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2015 Supreme(Ker) 224
IN THE HIGH COURT OF KERALA
K. Ramakrishnan, J.
Poly K. Ayyampally and Ors. – Appellant
Vs.
A. Pradeep Kumar and Ors. – Respondent
Crl. M.C. Nos. 4044, 2873 and 2874 of 2014
Decided On: 03.04.2015
For Appellant :K.V. Sohan, Sreeja Sohan K. and Rovin Rodrigues, Advocates
For Respondents:Rajesh Vijayan, Public Prosecutor, K. Moni, Official Liquidator, A. Ranjith Narayanan, A. Simi and S.K. Saju, Advocates
The court clarified the scope of legal proceedings under the Companies Act, 1956 and its applicability to criminal proceedings under the Negotiable Instruments Act, emphasizing the need for proceedings to be in relation to the assets of the company.
Headnote:
Negotiable Instruments Act - Proceedings under Section 138 - Companies Act, 1956, Section 279 and 280 - Summary
Fact of the Case:
Accused Nos. 2 and 3 challenged criminal proceedings under Section 138 of the Negotiable Instruments Act, claiming that the magistrate had no jurisdiction to entertain the complaints as the company had committed the offence and they were only acting as representatives of the company.
Finding of the Court:
The court found that the proceedings under Section 138 of the Negotiable Instruments Act cannot be stayed invoking the power under Section 446 of the Companies Act, 1956. The court directed the lower court to consider the question of jurisdiction in the absence of the bedridden 2nd accused and to permit the 3rd accused to represent through counsel and consider the question of maintainability.
Issues: Whether the proceedings under Section 138 of the Negotiable Instruments Act has to be stayed under Section 446 of the Companies Act, 1956, which is replaced by Section 279 and 280 of the Companies Act, 2013.
Ratio Decidendi: The court held that the expression 'legal proceedings' in Section 446 of the Companies Act is wide enough to include criminal prosecution, but such criminal proceedings must be in relation to the assets of the company. The court also directed the lower court to consider the question of jurisdiction in the absence of the bedridden 2nd accused and to permit the 3rd accused to represent through counsel and consider the question of maintainability.
Final Decision: The petitions were dismissed with the direction and observation mentioned above.
K. Ramakrishnan, J.
1. Accused Nos. 2 and 3 in criminal proceedings under Section 138 of the Negotiable Instruments Act, who are the Managing Director and Director of the company facing liquidation have challenged the proceedings by filing these petitions under Section 482 of the Code of Criminal Proceedings. In Crl. MC No. 4044/2014 petitioners are accused Nos. 2 and 3 in ST No. 162/2013 on the file of the Judicial First Class Magistrate Court-II, Koyilandy. That case was taken on file on the basis of a private complaint filed by the first respondent herein against the company by name Pen Properties and Builders Private Limited, Aluva, who is arrayed as second respondent herein with the petitioners as Managing Director and Director of the company, alleging commission of the offence under Section 138 of the Negotiable Instruments Act. Earlier the case was taken on file as CC No. 583/2008 on the file of the Judicial First Class Magistrate Court, Koyilandy. Since the present petitioners did not appear, the case against them was split up and refilled as CC 863/2013 as against the first petitioner, which is pending before the Judicial First Class Magistrate Court-I, Koyilandy, and as ST 162/2013 as against the 2nd petitioner and now pending before the Judicial First Class Magistrate Court-II, Koyilandy.
2. Crl. MC No. 2873/2014 was filed by accused Nos. 2 and 3 in ST No. 1405/2009, on the file of the Judicial First Class Magistrate Court, Perambra-II, which was taken on file on the basis of a private complaint filed by the 2nd respondent against the 3rd respondent company and the present petitioners as accused Nos. 1 to 3 alleging offence under Section 138 of the Negotiable Instruments Act.
3. Crl. MC No. 2874/2014 was filed by accused Nos. 2 and 3 in ST No. 276/2009 of Judicial First Class Magistrate Court, Perambra-I, which was taken on file on the basis of a private complaint filed by the 2nd respondent against the 3rd respondent company and the petitioners as accused Nos. 1 to 3 alleging offence under Section 138 of the Negotiable Instruments Act.
4. In all these cases, the case of the complainant was that, the first accused company represented by accused Nos. 2 and 3 owed certain amounts and in discharge of that liability accused Nos. 2 and 3 had issued the disputed cheques on behalf of the company from the account maintained by the first accused company in their banks at Aluva.
5. According to the petitioners, by virtue of Section 446 of Companies Act, 1956 and present Section 279 and 280 of the Companies Act, 2013, no proceedings can be initiated against the company or proceeded against the company without the leave of the company Court and the magistrate has no jurisdiction to entertain the complaints, as the allegation is that, the company has committed the offence and they are only acting as representatives of the company and they want to quash the proceedings on that ground by filing the above respective petitions.
6. Heard the counsel for the petitioners in these cases, Advocate Sri. K.V. Sohan and the counsel appearing for the respondents representing the liquidator Sri. K. Moni, A. Renjith Narayanan and learned Public Prosecutor.
7. The counsel for the petitioners in all these cases submitted that, by virtue of Section 446 of the Companies Act, 1956, which is now replaced by Section 279 of the Companies Act, 2013, no proceedings shall be allowed to continue in respect of winding up company without the leave of the company Courts. Counsel for the petitioner relied on the decision reported in Narayanankutty v. Official Liquidator 1998 KHC 99 : 1998 (1) KLT 525 : 1998 (1) KLJ 656 : ILR 1998 (2) Ker. 441 : AIR 1998 Ker. 278 in support of his case.
8. The counsel for the respondents submitted that, suit or other proceedings mentioned in Section 446 of the Companies Act, 1956, or present Section 279 of the Companies Act, 2013, will not take in criminal proceedings under Section 138 of the Negotiable Instruments Act. Counsel
