IMPORTANT POINT
Section 22 of S.I.C.A. does not create any legal impediment for instituting and proceeding with a criminal case under Section 138 N.I. Act against a Company or its Directors.

Marlapalle B.H., J.—Heard Mr. Soni the learned Counsel for the petitioners who are impleaded as accused in C.C. No. 462/SS/2006, presently pending before the learned Metropolitan Magistrate, 26th Court, Esplanade, Mumbai under Section 138 of the Negotiable Instruments Act, 1881 (for short N.I. Act). Order of process was issued by the learned Magistrate on 4.5.2006 against the present petitioners and the said order was carried in Criminal Revision Application No. 959 of 2006 before the Sessions Court. The said revision application has been dismissed by the learned Additional Sessions Judge for Gr. Mumbai and hence this petition under Article 227 of the Constitution read with Section 482 of Cr.P.C.

2. The main argument advanced before this Court, like before the Sessions Court, is that the accused No. 1-Company M/s. Aefloat Textiles (India) Ltd. is declared a sick Company by the B.I.F.R. as per its order dated 4.9.2003 and in view of the scheme of Sections 22 and 22-A of the Sick Industrial Companies (Special Provisions) Act, 1986 (for short S.I.C.A.) the complaint filed under N.I. Act is required to be quashed and set aside. Mr. Soni the learned Counsel for the petitioners placed reliance in support of these contentions on the decision in the case of M/s. Kusum Ingots and Alloys Ltd. v. M/s. Pennar Peterson Securities Ltd. and Ors.1

3. In the instant case, there is no dispute that the order passed under Section 22 of the S.I.C.A is dated 4.9.2003 and the dishonoured cheques in the total sum of Rs. 24,00,000/- were dated 7.2.2006 i.e. after about two and half years from the date of B.I.F.R’s. order. The B.I.F.R. has appointed I.C.I.C.I. Bank Ltd. as the operating agency under Section 16 (2) of the S.I.C.A. Mr. Soni relied upon the Direction No. VII in the said order dated 4.9.2003 and it reads as under:

“(VII) The Company/promoters are directed under Section 22-A of the Act not to dispose off any fixed or current assets of the Company without the consent of the secured creditor and the B.I.F.R. In case the Company is running, the current assets can be drawn to the extent required for day to day operations, proper accounts of which would be maintained.”

As per Mr. Soni above condition clearly implies that the complaint filed against the petitioners under Section 138 of the N.I. Act cannot be continued any further and till the scheme is out-dated. The cut off date fixed in the scheme is 31.12.2003.

4. Coming to the judgment of the Apex Court in the case of M/s. Kusum Ingots and Alloys Ltd., (supra), in para 18 their Lordships held as under:

“In our considered view Section 22 of S.I.C.A. does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence under Section 138 of the N.I. Act against a Company or its Directors. The Section as we read it only creates an embargo against disposal of assets of the Company for recovery of its debts. The purpose of such an embargo is to preserve the assets of the Company from being attached or sold for realisation of dues of the creditors. The Section does not bar payment of money by the Company or its directors to other persons for satisfaction of their legally enforceable dues.”

Mr. Soni relied upon the observations made in para 19 of the said decision. It has been stated in the said para that in a given case, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the B.I.F.R. under Section 22-A was passed against the Company then it cannot be said that the offence under Section 138 of the N.I. Act was completed. In the instant case, the restraint put by the B.I.F.R., as per the condition reproduced hereinabove, is against the disposal of the property of the sick Company and that too the disposal is permissible if the consent of B.I.F.R. is obtained. The dishonoured cheques have been drawn much after the order dated 4.9.2003 passed by the B.I.F.R., wh