winding-up, execution, distress, appointment of a receiver, and suits for recovery of money or enforcement of security. A criminal prosecution under section 138 of the Negotiable Instruments Act is not a suit for recovery of money and is not directed to enforcement of a security or recovery of the cheque amount, but to penal liability for the completed offence. The scheme and later amendment of SICA do not indicate any legislative intent to exempt sick companies from prosecution under section 138, and the absence of an express exclusion in the NI Act reinforces that view. Section 22A also afforded no assistance because no prohibitory order was in force during the statutory period for payment after notice.

Conclusion: The bar in section 22(1) of SICA does not prevent prosecution under section 138 of the Negotiable Instruments Act where the offence was completed before SICA proceedings commenced; the complaint is maintainable.

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