TaxTMI 
TaxTMI 
2023 (10) TMI 4
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....64 of 2021, 913 of 2021 and 916 of 2021 pending before the learned Additional Chief Judicial Magistrate, Surat under the provisions of Sections 138 of the Negotiable Instruments Act (`NI Act' for short). 2. As the common question of facts and law are involved in these petitions, at the request of learned advocates for the parties, they are heard together and disposed of by this common oral judgment. 3. Rule returnable forthwith. Learned advocate Mr.Hardik Modh waives service of notice of rule for respondent no.1 and learned advocate Mr.Dhawan Jayswal waives service of notice of rule for respondent no.2. 4. The impugned complaints are filed by the complainant for dishonour of the cheques with the endorsement `payment stopped by drawer', which are prayed to be quashed by way of these petitions. 5. Heard learned advocate Mr.Vatsa for the petitioners, learned advocate Mr.Modh for respondent no.1 and learned APP Mr.Jayswal, with for respondent no.2. 5.1 Learned advocate Mr.Vatsa for the petitioners submits that there are no outstanding legally enforceable debt or legal dues or other liabilities except for the supplies made on or before 23.9.2019; that the corporate insolv....
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....court on 16.3.2022. (2) Lalit Kumar Sharma and another V/s State of Uttar Pradesh and another, reported in (2008)5 SCC 638. (3) Sunil Todi and Others V/s State of Gujarat and anr., reported in 2021 SCC Online SC 1174. (4) Indus Airways Pvt.Ltd. And Others V/s Magnum Aviation Private Limited, reported in (2014) 12 SCC 539. (5) Sudhir Kumar Bhalla V/s Jagdish Chand and others, reported in (2008)7 SCC 137. (6) Suryalakshmi Cotton Mills Ltd. V/s Rajvir Industries Limited and others, reported in (2008) 13 SCC 678. 6. Per contra, learned advocate Mr.Modh for the respondent no.1-complainant has submitted that the complainant entered into MOU dated 2.5.2019 since M/s Lakeland Chemicals (India) Ltd., failed to repay advanced which were given towards working capital; that the petitioners were issued in terms of the MOU and since the said company failed to discharge its payent obligation as per the MOU, the respondent deposited the said cheques; that the cheques were issued by the promoters/directors of the company as additional security, in terms of the MOU entered between the parties. He submitted that the legal impediment contained in Section....
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....ank 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 prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless (a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. (b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and (c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or,....
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.... (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: 2 [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;] (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.]. [(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,- (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the 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 hold....
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....ion, quota, concession, clearances or a similar grant or right during the moratorium period. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2-A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances 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....
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....o did not want to take on the liability for any offences committed prior to commencement of CIRP. In one case, JSW Steel hadspecifically sought certain reliefs and concessions, within an annexure to the resolution plan it had submitted for approvalof the Adjudicating Authority. Without relief from imposition of the such liability, the Committee noted that in the long run, potential resolution applicants could be disincentivised from proposing a resolution plan. The Committee was also concerned that resolution plans could be priced lower on an average, even where the corporate debtor did not commit any offence and was not subject to investigation, due to adverse selection by resolution applicants who might be apprehensive that they might be held liable for offences that they have not been able to detect due to information asymmetry. Thus, the threat of liability falling on bona fide persons who acquire the legal entity, could substantially lower the chances of its successful takeover by potential resolution applicants. 17.4. This could have substantially hampered the Code's goal of value maximisation, and lowered recoveries to creditors, including financial institutions who....
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....b-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan. [Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.] (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1), - (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all ....
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.... "designated partner" as defined in clause (j) of Section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an "officer who is in default", as defined in clause (60) of Section 2 of the Companies Act, 2013 (18 of 2013), or was in any manner incharge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. xxx xxx xxx" 11. In the case of P.J.Mohanraj (supra), it is held by the Hon'ble Apex Court in paragraph 77 as under : 77. As far as the Directors/persons in management or control of thecorporate debtor are concerned, a Section 138/141 proceeding against them cannot be initiated or continued without the corporate debtor - see Aneeta Hada (supra). This is because Section 141 of the Negotiable Instruments Act speaks of per....
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.... liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1 :2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(....
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....s who are liable/covered by the two provisos to Section 32A(1) will continue in accordance with law." 13. In view of the above provisions of law and the judgments of the Hon'ble Apex Court, more particularly, the newly added provision of Section 32A of IBC, the corporate debtor can be exonerated from the liability if the company is dissolved, however, the natural person i.e. the partners or directors of the same cannot escape penal liability under the provisions of the NI Act. 14. As per the provisions of Section 138 of the NI Act, if the cheque was dishonoured, statutory notice was issued, the amount is not paid within 15 days thereafter, the cause of action arises and if the complaint is filed within one month from the date of cause of action, the only question before the criminal court is whether the cheque was issued, it was bounced, and despite the service of notice, the amount is not paid. There is no bar contained in any of the provisions of the IBC restraining the complainant to approach the criminal court to seek penal action under Section 138 of the NI Act. The signatory/director cannot take the benefit of discharge obtained by the corporate debtor by operation of l....
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.... an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint; vi) Criminal proceedings ought not to be scuttled at the initial stage; vii) Quashing of a complaint/FIR should be an exception rather than an ordinary rule; viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and one ought not to tread over the other sphere; ix) The functions of the judiciary and the police are complementary, not overlapping; x) Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences; xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice; xii) The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the in....
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....rcive steps to be adopted" and the accused should be relegated to apply for anticipatory bail under Section 438 Cr.P.C. before the competent court. The High Court shall not and as such is not justified in passing the order of not to arrest and/or "no coercive steps" either during the investigation or till the investigation is completed and/or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/disposing of the quashing petition under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India. xvii) Even in a case where the High Court is prima facie of the opinion that an exceptional case is made out for grant of interim stay of further investigation, after considering the broad parameters while exercising the powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India referred to hereinabove, the High Court has to give brief reasons why such an interim order is warranted and/or is required to be passed so that it can demonstrate the application of mind by the Court and the higher forum can consider what was weighed with the High Court while passing such an interim order. xviii) Whenever an interim....