NIKHIL CHANNA Vs. STATE

JUDGEMENT

(1.) BY this petition under Section 482 of the Code of Criminal Procedure, 1973 (for short 'cr. P. C), petitioners pray for quashing of the complaint titled, 'ginni Filaments Ltd. Vs. Warldtex Ltd,', under Section 138 of the Negotiable Instruments Act (for short NI Act) and to set aside the order dated 8. 5. 2003 dismissing their application, for recalling the order of summoning. The question raised for consideration is whether in view of the orders passed by the BIFR under SICA, there was any legal impediment for payment of the cheques in question and the accused persons are not liable to be prosecuted for the offence under Section 138/141 of the NI Act ? The parties hereinafter are described as the 'complainant' and the 'accused' persons, as arrayed in the complaint, for the sake of convenience.

(2.) FACTS in brief are as follows. The complainant filed a complaint under sections 138 and 141 of the NI Act, against the petitioners', pleading that the accused Nos. 2 and 3, on behalf of accused No 1-the Company, have been purchasing cotton yarn from the complainant Co. on cash/credit basis from time to time. A sum of Rs. 7,76,773. 39 p was outstanding against the accused Company as on 30. 4. 2000 besides liability of interest. In order to discharge the said liability accused Nos. 2 and 3 as the Managing Director and Director of the accused No. 1-Company issued two cheques for Rs. 2,24,960/- and Rs. 1,89,132/-, both dated 30. 4. 2000 drawn on Global Trust Bank Ltd. , Connaught Circus Branch, new Delhi. These two cheques were presented for encashment on 5. 10. 2000 and the same were dishonoured for 'insufficient funds'! The accused persons did not make payment despite service of legal notice dated 21. 10. 2000. It is pleaded that accused No. 2 as the Managing director and accused No. 3 is Director, of accused No. 1-Company, are in-charge and responsible for the conduct of the business of the Company. After pre-summoning of evidence, accused persons were summoned. The accused persons moved an application or recalling order of summoning inter alia pleadings that accused-Company was declared sick under the Special Provisions of Sick Industrial Companies Act, 1985 (for short 'sica') and subsequently, proceedings for winding up were initiated. It is pleaded that on 31. 3. 2000 Board for Industrial and Financial reconstruction (in short BIFR) under the Act, passed an order under section 22 (A) of SICA, restraining the accused-Company, to dispose any of its property or assets. On recommendation of BIFR vide order dated 8. 5. 2002, the petition for winding up of the company was admitted for hearing. Official Liquidator, was appointed vide orders dated 30. 10. 2002.

(3.) LEARNED counsel for petitioners referring to clause (j) of para 10 (ten) of the BIFR's order dated 31. 3. 2000 argued that the Company was restrained to dispose of its assets and, thus reasons for dishonouring of cheques and non-payment were beyond their control, Therefore, proceedings under Section 138 of the NI Act, are liable to be quashed. Reliance is placed on the Supreme Court decision in Kusum Ingots and Alloys Ltd. Vs. Pennar Peterson Securities Ltd. and Ors. (2000) 2 SCC 745.