TaxTMI 
TaxTMI 
2022 (8) TMI 871
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.... under:- a] M/s. Rangara Industries Private Limited (accused No.1) (hereinafter referred "M/s. Rangara") is a company in liquidation. The applicant Nos. 1 and 2 were the Directors of M/s. Rangara. The later owed a certain liability towards M/s. Surajbhan Rajkumar Private Limited (M/s. Surajbhan), a company incorporated under the Companies Act, 1956. Alleging that M/s. Rangara was not in a position to discharge its debt, the complainant instituted a Company Petition No. 207 of 2013 under section 439 of the Companies Act, 1956 for winding up of M/s. Rangara. b] By an order dated 24th November, 2014 the said Company Petition was admitted. Subsequently consent terms were executed in the said Company Petition between M/s. Surajbhan and M/s. Rangara, whereunder M/s. Rangara undertook to deposit an amount of Rs. 1,50,00,000/- with the Prothonotary and Senior Master of this Court. Upon the said deposit, the parties agreed, the claims of M/s. Surajbhan be referred to arbitration by a sole arbitrator. Recording the consent terms and undertakings therein, the Company Petition came to be disposed of by an order dated 30th January, 2015. c] On 27th February, 2015 a joint motion was made b....
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....ember, 2016, respectively. Cheque Nos. 089456, 089457 and 089458 drawn for Rs. 13 lakhs each payable on 15th July, 2016, 15th August, 2016 and 15th September, 2016 respectively are the subject matters of Complaint Case No. 897/SS/2017. g] Post recording of verification of the complainant, process came to be issued in each of the complaints for the offence punishable under section 138 read with 141 of the Act, 1881. 4. The applicants have approached this Court under section 482 of the Code with the assertion that the complaints suffer from the vice of suppressio veri and suggestio falsi. The complainant has not approached the Court with clean hands. The fact that in accordance with the consent terms, executed on 26th February, 2015, consequent to the default M/s. Rangara automatically stood wound up was deliberately suppressed by the complainant. In the circumstances, after M/s. Rangara was ordered to be wound up, there was no cause or occasion for the complainant to present the cheques for encashment. In any event, with the winding up of M/s. Rangara, the company in liquidation and/or the applicants who are Ex-Directors of M/s. Rangara could not have complied with the demand o....
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.... this betrays a clear non application of mind. 10. As regards the last submission which pertains to CC No. 645/ SS/2016, the subject matter of Application No. 589 of 2019, in all fairness to Mr. Pandey, it is necessary to note that the submission is not borne out by the facts. Indeed the verification statement seems to have been recorded on 23rd March, 2016. However, there seems to be an inadvertent mistake in recording the date of the order. This become evident from the record of proceedings (Roznama) tendered by the learned counsel for the respondent No. 3. It shows that the verification statement was recorded on 23rd March, 2016 and on the very day process was ordered to be issued. The alleged irregularity sought to be highlighted seems to be non-existent. 11. Before adverting to the contentious issues, it may be apposite to note few un-controverted facts. Institution of the Company Petition No. 207 of 2013 and the passing of the orders therein are not much in contest. The Company Petition was admitted on 24th November, 2014. Initially, by an order dated 30th January, 2015, upon an undertaking to deposit a sum of Rs. 1,50,00,000/- in this Court and with the consent of t....
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.... respondent shall make payment of the said defaulted installment with in further grace period of 15 days failing which this concession stands withdrawn and the entire dues as claimed in the petition stands admitted and the petition shall stand revived without any further reference to Court, and in that event the petition stands absolute in terms of prayers (a) and (b) of the petition without any further reference to this Court. 13. It appears that on 13th May, 2016 a notice was issued by Official Liquidator that pursuant to the order dated 27th February, 2015 the Official Liquidator attached to High Court came to be appointed as a Liquidator of M/s. Rangara, and took possession of the assets of the said company. 14. Mr. Pandey urged, with a degree of vehemence, that consequent to default on the part of M/s. Rangara, the later part of Clause 4 (extracted above) kicked in and M/s. Rangara stood wound up as the Company Petition stood allowed in terms of prayer clause (a) and (b). After the company stood so wound up, according to Mr. Pandey, the complainant could not have proceeded to present the cheques for encashment and institute the complaints. Secondly, without impleading the Of....
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....46 must be read ejusdem generis with the expression 'suit' and can mean only civil proceedings which have a bearing so far as the winding up is concerned namely realisation of the assets and discharge of liabilities of the company. 20. The learned Judge repelled the contention that the expression 'legal proceedings' would include criminal complaint under section 138 of the Negotiable Instruments Act, 1881. 21. In Suresh K. Jasnani vs. Mrinal Dyeing and Manufacturing Co. Ltd. And Ors.Cri. Revn. Appln. No. 245 of 1997., another learned single Jude of this Court took the view that section 446(1) of the Companies Act applied to the proceedings under section 138 of the Act, 1881 as well. 22. A reference was thus made to a Division Bench in Indorama Synthetics (I) Limited vs. State of Maharashtra 2016 ALL MR (CRI) 3458. The Division Bench considered the following question:- "Whether the expression 'suit or other proceedings' in section 446(1) and the expression 'suit or proceedings' in section 442, under chapter II of part VII of the Companies Act, 1956, include criminal complaints filed under section 138 of the Negotiable Instruments Act, 1881?" 23. The Division Be....
