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2020 Supreme(Mad) 967
IN THE HIGH COURT OF MADRAS
G.R. SWAMINATHAN, J.
Ajay Kumar Bishnoi - Appellant
Versus
Tap Engineering - Respondent
Crl. OP Nos. 34996, 35007, 35011, 35013, 35016, 35020 of 2019, Crl. MP Nos. 19302, 19303, 19305, 19307, 19308 to 19313 and 19314, 19315 of 2019
Decided On : 09-01-2020
Advocate Appeared:
For the Appellant : Nithyaesh and Vaibhav.
Headnote:
Negotiable Instruments Act, 1881 - Section 138, 141 - Companies Act, 1956 - Section 446(1) - Indian Contract Act, 1872 - Section 133 – Imprisonment - Jurisdictional criminal court - Supply of goods – Dishonor - In view of the non compliance of the demand set out in legal notices, Tap Engineering represented by its Proprietor filed C.C. Nos. 160, 161, 162, 163, 164, 165 and 166 of 2014 before jurisdictional Magistrate court. Cognizance of the offence under Section 138 r/w 141 of Negotiable Instruments Act, 1881 was taken and summons were issued - Systems Limited was shown as the first accused. The petitioner herein was shown as the second accused in each of the complaints - During the pendency of these complaints Systems Limited came under Corporate Insolvency Resolution Process. One of its financial creditors filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, New Delhi application was admitted and by order an Interim Resolution Professional was appointed and moratorium in terms of Section 14 of the Code was declared. resolution plan submitted by Infrastructures Private Limited was accepted. By order dated 15.05.2019, the Principal Bench of National Company Law Tribunal New Delhi declared that the resolution plan is binding on the corporate debtor, members, employees of the corporate debtor creditors of the corporate debtor and other stakeholders involved in the resolution plan - Resolution plan provided for change in the management control of the corporate debtor was to vest with the resolution applicant-KIPL – Held, prayer made by the petitioner in these criminal original petitions is for quashing the criminal complaint filed by the respondent herein - In complaint petitioner herein is figuring as the second accused - Systems Limited is first accused petitioner is asking for quashing of the entire prosecution. But then, as held by Supreme Court in Industries Limited Bank and another once an insolvency professional is appointed to manage the company, the erstwhile directors who are no longer in management, obviously cannot maintain an appeal on behalf of company. This petition has been filed only by the erstwhile managing director - He cannot maintain a prayer for quashing the entire prosecution - At best, he can confine the relief to himself. But, as already held, the approval of the resolution plan is of no avail to erstwhile director of the corporate debtor Fashioned by IBC is custom made. It will fit the corporate debtor alone. The protective shield will not fit the erstwhile director at all - It was never designed for him - court of course, conscious that these petitions have been filed under Section 482 of inherent powers of this Court are meant to be exercised only to prevent the abuse of process of law or to secure ends of justice. The facts appearing on record and the contentions put forth by learned counsel for the petitioner do not persuade me to come to the conclusion that continuation of the impugned prosecution would constitute an abuse of legal process court therefore decline to invoke inherent powers of this Court under Section 482 of petitioner – Petitions dismissed
ORDER :
G.R. Swaminathan, J.
1. These petitions have been filled under Section 482 of the Criminal Procedure Code by the former Managing Director of M/s. Tecpro Systems Limited. The prayer in these criminal original petitions is for quashing the complaints instituted by M/s. Tap Engineering under Section 138 r/w. 141 of the Negotiable Instruments Act, 1881. The complainant is a proprietary concern. It is engaged in the business of manufacturing and sale of pumps, motors and accessories. It had business transactions with M/s. Tecpro Systems Limited. The supply of goods used to be based on the purchase orders placed by the Tecpro Systems Limited. The case of the complainant is that even though goods were supplied, payments were not made. Following persistent requests, Tecpro Systems Limited issued eight post dated DBS bank cheques to the complainant towards discharge of their liability. The cheques were presented. They were, however, returned for the reason "insufficient funds". The returned cheques were re-presented. Again, they were dishonoured. Thereupon, Tap Engineering issued legal notices. Though a partial payment was made in respect of one dishonoured cheque, Tecpro Systems Limited failed to make payments with regard to the other cheques.
2. In view of the non compliance of the demand set out in the legal notices, Tap Engineering represented by its Proprietor filed C.C. Nos. 160, 161, 162, 163, 164, 165 and 166 of 2014 before the jurisdictional Magistrate court. Cognizance of the offence under Section 138 r/w 141 of the Negotiable Instruments Act, 1881 was taken and summons were issued. Tecpro Systems Limited was shown as the first accused. The petitioner herein was shown as the second accused in each of the complaints.
3. During the pendency of these complaints, Tecpro Systems Limited came under Corporate Insolvency Resolution Process. One of its financial creditors filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, New Delhi. The application was admitted and by order dated 07.08.2017, an Interim Resolution Professional was appointed and moratorium in terms of Section 14 of the Code was declared. The resolution plan submitted by Kridhan Infrastructures Private Limited was accepted. By order dated 15.05.2019, the Principal Bench of the National Company Law Tribunal, New Delhi declared that the resolution plan is binding on the corporate debtor, members, employees of the corporate debtor, creditors of the corporate debtor and other stakeholders involved in the resolution plan. It is seen from the Annexure that Tap Engineering has been recognised as one of the operational creditors of the Tecpro Systems Limited and its claim as on 21.10.2017 was Rs.1,06,91,645/-. The resolution plan provided for change in the management. The control of the corporate debtor was to vest with the resolution applicant-KIPL.
4. The petitioner's contention is that in view of the acceptance of the resolution plan by the Tribunal and the change in management, the impugned prosecution against the petitioner under Section 138 of the Negotiable Instruments Act, 1881 is liable to be quashed. The petitioner's counsel points out that the resolution plan clearly states that all the outstanding negotiable instruments issued by the company or by any persons/entities on behalf of the company prior to the insolvency commencement date including demand promissory notes, cheques and letters of credit, shall stand terminated and the liability of the company and its current employees under such instruments shall stand extinguished and all the legal proceedings relating thereto shall stand irrevocably and unconditionally abated. His pointed contention is that on 07.03.2019, the resolution applicant Kridhan Infrastructure Private Limited had submitted its resolution plan before the Interim Resolution Professional and the same has been approved and vide order dated 15.05.2019, KIPL has taken over the ent
