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2019 (7) TMI 891 - HC - Indian LawsDishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1881 - Company declared as sick unit - whether a company and its directors can be proceeded against for having committed an offence punishable under Section 138 of the Act after the company has been declared sick under the provisions of the SICA before the expiry of the period for payment of the cheque amount? - HELD THAT:- The Apex Court in KUSUM INGOTS & ALLOYS LTD. VERSUS PENNAR PETERSON SECURITIES LTD. [2000 (2) TMI 724 - SUPREME COURT] has held that Section 22 only deals with the proceedings for recovery of money or for enforcement of any security or guarantee in respect of any loans or advance granted to the company and a proceedings for winding up of the company and there is no reference to any criminal proceedings - The Apex Court then referred to its earlier decision in BSI LTD. VERSUS GIFT HOLDINGS (P.) LTD. [2000 (2) TMI 719 - SUPREME COURT] which holds that pendency of proceedings under Section 22(1) of the SICA alone is not sufficient to get absolved from the liability under Section 138 of the Act (emphasis supplied). The offence under Section 138 of the Act was not complete and the order of issuance of process is unsustainable. The offence not complete, not because there was a statutory bar, but as explained by the Apex Court, because the directors of the company were prevented by reasons beyond their control from honouring the cheques. The repeal of SICA, cannot breathe life in the complaint which was still born since the offence was not complete as on the date of the issuance of process by the learned Magistrate. The order for issuance of process is quashed - petition allowed.
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