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        Companies Law

        2002 (11) TMI 674 - HC - Companies Law

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        Section 138 criminal proceedings remain distinct from civil recovery, while Section 141 responsibility issues may be tested at trial. Proceedings under Section 138 of the Negotiable Instruments Act are independent criminal proceedings and are not barred merely because the complainant may ...
                          Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                              Section 138 criminal proceedings remain distinct from civil recovery, while Section 141 responsibility issues may be tested at trial.

                              Proceedings under Section 138 of the Negotiable Instruments Act are independent criminal proceedings and are not barred merely because the complainant may also pursue civil recovery under Order 37 CPC; the criminal liability under Section 138, including imprisonment, fine, or both, is distinct from civil remedies, so a double jeopardy objection is misconceived. The question whether company officers were in charge of and responsible for the conduct of the company's business under Section 141 was not treated as a ground for quashing at the threshold and was left to be examined at trial, with liberty to seek recall of the summoning order. The quashing petition was therefore not maintainable on the merits urged.




                              Issues: Whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 were liable to be quashed on the ground that the complainant could also pursue recovery under Order 37 of the Code of Civil Procedure, 1908, and whether the petitioners' objection regarding the arraying of company officers as accused required quashing at the threshold.

                              Analysis: Proceedings under Section 138 of the Negotiable Instruments Act, 1881 are independent criminal proceedings. The penal consequence under that provision cannot be equated with a civil recovery action under Order 37 of the Code of Civil Procedure, 1908, because the criminal liability contemplated by Section 138 includes imprisonment, fine, or both. The contention of double jeopardy was therefore misconceived. As to the objection based on Section 141 of the Negotiable Instruments Act, 1881, the question whether particular persons were in charge of and responsible for the conduct of the company's business was not treated as a ground for quashing in these proceedings and was left to be considered at the trial stage, with liberty to seek recall of the summoning order.

                              Conclusion: The quashing petition was not maintainable on the merits urged and the complaint proceedings under Section 138 were allowed to continue. The objection based on Section 141 was left open for consideration before the Trial Court.


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