ORKAY INDUSTRIES LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) IN all these petitions substantial questions of law have been raised with regard to the applicability of the provisions of section 138 to section 142 of the Negotiable Instruments Act, in view of the provisions of section 536(2), 441(2), 442 and 331 of the Companies Act. It is the submission of the petitioners that in view of the bar contained in section 536(2) of the Companies Act, as soon as a winding up petition is filed in the Court, no complaint can be entertained by the criminal Courts for offences under section 138 to section 141 of the Negotiable Instruments Act. Mr.Manohar relies on a Division Bench Judgement of this Court in the case of Tulsidas Jasraj Parekh Vs. Industrial Bank of Western India reported in AIR 1931 Bombay page 2, wherein it is categorically held as under:

(2.) MR .Chinoy, learned Senior Counsel on the other hand submits that there is in fact no bar under section 536(2) of the Companies Act as submitted by the learned counsel for the petitioners. He submits that mere filing of the Company Petition does not prohibit the Company from making dispositions of its assets. For this proposition, Mr.Chinoy relies on (i) 56 Company Cases page 19 (Division Bench, Bombay), (ii) 1963 (2) All E.R. 556, (iii) 17 Company Cases page 87, (iv) 1970 Company Cases 1230, (v) 39 Company Cases 201 and (vi) 90 Company Cases 438.

(3.) AFTER anxiously considering the argument of the learned Counsel, I am of the considered opinion that problems such as the ones presented in these petitions are likely to be raised in a large number of cases. Apart from the provisions of the Companies Act, it also needs to be examined as to whether or not the provisions of the Negotiable Instruments Act can be given precedence over the provisions of the Companies Act. The argument put forward by Mr.Shrikant Bhat, learned Counsel for the Respondents in some of the petitions, is that the provisions of the Negotiable Instruments Act have to take precedence over the provisions of the Companies Act. In support of this submission, he has relied on a single Bench decision of the Kerala High Court in case of K.P. Devsssy Vs. Official Liquidator and another reported in Company Cases (Vol.90) page 438. In this Judgement, it is observed as follows: