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2023 (2) TMI 1149
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..... Aquamarine Medical Solutions. Accused no. 1 therein viz. Great Unison Contractors India Private Limited, is a private limited company. Accused no. 2-Senthil Kumar Karmegam (respondent no. 1 in REVN/387/2022 & REVN/389/2022) & accused no. 3-Ambujam are its directors and accused no. 4-Yogesh Badoni (respondent no. 1 in REVN/386/2022 & REVN/388/2022) is an authorized signatory of four cheques bearing nos. 007559, 007564 & 007562 of Rs. 14,56,664/- each and 007563 of Rs. 12,00,000/-, totalling an amount of Rs. 55,69,992/-. 4. It is averred in the complaint that accused nos. 2 to 4 were in charge of affairs of the accused-company. They have active participation in management of the company. They were also responsible for day to day business and operation of the accusedcompany. 5. It is further averred in the complaint that the applicant/complainant was in the business of providing medical services such as medical manning, medical consultancy solutions and topside medical assistance etc. The original accused nos. 2 to 4 approached the applicant/complainant for availing various services like providing qualified doctors, qualified paramedics, topside medical assistance, BLS/ACLS am....
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....ited reported in (2021)6 Supreme Court Cases 258 seals the fate of these revision applications. Learned Advocate would submit that in view of moratorium clamped under Section 14 of the Insolvency and Bankruptcy Code, 2016 (for short "IBC"), the prosecution against Directors and those others responsible to the day to day affairs of the company/firm would continue or be initiated under Section 138 read with Section 141 of NI Act. The observations of Hon'ble Apex Court in paragraphs 101 & 102 of the judgment in the case of P. Mohanraj (supra) have been specifically relied on. 11. Learned Advocate further relied on the judgments of Hon'ble Apex Court in the cases of Nag Leathers Private Limited vs. Dynamic Marketing Partnership represented by its partners and Another reported in (2022)2 Supreme Court Cases 271 and Narinder Garg and Others vs. Kotak Mahindra Bank Limited and Others reported in 2022 SCC OnLine SC 517, to ultimately submit that there is no bar to prosecute natural persons, who could be brought under the dragnet of offence in view of Section 141 of NI Act. He would further submit that what has been submitted by learned Advocate for the respondents if accepted, it would ....
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....s operative cannot be rejected outright." 16. He also relied on the judgment of Delhi High Court in the case of M. L. Gupta and Another vs. Ceat Financial Services Limited reported in 2006 SCC OnLince Del 1448, to submit that the complaint would not be maintainable when the cheque was presented after the company has already been wound up. 17. He further relied on the judgment of Punjab and Haryana High Court in the case of Rajesh Meena vs. State of Haryana and Others reported in 2019 SCC OnLine P&H 6256, wherein it has been observed that - "20. A careful analysis of Section 138 of NI Act reveals that the first and foremost requirement to maintain the complaint under Section 138 of NI Act is that the cheque issued by the account holder must be from the account maintained by account holder with the drawer-Bank for discharge in whole or in part of any debt or other liability. 21. The expression "account maintained by him" as appearing in Section 138 of NI Act carries great significance and meaning. The dictionary meaning of "Maintain" (as contained in Oxford Dictionary) is defined as :- the act of making the state or situation continue. Therefore, the said expr....
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....t, documents and the authorities relied on. 19. It is not in dispute that at the instance of applicant herein, the proceedings under Section 9 of IBC were initiated against the respondent company. It was an Insolvency And Bankruptcy Application No. 1944/2018. A settlement was arrived at between the parties to the said application. A copy of Consent Terms is on record. 20. The respondent/accused company acknowledged/accepted its liability. It had issued four post-dated cheques (subject matter of the complaint) towards repayment of principle sum due + interest on delay in payment. 21. Since the terms of settlement could not be materialized, the cheques were presented for encashment. The cheques returned unpaid for the reason "Drawer's Signature Differ". A short question therefore falls for consideration in these applications is as to whether the prosecution under Section 138 read with 141 of NI Act against the respondents shall continue in the peculiar facts and circumstances of the case. 22. For better appreciation, Section 14 of IBC is reproduced hereinafter :- "14. Moratorium (1) Subject to provisions of sub-sections (2) and (3), on the insolvency com....
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....cumstances as may be specified.] (3) The provisions of sub-section (1) shall not apply to - [(a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; (b) a surety in a contract of guarantee to a corporate debtor.] (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: PROVIDED that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be." 23. Admittedly, another operational creditor initiated/filed proceeding against accused company under Section 9 of IBC vide Application No. 1414/2018. The said application was allowed on 08/01/2019. NCLT, Mumbai Bench vide order dated 08/01/2019 admitted the said application with the following prohib....
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....er to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the Company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted. 56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the Company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the section is of immense significance and,....
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.... 14 IBC would make it impossible for such proceeding to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Sections 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Sections 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act." 25. In the case of Nag Leathers Private Limited (supra), it has been observed by the Hon'ble Apex Court that since no natural person was arrayed as accused, exception carved out in aforementioned case of P. Mohanraj (supra), does not arise in the instant case. While in the case of Narinder Garg (supra), it has been observed by the Hon'ble Apex Court that - "A subsidiary issue was also about the liability of natural persons like a Director of the Company. In paragraph 77 of its judgment, this Court observ....
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....to be understood by considering facts of the case, the points raised for decision and the ruling thereon and no decision can be read as a statute. (24) Precedent - Reliance on decision - Can not be placed without discussing whether it was rendered in same factual and legal background - Judgments of Court - Cannot be construed as statutes - Since judges interpret words of statutes. AIR 2003 SC 2661 (2664) : 2003 AIR SCW 3387 : 2003 ALL LJ 1874." 28. For better appreciation, Sections 138 & 142 of NI Act are reproduced hereinbelow :- "138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejud....
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....he payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated. Explanation.- For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.]." 29. In the judgment in the case of S. P. Mani and Mohan Dairy vs. Dr. Snehalatha Elangovan reported in 2022 SCC OnLine SC 1238, it has been observed by the Hon'ble Apex Court that - "24. Evidently, the gist of Section 138 is that the drawer of the cheque shall be deemed to have committed an offence when the cheque drawn by him is returned unpaid on the prescribed grounds. The conditions precedent and the conditions subsequent to constitute the offence are drawing of a cheque on the account maintained by the drawer with a banker, presentation of the cheque within the prescribed period, making of a demand by the payee by giving a notice in writing within the prescribed period and failure of the drawe....
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.... 141 for being in-charge of and responsible to the company "at the time the offence was committed." It would, therefore, be important to find out the "time when the offence under Section 138 can be said to have been committed by the company. It is common place that an offence means an aggregate of facts or omissions which are punishable by law and, therefore, can consist of several parts, each part being committed at different time and place involving different persons. The provisions of Section 138 would require a series of acts of commission and omission to happen before the offence of, what may be loosely called "dishonour of cheque" can be constituted for the purpose of prosecution and punishment. It is held by the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510, that :- "14. The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence : (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding paymen....