ORKAY INDUSTRIES LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) BY all these petitions the petitioners pray that the proceedings before the Metropolitan Magistrate Courts, under section 138 of the Negotiable Instruments Act, be quashed. In some of these petitions a prayer is also made that undertakings given by the concerned petitioners to those courts, to pay amounts, be also quashed and/or set aside.

(2.) MOST of these petitions have been filed by Directors of two companies viz. Orkay Industries Limited and Atash Industries (India) Limited. In most of these petitions the concerned company is also a party. In some, it is a co-petitioner. In some, it is a respondent. In all these petitions common questions of law are raised. The main question raised before this Court is whether by virtue of section 536 (2) read with section 441 (2) of the Companies Act providing that all transfers made, after the commencement of winding up, will be void, any offence can be deemed to have been committed under section 138 of the Negotiable Instruments Act. According to the petitioners, as the payments, if made, would have been void under section 536 (2) of the Companies Act, they were justified in refusing to do a void act and there is no "failure to make payment" and hence no offence has been committed under section 138 of the Negotiable Instruments Act.

(3.) FOR the purpose of his argument Mr. Manohar had shown to Court facts in Criminal Writ Petition No. 430 of 1998. These facts are merely illustrative. Except for some differences, the facts in all these petitions will be the same. Mr. Manohar points out to Court that to the respondent No. 2, in Criminal Writ Petition No. 430 of 1998, 22 cheques aggregating to a total of Rs. 3,14,85,159/- were issued by Orkay Industries Ltd. These were issued between 15th March 1996 and 26th April 1996. All these cheques were dishonoured on 10th May 1996. On 21st May 1996 a statutory notice, as required by section 138, was served on Orkay Industries Ltd. This was received by Orkay Industries Ltd. on 22nd May 1996. The 15 days period would therefore have ended on 6th June 1996. In the meantime, on 27th May 1996, Company Petition No. 372 of 1996 came to be filed by one M/s. U. K. Industries Ltd. Thus in this case the cheques were issued before the petition for winding up was presented. However, in some petitions the cheques were issued after a petition for winding up was presented.