Winding-up proceedings do not bar cheque dishonour prosecution when non-payment after notice completes the section 138 offence.

Pendency of a winding-up petition does not, by itself, create a legal disability that prevents payment within the statutory notice period under section 138 of the Negotiable Instruments Act, 1881, and a later winding-up order does not defeat the offence once non-payment after notice has occurred. The analysis applies sections 536(2) and 441(2) of the Companies Act, 1956 to state that a cheque is not a disposition of property and that section 138 is completed by failure to pay within the prescribed period after notice. A quashing challenge on that basis is therefore not maintainable. A separate plea that some directors had resigned earlier raised a disputed question of fact and could not be decided in inherent jurisdiction.

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Issues: Whether the pendency of a winding-up petition or a subsequent winding-up order bars criminal prosecution under section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheques issued by a company and its directors.

Analysis: The relevant question was whether section 536(2) of the Companies Act, 1956, read with section 441(2), creates a legal disability that prevents the company from making payment within the statutory notice period under section 138 of the Negotiable Instruments Act, 1881. The winding-up petition had been admitted before the expiry of the notice period, but no winding-up order had been passed during that period. The controlling principle applied was that presentation of a winding-up petition does not by itself render payment legally impossible, and the mere pendency of such proceedings does not nullify the statutory consequence of non-payment after notice. A cheque is not itself a disposition of property, and the offence under section 138 is completed by failure to pay within the prescribed period after notice, not by any later liquidation order. The plea that some directors had resigned earlier raised a disputed question of fact, which was not suitable for determination in proceedings under section 482 of the Code of Criminal Procedure, 1973.

Conclusion: The prosecution under section 138 was not barred by the winding-up proceedings, and the petition for quashing was not maintainable on that ground. The factual plea regarding resignation of directors could not be decided in inherent jurisdiction.

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