TaxTMI 
TaxTMI 
2025 (9) TMI 119
X X X X Extracts X X X X
X X X X Extracts X X X X
....hardwaj, Adv. Mr. Nischal Kumar Neeraj, AOR. JUDGMENT PER MANOJ MISRA, J. 1. Leave granted. 2. These seven appeals arise from identical judgment(s) and order(s) of the High Court of Judicature at Bombay (for short the High Court), dated 5.10.2023, passed on separate petitions, under Article 227 of the Constitution of India, impugning revisional court order(s) emanating from separate complaint(s) filed by the appellant against the respondent(s) under Section 138 of the Negotiable Instruments Act, 1881 [N.I. Act]. As common questions of law and fact arise for our consideration, between same set of parties, these appeals were heard together and are being decided by a common order. Factual matrix 3. Appellant is the original complainant who had lodged separate complaints, under Section 138 read with Section 141 of N.I. Act, against L.D. Textile Industries (for short the accused company - first respondent) and four others (other respondents) in respect of dishonour of cheques issued by the accused company. Details of those cheques with reference to corresponding SLP (Crl.) No. and complaint number(s) are given in the table below: Special Leave Petition No. Compla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as imposed on disposal of its assets, it could not have responded to the demand notice. Therefore, proceedings qua them, under Section 138 of N.I. Act, were not sustainable. In support of its plea, the accused relied on a decision of this Court in M/s. Kusum Ingots & Alloys Ltd. vs. M/s. Pennar Peterson Securities Ltd. and others (2000) 2 SCC 745. 7. The learned Magistrate dismissed the application seeking recall of the processes. Against which, the accused filed a revision before the Court of Session. The revisional court allowed the revision and set aside the order of the learned Magistrate thereby discharging the accused of offences punishable under Section 138 read with Sections 141 and 142 of N.I. Act. Aggrieved by orders of the revisional court, appellant filed Criminal Writ Petition Nos. 767, 768, 769, 770, 776, 777 and 779 of 2005 before the High Court of Judicature at Bombay, which came to be dismissed by impugned order(s) dated 5.10.2023. 8. Aggrieved therewith, these appeals have been filed. 9. We have heard Sri Ninad Laud for the appellants and Sri Rishi Bhuta for the respondents. Submissions on behalf of the appellant 10. Learned counsel for the appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her the proceedings under Section 138 of N.I. Act are barred on account of restraint order of BIFR, is a mixed question of law and fact which has to be decided on the facts of each case based on the evidence led by the parties. Therefore, restraint order cannot be used to stifle a legitimate prosecution without giving opportunity to the complainant to lead evidence. Further, the power to recall the summoning order does not exist. Hence, the learned Magistrate's order rejecting the recall application required no interference by the revisional court. In such circumstances, the High Court ought to have corrected the error committed by the revisional court. Submissions on behalf of accused-respondent(s) 12. Per contra, learned counsel for the accused- respondent(s) supported the judgment of the High Court and submitted that the cheques sought to be encashed by the complainant were all post-dated and once the accused company was declared 'SICK' and a restraint order was passed, the complaint proceedings were liable to be quashed and, therefore, order of the revisional court as well as the High Court calls for no interference. Analysis/ Discussion 13. We have considered the subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the date on which those cheques were issued, the question as to whether those cheques were issued for running day-to-day operations of the company is an issue, which would have to be addressed on the basis of evidence led in trial. 19. The decision of this Court in Kusum Ingots (supra) does not propound a complete bar on proceedings against a "SICK" company under Section 138 of N.I. Act. Paragraphs 18, 19 and 20 of Kusum Ingots are relevant, and are reproduced below: "18. In our considered view section 22 SICA does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence under section 138 of the NI Act against a company or its Directors. The section as we read it only creates an embargo against disposal of assets of the company for recovery of its debts. The purpose of such an embargo is to preserve the assets of the company from being attached or sold for realisation of dues of the creditors. The section does not bar payment of money by the company or its directors to other persons for satisfaction of their legally enforceable dues. 19. The question that remains to be considered is whether section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any good reason for accepting the contentions raised by the learned counsel for the appellants in favour of the prayer for quashing the criminal proceedings or for keeping the proceedings in abeyance. It will be open to the appellants to place relevant materials in this regard before the learned Magistrate before whom the cases are pending and the learned Magistrate will examine the matter keeping in mind the discussions made in this judgment. We make it clear that we have not considered the question whether in the facts and circumstances of a particular case Section 138 NI Act is attracted or not, for that is a question to be considered by the Court at the appropriate stage of the case in the light evidence on record. The appeals are disposed of on the terms aforesaid." (Emphasis supplied) 20. A careful reading of the aforesaid extracts from Kusum Ingots (supra) would make it clear that Section 22 of SICA does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence under Section 138 of the N.I. Act against a sick company or its Directors. However, where a direction is issued by BIFR, under Section 22A of SICA, res....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only clearly show that there was an undisputed debt, but would also show that, right from the inception, the appellants in fact had no intention of paying the amount for the purchases made by them. The intention of the appellants can be gathered by their subsequent acts, conduct and behaviour of taking a shelter under the provisions of SICA. Hence, the appellants are not entitled to any indulgence of this court under its extraordinary jurisdiction under Article 136 of the Constitution. The appellants had lost their total credibility because of their conduct. When the appellant company was declared sick, then without disclosing this fact the appellants ought not to have made huge purchases from the respondent company. Ultimately, the appellant company did not pay for the purchases. This clearly indicates that the appellants had no intention of making payment of the purchases made by it." 22. Legal principles deducible from the decisions above, inter alia, are, (a) there is no embargo on filing a complaint under Section 138 of N.I. Act against a 'SICK' company; (b) even if there is a restraint order under Section 22A of SICA, the nature of the restraint order and the facts of tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof (and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company) shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. (2) Where the management of the sick industrial company is taken over or changed (in pursuance of any scheme sanctioned under section 18), notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or in the memor....