The winding up of a company does not absolve the personal liability of its directors for offences under Section 138 of the Negotiable Instruments Act, and such criminal proceedings can continue despite the company's dissolution.

ORDER

M. Nagaprasanna, J. -

The petitioner is before this Court calling in question an order dated 11-11-2014 passed by the XXVIII Additional Chief Metropolitan Magistrate, Bengaluru, in C.C.No.19781 of 2007 registered for offences punishable under Sections 138, 141 and 142 of the Negotiable Instruments Act,1881 ('the Act' for short) and has sought a further direction to expeditiously dispose of C.C.No.19781 of 2007 within the time frame that would be fixed by this Court.

2. Shorn of unnecessary details, facts germane, are as follows:-

The petitioner is one M/s. Rajesh Exports Limited and the respondent is the ex-Managing Director of one M/s Jewels De Paragon Private Limited ('the Company' for short). The petitioner enters into an agreement with the Company for supply of gold jewellary on 23-08-2000 and the respondent in his personal capacity gives a cheque for 3,00,00,000/- (without indicating the date on the cheque) in favour of the petitioner for repayment of the value of gold received by the Company from the hands of the petitioner. After about 7 years, on 05-04-2007, the petitioner presents the cheque only to be dishonoured and returned with an endorsement 'account closed' in the concerned Bank. This leads the petitioner to issue a demand notice to the respondent seeking payment of the outstanding amount. That having gone unheeded, the petitioner invoking Section 200 of the Cr.P.C., files a petition before the learned Magistrate who then registers a criminal case in C.C.No.19781 of 2007 in accordance with law. The petitioner is said to have filed another complaint against the respondent in C.C.No.19782 of 2007.

3. Certain analogous developments take place. One M/s Lalchand K. Chabria prefers a company petition before this Court in Company Petition No.221 of 2013 invoking Sections 433(e) and (f), 434 r/w. 439 of the Companies Act, 1956 ('the Companies Act' for short) seeking winding up of the Company. On 07-08-2014, this Court allows the company petition and orders winding up of the Company. Thus, the Company gets wound up. On the order passed by this Court directing winding up of the Company, the Company files a memo with the certified copy of the order passed by this Court seeking stay of further proceedings in C.C.No.19781 of 2007, before the concerned Court. On 11-11-2014, the Court of the learned Magistrate stays its own proceedings pending in the aforesaid criminal case. On 07-07-2018, again on a memo filed, the concerned Court recalls the order dated 11-11-2014 and resumes the proceedings in the aforesaid two cases. This leads the Company to knock at the doors of this Court in Writ Petition No.33760 of 2018 seeking to quash the order dated 07-07-2018, by which the concerned Court recalled its order dated 11-11-2014. Since two orders were recalled, two petitions were preferred viz., W.P.Nos.33760 of 2018 and 33761 of 2018. On 23-09-2023, a coordinate Bench of this Court allows Writ Petition No.33761 of 2018 filed by the Company and restores the order dated 11-11-2014 by which the stay was operating. Therefore, the stay granted by the learned Magistrate stood restored. On 19-03-2024, the other writ petition in W.P.No.33760 of 2018 comes up before another coordinate bench. The said coordinate bench though allows the writ petition and sets aside the order dated 07-07-2018, reserves liberty to the present petitioner to challenge the order dated 11-11-2014. It is, therefore, the present petition is preferred by the petitioner.

4. Heard Sri Rohan Kothari, learned counsel appearing for the petitioner and Sri S.R. Kamalacharan, learned counsel appearing for the respondent.

5. The learned counsel appearing for the petitioner would vehemently contend that the learned Magistrate could not have stayed his own proceedings erroneously invoking Section 446 of the Act. He would, therefore, contend that the proceedings be permitted to be continued and a time line for its closure be directed by this Court as admittedly the issue dates back