The central legal point established in the judgment is that the accused cannot be held liable under Section 138 of the N.I. Act due to the restraint order of the BIFR under Section 22(a) of SICA and the settlement reached between the parties during protected negotiations.

JUDGMENT :

B.P. Ray, J. - The petitioner which is a Company incorporated under the Companies Act, 1956 has challenged the order dated 29.03.2003 passed by the learned S.D.J.M., Bhubaneswar in I.C.C. No. 154 of 2002 and has sought for quashing of the same holding that the Criminal complaint as per the grounds on the basis of the facts of the case is not maintainable against the accused persons and also has prayed for dismissal of the said petition.

2. The petitioner-company had a long standing transactional agreement with the opp.party No.1. The above mentioned complaint was filed u/s. 138, N.I. Act by the opp.party No.1 because of non-payment of 9 (nine) numbers of cheque by the Banker due to "insufficiency of funds". The learned S.D.J.M. after taking cognizance issued summons to the accused persons for their appearance.

3. The petitioner filed an application before the learned S.D.J.M. for recall of the order of cognizance as the petitioner-Company was declared sick by the Board for Industrial and Financial Reconstruction (in short, "BIFR") Court and the restrictions were imposed under Sections 22 & 22(a) of the Sick Industrial Company (Special Provisions) Act, 1985. The petitioner's application was on the basis of ratio of a decision of the apex Court reported in Kusum Ingots and Alloys Ltd., etc. Vs. Pennar Peterson Securities Ltd. and Others, The relevant portion of the judgment at paragraph 18 which is relied upon by the petitioner is as follows :-

In a case in which the BIFR has submitted its report declaring a Company as 'sick' and has also issued a direction u/s. 22-A restraining the Company or its Directors not to dispose of any of its assets except with consent of the Board then the contention raised on behalf of the appellants that a criminal case for the alleged offence u/s. 138 of N.I. Act cannot be instituted during the period in which the restraint order passed by the BIFR remains operative cannot be rejected outright. Whether the contention can be accepted or not will depend on the facts and circumstances of the case. Take for instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the BIFR u/s. 22-A was passed against the Company the it can not be said that the offence U/s. 138 of N.I. Act was completed. In such a case it may reasonably be said that the dishonoring of the cheque by the Bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused. It may also be contended that the amount claimed by the complainant is not recoverable from the assets of the Company in view of the ban order passed by the BIFR. In such circumstances it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case.

4. However, learned S.D.J.M., vide its order dated 29.3.2003 rejected the application of the petitioner on the ground that in order to take benefit of the judgment the trial is necessary. The above factual aspects have not been disputed by the O.P. No.1. During the pendency of this matter, the petitioner claimed that the total amount of the value of the cheques amounting to Rs. 3,89,83,933/- has been paid in different installments after repeated protected negotiations and conciliations. This fact is admitted in the counter affidavit filed on 10.3.2008 by the O.P. No.1. After receiving the above amount the opp.party No.1. claimed interest without quantification of the same.

5. From several counter affidavits filed by the opp.party No.1 and as per stand of the petitioner it is admitted there was a long standing transaction between the petitioner and opp.party No.1. The business relationship admittedly continues. During pendency of the case repeated conciliation meetings have taken place and it is admitted the total value of the cheques has been paid. The petitioner has further reli