The provisions of S. 446 of the Companies Act do not apply to proceedings under S. 138 of the Negotiable Instruments Act, as they are purely for the punishment of the person who issued the cheque and do not relate to the assets of the company.

This application is filed by the accused in C.C. No. 456/96 pending before the Addl. Chief Judicial Magistrate's Court, Ernakulam, to stay all the proceedings under S. 446 of the Companies Act.

2. C.C. No. 456/96 is filed by the 2nd respondent herein before the Addl. Chief Judicial Magistrate' Court, Ernakulam alleging offence punishable under S. 138 of the Negotiable Instruments Act against the petitioner and M/s. Belhouse Associates (P) Ltd. which is the Company under liquidation of which the petitioner was the Managing Director. It is alleged in the complaint filed before the Addl. Chief Judicial Magistrate's Court, Ernakulam, a copy of which is marked as Annexure-A1, that the cheque for Rs. 1,12,000/- was issued by the accused therein on 19-1-1996 in order to discharge the liability to the complainant for the electrical works done by them and when the cheque was presented for encashment it was bounced and the accused did not pay the amount in spite of registered notice sent on behalf of the complainant intimating about the dishonour of the cheque and calling upon them to pay the amount.

3. The 1st accused-Company therein is under dissolution as per the order passed by this Court in C.P. No. 20/94 and the Official Liquidator has been appointed as the liquidator of the Company. It is also contended by the petitioner that apart from alleging that he issued the cheque as the Managing Director of the Company absolutely no allegation is made personally against him in the complaint. Therefore, according to him, the liability under C.C. No. 456/96 is entirely upon the company and as such the entire proceedings of the case are liable to be stayed under S. 446 of the Companies Act.

4. The Official Liquidator has filed objections opposing the above application stating that C.C. 456/96 instituted by the 2nd respondent under S. 138 of the Negotiable Instruments Act against the Company under liquidator and the applicant herein and the proceedings are not liable to be stayed under S. 446 of the Companies Act and similar applications in M.C.A. Nos. 106 and 109 of 1990 and 155/94 in C.P. Nos. 54 and 57 of 1989 were dismissed by this Court by order dated 12-6-1997.

5. No notice is issued from this Court to the 2nd respondent. The counsel for the applicant and the Official Liquidator were heard.

6. The facts that the Company is under liquidation and the Official Liquidator is appointed as the liquidator of the Company and C.C. 456/96 pending before the Addl. Chief Judicial Magistrate's Court, Ernakulam is instituted by the 2nd respondent alleging offence punishable under S. 138 of the Negotiable Instruments Act against the Company and the applicant as accused Nos. 1 and 2 respectively since the cheque issued by the Company and signed by the applicant as Managing Director was dishonoured for insufficiency of funds, are admitted. The only contention raised by the applicant is that the allegation made by the 2nd respondent before the Addl. Chief Judicial Magistrate's Court, Ernakulam is against the Company under liquidation and nothing personally is alleged against the applicant, and therefore, the liability in those proceedings being that of the Company under liquidation, Section 446 of the Companies Act applies and, therefore, the proceedings are liable to be stayed under S. 446 since the proceedings are not instituted by obtaining leave from this Court.

7. The Official Liquidator has contended that apart from alleging criminal liability punishable under S. 138 of the Negotiable Instruments Act, absolutely no claim or allegation is made against the assets of the Company under liquidation, and therefore, the provisions of S. 446 of the Companies Act has absolutely no application to the facts of this case.

8. Section 446 of the Companies Act reads as follows :

"Section 446 - Suits stayed on winding up order - (1) When a winding up order has been appointed as provisional liquidator, no suit or other legal proceeding shall be commence