IMPORTANT POINT
Expression “suit or other proceedings” in Section 446(1) under Chapter II of Part VII of Companies Act, 1956, does not include criminal complaints filed under Section 138 of Negotiable Instruments Act, 1881.

Shalini Phansalkar Joshi, J.—This is a Reference made before us so as to resolve a conflict between two views recorded in two Single Judges Judgments of this High Court. The question framed for Reference is as follows:-

Whether the expression suit or other proceedings in Section 446(1) and the expression suit or proceedings in Section 442, under Chapter II of Part VII of the Companies Act, 1956, include criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881?

2. The facts giving rise for making of this Reference can be stated, in brief, as follows:-

The Petitioner herein has filed a Criminal Case, being C.C. No. 899/SS/2005, in the Court of Metropolitan Magistrate, 21st Court, Bandra, Mumbai, against Respondent Nos. 2 and 3 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, (for short “N.I. Act”). Respondent No. 2 is the Company registered under the Companies Act, 1956, whereas, Respondent No. 3 is its Director. Cognizance of the offence was taken by the learned Magistrate and the process was issued against, both, Respondent Nos. 2 and 3, who appeared and pleaded not guilty, claiming to be tried. The Petitioner thereupon examined its Authorized Representative in support of its case.

3. At this stage, Respondent No. 3 filed an application under Section 446(1) of the Companies Act, 1956, (for short “the Act”) inter alia, praying for a direction to the Petitioner to secure leave from the Hon’ble Gujarat High Court, as Respondent No. 2-Company was ordered to be wound-up by the said High Court in Company Petition Nos. 115 of 2001, 157 of 1997 and 245 of 1997. It was submitted that, in view of Section 446(1) of the Act, the complaint cannot be proceeded with till such time the Petitioner secures leave from the Hon’ble Gujarat High Court to proceed with the complaint. This application came to be resisted by Respondent Nos. 2 and 3 on the ground that the Petitioner-Company is ordered to be wound-up after recording plea of Respondent Nos. 2 and 3-Accused and hence the application is not maintainable. Both the parties were heard on this application and then relying on the unreported Judgment of this High Court in the case of Suresh K. Jasani vs. Mrinal Dyeing and Manufacturing Company Limited & Others, Criminal Revision Application No. 245 of 1997 [Coram : J.H. Bhatia, J.], learned Magistrate was pleased to hold that, in view of the provisions of Section 446(1) of the Act, the matter could not be proceeded with any more, after the winding-up order. Accordingly, the application preferred by Respondent Nos. 2 and 3 was allowed and the Petitioner was directed to secure leave from the Hon’ble Gujarat High Court, which had passed the winding-up order of Respondent No. 2-Company, to continue with this proceeding under Section 138 of the N.I. Act.

4. This order of the learned Magistrate dated 2nd December 2008 was challenged by the present Petitioner, Original Accused Nos. 2 and 3, before the learned Single Judge of this High Court in Criminal Writ Petition No. 1280 of 2010, by submitting that the protection granted under Section 446(1) of the Act aims at safeguarding the assets of the Company, which is wound-up, against the wasteful or expensive litigation and that it does not extend to the criminal proceedings under Section 138 of the N.I. Act. For advancing this submission, learned counsel for the present Petitioner placed reliance on the decision of another Single Judge of this Court [Coram : F.I. Rebello, J.] in the matter of Firth (India) vs. Steel Co. Ltd. (In Liqn.) AIR 1999 Bombay 75, taking a view that Section 446(1) of the Companies Act has no application to proceedings under Section 138 of the N.I. Act and hence leave of the Company Court is not necessary for continuing proceeding under Section 138 of N.I. Act.

5. Thus, before the learned Single Judge, two decisions of Coordinate Benches of this High Court were placed taking divergent views on the application of