IMPORTANT POINT
Dishonour of cheque – There is no embargo on filing complaint under Section 138 of N.I. Act against a ‘SICK’ company.

JUDGMENT

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:

4. Allegations in each complaint, inter alia, are: (a) that the accused company, towards part payment for supplies made by the complainant, issued cheque(s) in favour of the complainant; (b) those cheque(s) were deposited for collection but they returned for “insufficient funds” in the drawer’s account; (c) complainant thereafter served notice on all the accused calling upon them to pay to the complainant the cheque amount; (d) despite service of notice, the amount was not paid; and (e) therefore, the accused company including respondents 2 to 5, who were in-charge of and responsible for day-to-day business affairs of the accused company, are liable to be punished for offence punishable under Section 138 read with Section 141 of N.I. Act.

5. Based on the complaint and the affidavit filed in support thereof, the accused were summoned by Magistrate concerned.

6. On being summoned, the accused applied to the learned Magistrate to recall the processes issued against them and prayed that proceedings against them be dropped and they be discharged. In their application, it was claimed that the accused company was not only declared ‘SICK’ by the Board of Industrial and Financial Reconstruction [BIFR] under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 [SICA] but it was restrained from disposing of any of its assets without the consent of BIFR. In such circumstances, when a legal embargo was 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