TaxTMI 
TaxTMI 
2020 (2) TMI 539
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.... of the first accused Company. The complainant is running Jewellery Shops under the name and style of "Bhima Jewellery" at Nagercoil, as well as at Madurai. The accused approached the complainant for supplying standard gold to them and on the assurance given by the accused, the complainant has paid an advance money to them. But, after receipt of the money, the accused have failed to supply the standard gold and as such, there was an outstanding advance amount of Rs. 2,50,00,000/- [Rupees Two Crores and Fifty Lakhs only] to the Madurai Branch and Rs. 2,50,00,000/- [Rupees Two Crores and Fifty Lakhs only] to Nagercoil Branch. In order to discharge the above liability, the accused issued two post-dated cheques dated 06.05.2015 drawn on Punjab National Bank, Chennai, bearing Cheque Nos.484148 and 484147. Subsequently, the complainant presented the cheques on the instructions given by the accused in Federal Bank, Madurai, on 03.08.2015. The same were returned by the Bank on the ground of "Funds Insufficient". Thereafter, the complainant issued a common statutory legal notice on 14.08.2015 to the accused, calling upon them to pay the amount. Though the accused received the notice, they d....
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....favour of M/s.Bhima Jewellery at Nagercoil. Hence, M/s.Bhima Jewellery, Madurai cannot maintain a complaint against the petitioner, as there is no legally enforceable liability against M/s.Bhima Jewellery Madurai and no cheque has been issued in favour of M/s.Bhima Jewellery Madurai. 6. The learned counsel appearing for the petitioner further submitted that now the first accused company underwent liquidation and insolvency proceedings have been taken against the company by the creditors of the company, hence, under Section 14 of the Insolvency and Bankruptcy Code, 2016, the Magistrate cannot proceed with the complaint, as an Insolvency Resolution Professional has already been appointed by the National Company Law Tribunal. 7. In support of his contention, the learned counsel appearing for the petitioner relied upon the following judgments: (i) Meters and Instruments (P) Ltd. v. Kanchan Mehta [2018(1) SCC 560]. (ii) Ashoke Mal Bafna vs. Upper India Steel Manufacturing & Engineering Co. Ltd. [2018(14) SCC 202]. (iii) Kalanithi Maran v. UOI and another [CDJ 2018 MHC 2663] (iv) National Small Industries Corporation Limited v. Harmeet Singh Paintal & Another [2010 (3) SCC 330....
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....s well as at Madurai, and the cheques have been presented in the account maintained by both Firms at Madurai, and the complaints have been filed at Madurai. That apart, it is not the case of the petitioner that, liability is only in respect of M/s.Bhima Jewellery at Nagercoil, and the cheques have also been issued only to Nagercoil shop and not in respect of Madurai shop. At any rate, these are all matters for evidence. Whether there is any legally enforceable liability against the Madurai Firm, is a matter to be decided during trial and it cannot be decided in a quash petition. It is also contended that merely because the first accused company underwent liquidation and a proceedings has been initiated under Insolvency and Bankruptcy Code, 2016, the complaints cannot be quashed, and, absolutely, there is no material to substantiate the said contention. That apart, even assuming that now a proceedings has been initiated under the Code, it is not a bar to initiate a proceedings for the criminal liability. 10. I have considered the rival submissions and also perused the records carefully. 11. The primordial contention of the petitioner is that the complainant Firm is an unregistere....
