The lack of adjudication as insolvents does not permit quashing criminal proceedings under Section 138 of the Negotiable Instruments Act.

1.This petition is filed under S.482, Cr. P.C. to quash the proceedings in CC No. 376 of 1995 on the file of the VIII Metropolitan Magistrate, Vijayawada.

2. The facts in giving rise to the filing of this petition are, briefly, as follows : -
It is mentioned in the complaint that the second respondent is the company and manufactures DAP and other fertilizers. The first petitioner is the firm represented by its Managing Partner, the second petitioner, and did business in the name and style of Sri Srinivasa Trading Company at Pamidipadu, Guntur District and the petitioners 2 and 3 are the partners of the first petitioner firm. It is further alleged that the company used to supply fertilizers and chemicals to the petitioners on credit and when the accounts were settled, the first petitioner issued a cheque for Rs. 2,92,072.62 ps. drawn on Andhra Bank, Vinumonda Branch along with a letter requesting to present the cheque in second week of May, 1993 and accordingly, they presented the cheque on 17-5-1993 with their Banker, Andhra Bank, Labbipet, Vijayawada for collection, the cheque was returned with an endorsement 'insufficient funds' on 25-5-1993 with a debit charge of Rs. 449.50 ps. towards bank charges. Then the complainant gave a phonogram to the first petitioner on the same day informing about the dishonour of cheque and demanded payment of the sum within fifteen days. Again on 31-5-1993, the complainant got issued another notice through advocate and it was returned on 1-6-93 with an endorsement that the accused left without instructions. Again the complainant after making enquiries got issued another notice under certificate of posting on 3-6-93 and all the accused gave reply with false and frivolous allegations denying the cheque. It is further alleged that the petitioners filed I.P. No. 17/93 on the file of the Sub-Court, Narsaraopet to declare them as insolvent persons and thus he sought to punish the accused.

3. Now the petitioners filed this petition to quash the proceedings.

4. The learned Counsel for the petitioners submitted that the petitioners already filed I.P. No. 17/93 on the file of the Sub-Court, Narsaraopet showing the second respondent as creditor and in view of the filing of the said insolvency petition, the second respondent is not entitled to prosecute the petitioners for an offence under S.138 of the Negotiable Instruments Act . He further submitted that under S.28 of the Provincial Insolvency Act no suit or other legal proceeding except with the leave of the Court can be initiated or prosecuted and similar provision under S.446 is incorporated in Companies Act and this Court quashed the proceedings initiated for the offence under S.138 of the in view of the winding up orders passed in a Company Petition and Liquidator was appointed and he relied on a decision Venkateswara Rao v. Abdul Lateef , 1994 (2) ALT (Cri) 475 (AP), wherein it is held as under : -
"...It is contended inviting attention to S.446 of the Companies Act that the winding up proceeding is filed in the Court and when the Court had passed an order appointing Official Liquidator, no legal proceeding shall be instituted or if pending earlier, it cannot be proceeded further without the leave of the Court. Leave was not taken and, therefore, the prosecution filed by the de facto - complainant is bad in law.
Accepting the contention, it is held that the prosecution filed against the petitioner is bad in law and, therefore, it stands quashed......."
He further submitted that, admittedly, no leave of the Court was obtained to con