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....inding-up proceedings, or criminal offences where the Director of the Company is presently liable for penal action. (emphasis supplied) 25. In view of the aforesaid enunciation of the legal position, the controversy sought to be raised on behalf of the applicants that the complaints for the offence punishable under section 138 of Negotiable Instruments Act, 1881 sans permission of the Company Court under section 446(1) of the Companies Act, 1956 are not tenable, does not merit countenance. 26. This takes me to a more substantive challenge on behalf of the applicants that with the order of automatic winding up of the company, consequent to the default in accordance with the consent terms, the company could not have been prosecuted for the offence punishable under section 138 of the Act, 1881. To appreciate this challenge, in a proper perspective, a re-visit to the facts becomes necessary, especially the time line. 27. The consent terms were accepted on 27th February, 2015 and the Company Petition stood disposed. The cheques in question were purportedly drawn in accordance with Clause (c) of paragraph 3 of the consent terms (extracted above). All the cheques were drawn for Rs. 13....
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....of the said cheque, a fresh complaint for the offence punishable under section 138 of the Act came to be lodged. In that context, the Supreme Court held that, "since the cheque was issued in terms of the compromise, it did not create a new liability. Since the compromise did not fructify, the same cannot be said to have been issued towards payment of debt." 32. I am afraid the aforesaid pronouncement advances the cause of the applicants. The reason is not far to seek. In the said case, in the first complaint, for the compounding of which the second cheque was drawn, the accused were already convicted and punished. In that context, the Supreme Court observed that the second cheque drawn in terms of the compromise did not create a fresh liability. That does not seem to be the case at hand. It is nobodies case that M/s. Rangara or the applicants discharged the liability for which the Company Petition was filed. 33. To bolster up the submission that the complaint under section 138 of the Act, 1881 cannot be filed after the winding up order of the company, Mr. Pande placed a very strong reliance on the judgment of a learned single Judge of Delhi High Court M.L. Gupta and Another vs. C....
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....ecute a company, which is under liquidation, for an offence punishable under section 138 of the Act. 39. The judgment of the Supreme Court in the case of Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. and Others (2000) 2 Supreme Court Cases 745., rendered in the context of section 22A of the SICA delineates the approach to be adopted by the Court. The observations of the Supreme Court in paragraph 19 are instructive and hence extracted below: 19] The question that remains to be considered is whether section 22 A of SICA affects a criminal case for an offence under section 138 NI Act. In the said section provision is made enabling the Board to make an order in writing to direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets - (a) during the period of preparation or consideration of the scheme under section 18; and (b) during the period beginning with the recording of opinion by the Board for winding up of the company under sub-section (1) of section 20 and up to commencement of the proceedings relating to the winding up before the concerned High Court. This exercise of the power by the Board is conditioned by....
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....he proceedings. 41. At this stage, it would be appropriate to refer to the pronouncement of the Supreme Court in the case of Pankaj Mehra and Another vs. State of Maharashtra and Others (2000) 2 SCC 756. In the said case, the Supreme court was confronted with the following question: "Can a company escape from penal liability under Section 138 of the Negotiable Instruments Act on the premise that a petition for winding up of the company has been presented and was pending during the relevant time ?" 42. The aforesaid question arose as the Division Bench of this Court had held that the company can not avert its liability on the mere ground that winding up petition was presented prior to the company being called upon by a notice to pay the amount of the cheque. The Supreme Court, after an analysis of the previous precedents, enunciated the law as under: 20] It is difficult to lay down that all dispositions of property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed, for, the company may hav....
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....d liabilities due from the company will render the debt unenforceable, cannot be accepted. 26] The alternative approach is this : Even assuming that any disposition of the property made by a company after commencement of the winding up proceedings is null and void, how that is an escape ground from the offence under Section 138 of the NI Act? That section created a statutory offence which on the confluence of the various factors enumerated therein, commencing with the drawing of the cheque and ending with the failure of the drawer of the cheque to pay the amount covered by it within the time stipulated, ripens into a penal liability. 27] The last factor for constituting the offence under Section 138 of the NI Act is formulated in clause c of the proviso to the Section which reads thus : "the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. 28] The words "the drawer of such cheque fails to make the payment" are ostensibly different from saying "the drawer refuses to make payment". Failure to make payment can be due to t....
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....order, cannot be appreciated de hors the facts of the case and especially in such a fashion so as to insulate a company and its ex-directors from the rigors of law where it appears that they profess to take advantage of their own wrong. 46. In the facts of the case, if the submission on behalf of the applicants is readily acceded to, then M/s. Rangara would get a long leash to avoid the liability by taking undue advantage of its own default. M/s. Rangara, it can be fairly assumed, entered into consent terms in the Company Petition to wriggle out of the consequences which would have otherwise ensued in the Company Petition. M/s. Rangara committed default in compliance with the undertakings in the consent terms. Undoubtedly the consent terms provided for the consequence of the winding up petition being allowed in the event of any default. But that stipulation appears to be in the nature of a dyke against the default. In such a situation, to accede to the submission on behalf of the applicants, would amount to playing into the hands of a party who succeeds in avoiding the liability under the original proceedings as well as the one incurred under the consent terms. 47. In a case of t....