Section 446 of Companies Act is not applicable to criminal proceedings under Section 138 of the NI Act since they do not concern the company’s assets.

ORDER :

1. The present report has been filed by the official liquidator in respect of the company which has been ordered to be wound up as per order of this Court dated 04.02.2019 in CP No. 43 of 2015. It is submitted that multiple criminal cases under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “NI Act”) are presently pending before the Chief Judicial Magistrate Court, Kalpetta, against the company. By official memorandum dated 25.03.2025 of the Chief Judicial Magistrate Court, Kalpetta, the company under liquidation was directed to obtain leave of the Tribunal under Section 279 of the Companies Act, 2013 (hereinafter referred to as “Act 2013”), to proceed with the case. In the report, permission is sought to permit the Official Liquidator to proceed with criminal complaint pending under Section 138 of the NI Act, before the Chief Judicial Magistrate Court, Kalpetta as S.T.Nos.370 of 2016, 380 of 2016, 46 of 2022, 165 of 2022, 175 of 2022 and 68 of 2023 without the necessity of obtaining leave from NCLT.

2. The company was wound up and orders were passed as per the provisions of the Companies Act, 1956 and is still under the jurisdiction of this Court and in view of Section 434 of the Companies Act , 2013 and the Companies (Transfer of Pending Proceedings) Rules, 2016, the matter has not been transferred to NCLT and hence the proceedings still remain before this Court. The Chief Judicial Magistrate Court, Kalpetta, has directed the company under liquidation to obtain leave of the Tribunal under Section 279 of the Companies Act, 2013, so as to proceed with the case. Since the company has been wound up as per the provisions of the Companies Act, 1956 and the matter is pending before this Court and not before the Tribunal, the provisions of the Companies Act, 1956 will apply in the present case and Section 446 of the Companies Act, 1956 which is the corresponding Section to Section 279 of the Companies Act, 2013 for obtaining leave will have no application in the present case.

3. The further issue to be resolved is as to whether leave of the Court is to be obtained for proceeding with a complaint filed under Section 138 of the NI Act, 1881. This Court in Jose Antony v. Official Liquidator, 1998 (2) KLT 176, has held that only those criminal proceedings which relate to the assets of the company will come within the ambit of legal proceedings contemplated under Section 446 of the Companies Act, 1956. Paragraphs 8, 9, 10 and 11 of the said judgment read as follows:

“8. S.446 of the Companies Act reads as follows:

S.446 - Suits stayed on winding up order - 

(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of winding up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose.

x x x x x x x x x x x x

9. Even though the provisions of S.446 of the Companies Act are wide enough to include criminal prosecution within the ambit of legal proceedings mentioned therein, the criminal proceedings which relate to the assets of the company alone will come within the ambit of the legal proceedings contemplated under S.446 of the Companies Act . In this case, it is clear from the complaint filed by the 2nd respondent before the Addl. Chief Judicial Magistrates Court, a copy of which is produced as Annexure - Al to this petition, that only the offence punishable under S.138 of the Negotiable Instruments Act is alleged against the applicant and the company and absolutely no allegation to fasten any civil liability against the applicant and the company is alleged in that complaint. It is also stated by the applicant in the affidavit filed in support of thi