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....ng Partners. The relevant portion of Clause 13 of the partnership deed executed on 01.04.2006 relating to M/s.Bhima Jewellery at Nagercoil, reads as follows: "The party of the First Part viz., Sri.B.Govindan and party of the Third Part viz., Sri Sudhir Kapoor shall be the Managing Partners and as such, they shall have the following powers: (a) to sign and/or verify plaints and/or application to be presented before the appropriate Courts, Tribunal or other Public Authorities. (b) To initiate legal proceedings in Civil and Criminal Courts whenever found necessary to continue and conduct pending cases and execute decrees joining as additional plaintiffs or defendants, in the place of the partners already left, if necessary. (c) To appoint Advocates, Pleaders, Authorised Representatives, Attorneys or Agents and to act in such proceedings. (d) To enter into agreements on behalf of the firm with the Managers for the conduct of the business and also to give them Powers of Attorney." 15. Likewise, Clause 13 of the partnership deed executed on 07.06.2007 relating to M/s.Bhima Jewellery Madurai, reads as follows: "The parties of the First Part viz., Sri.B.Govindan, Second Part v....
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....ction between the parties, and in the absence of any personal knowledge, he cannot depose. In this regard, it is relevant to rely upon the judgment of the Hon'ble Supreme Court in A.C.Narayanan v. State of Maharashtra and another reported in 2014(1) LW 698, wherein, at Paragraph No.26, it has been held as follows: "26....... We clarify the position and answer the questions in the following manner: (i) Filing of complaint petition under Section 138 of N.I. Act through power of attorney is perfectly legal and competent. (ii) The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions. (iii) It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case. (iv) In the light of section 145 of N.I.Act, it is open t....
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....Senior Counsel appearing for the first respondent contended that the petitioner has the liability in respect of both the Firms, only in order to discharge that liability, he has issued two cheques one in favour of the Nagercoil firm and another in favour of Madurai firm. Both the cheques have been presented at Madurai, where the account was maintained by the complainant. But, the cheques have been returned on the ground of "funds insufficient". The complaints also clearly disclose the outstanding liability against both the Firms. Whether there is any legally enforceable liability, against the Madurai firm, can be decided during trial, that issue cannot be decided at this stage. 21. So far as the liability of the petitioner is concerned, from the perusal of both the complaints, it could be seen that, there is an outstanding advance amount of Rs. 2,50,00,000/- [Rupees Two Crores and Fifty Lakhs only] to the Madurai Branch and also Rs. 2,50,00,000/- [Rupees Two Crores and Fifty Lakhs only] to Nagercoil Branch. In order to discharge those liability, the accused have given two cheques and the cheques have been presented before the bank as per the instructions of the accused and the sam....
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....he complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint. (vii) The person sought to be made liable should be in-charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases." [Emphasis supplied] 24. The learned counsel appearing for the petitioner, relying upon the judgments in Ashoke Mal Bafna vs. Upper India Steel Manufacturing & Engi....
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....r or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor." 28. On a careful reading of the aforesaid provision, it could be seen that, the Adjudicating Authority shall by an order declare moratorium for prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree, or order in any Court of law, tribunal, arbitration panel or other authority. Section 14(1)(a) of the Code precisely restricts its operation only in respect of civil proceedings. The expression 'suit or other proceedings' cannot be interpreted so liberally so as to include the criminal proceedings initiated for an offence under Section 138 of the Negotiable Instruments Act, 1881. The offence under Section 138 no way relates to the institution of proceedings under the Code, and any order passed under Sect....
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..... These words will have to be interpreted ejusdem generis with the words 'suits' used earlier thereto. So interpreted, the word 'proceedings' used therein and even the words 'order' and 'in Court of law' will have to be interpreted as a proceeding arising in the nature of a suit and orders passed in such proceedings and suits. Apart from the fact that the Legislature has not conspicuously used the words 'criminal' as an adjective to the word 'proceedings' and as an adjective to the noun 'Court of law', it must be assumed that the Legislature in its wisdom has consciously omitted to use such adjectives since it must have intended to prohibit only the suits and execution of the judgments and decrees or a proceeding of the like nature. Therefore, applying this principle of interpretation, one cannot put any other interpretation on this provision contained in section 14 of the Code except that it only prohibits a suit or a proceeding of a like nature and does not include any criminal proceeding." 31. In the above circumstances, the proceedings initiated under Section 14 of the Code noway affects the continuation of the criminal p....