RAJIV GUPTA Vs. STATE

JUDGEMENT

(1.) The common question that arises in these petitions filed under Section 482 Cr.P.C., is whether a company and its Director can be proceeded against for havingcommitted an offence under Section 138 of the Negotiable Instruments Act (for short'the Act') after the expiry of the period of payment of the cheque amount beforepassing of the order of winding up under Section 433 (e) and (f) of the CompaniesAct. Since the relevant facts involved in all the cases are similar and a commonquestion of law arises in all the cases, they were heard together and they are beingdisposed of by this order.

(2.) It is sufficient to set out the facts from one of these petitions in this batch. Facts inCri. M. (M) No. 3444/99 are the following: M/s. Sakura Seimitsu (India) Ltd. is aLimited Company incorporated under the Indian Companies Act. The petitioner wasthe Managing Director of the said company. Mr. M.L.Gupta, Chairman of the saidcompany issued the following post-dated cheques in favour of the respondent No. 2. <FRM>JUDGEMENT_802_AD(DEL)5_2000Html1.htm</FRM>

(3.) These cheques when presented for encashment were dishonoured by thedrawee bank on the ground of insufficiency of amount in the account concerned and,the respondent No. 2 issued a notice on 18.10.1997, demanding payment of theamount covered by the aforesaid cheques. As the company failed to make thepayment within 15 days of the receipt of the notice, a complaint under Sections 138/141/142 of the Act read with Section 420 of the Indian Penal Code was filed againstthe Company, its Chairman and the Managing Director. On such complaint beingfiled, the learned Magistrate issued process vide orders dated 17.11.1998. Aggrievedthereby, the petitioner has filed the petition under Section 482 Criminal Procedure Code seekingquashing of the complaint. A petition for winding up of the company was filed on18.3.1997 and the winding up order was passed on 23.11.1998 by the CompanyCourt. The above is the background in which learned counset for the petitionercontended that on the company being wound up by the order of the Company Court, no steps could be taken by the complainant for realisation of the amounts said to bedue to it and, therefore, the criminal proceedings initiated against the drawer companyand its Director is misconceived and should be quashed. He submitted that theexpression "in the case of a winding up by the Court" employed in Section 536(2) ofthe Companies Act does not mean that the said Section is to come into force onlyafter a winding up order is passed. According to him. the said expression must beread in the light of Section 441(2) and, therefore, once a petition for winding up isfiled, Section 536(2) comes into operation and there can be no transfer or dispositionof properties. He submitted that even if any transfer takes place, such transfer wouldbe void. He further submitted that in such a situation the Company and its Directorwould be entitled not to make payment because if such payment is made it would bevoid. He submitted that the Court cannot force a company or its director to make avoid payment or do something, which is not sanctioned or permitted by law. He alsosubmitted that on 23/11/1998. an order of winding up was passed by theCompany Court and an official liquidator was appointed, which bars the companyand its Director from making any payment. According to him, the said bar wouldoperate retrospectively by virtue of Section 441 but the bar would come into existenceonly on the order of winding up being passed or a provisional liquidator beingappointed. He further submitted that the said legal disability prevented the companyand its Director from making payment. He submitted that the offence under Section138 of the Act is deemed to have been committed only if the drawer of the chequefails to make the payment of the money to the holder in due course within 15 days ofthe receipt of the notice as stipulated insection 138 of the Act. If before the period of15 days is over, any circumstance intervenes which makes it impossible to makepayment, then there can be no failure to make payment within the meaning of Section138 of the Act.