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1998 (6) TMI 475

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..... struments Act against the petitioner and Belhouse Associates (P.) Ltd. which is the Company under liquidation of which the petitioner was the managing director. It is alleged in the complaint filed before the Addl. Chief Judicial Magistrate s Court, Ernakulam, a copy of which is marked as Annexure-A1, that the cheques for Rs. 1,12,000 was issued by the accused therein on 19-1-1996 in order to discharge the liability to the complainant for the electrical works done by them and when the cheque was presented for encashment it was bounced and the accused did not pay the amount in spite of registered notice sent on behalf of the complainant intimating about the dishonour of the cheque and calling upon them to pay the amount. 3. The 1st accus .....

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..... f the Negotiable Instruments Act against the Company and the applicant as accused Nos. 1 and 2 respectively since the cheque issued by the company and signed by the applicant as the managing director was dishonoured for insufficiency of funds, are admitted. The only contention raised by the applicant is that the allegation made by the 2nd respondent before the Addl. Chief Judicial Magistrate s Court, Ernakulam is against the company under liquidation and nothing personally is alleged against the applicant and therefore, the liability in that proceedings being that of the company under liquidation, section 446 applies and, therefore, the proceedings are liable to be stayed under section 446 since the proceed- ings is not instituted by obtain .....

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..... the applicant and the company is alleged in that complaint. It is also stated by the applicant in the affidavit filed in support of this application that O.S. No. 447 of 1996 filed by the 2nd respondent against the applicant and the company before the 2nd Addl. Sub Court, Ernakulam for realisation of the amount covered by the cheque, is already transferred to this Court and renumbered as C.S. 24 of 1997. It is also submitted at the Bar that the suit has been withdrawn by the plaintiff therein. 10. The counsel for the Official Liquidator submitted that this Court has considered identical issue in the decision in K.P. Devassy v. Official Liquidator 1997 (2) K.L.J. 243 and held that the complaint filed under section 138 of the Negotiab .....

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..... assets of the Company can be distributed in an equitable manner to the creditors and members of the Company. Section 138 of the Negotiable Instruments Act is enacted in order to safeguard the credibility of commercial transactions and to prevent bouncing of cheques by providing a personal criminal liability against the drawer of the cheque in public interest. No civil liability or any liability against the assets of the drawer of the cheque is contemplated under section 138 of the Negotiable Instruments Act. Therefore, I am in respect-ful agreement with the observations made by the learned single Judge in the above decision to the effect that the provisions under section 446 have no application to the proceedings under section 138 of the .....

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..... a very special provision incorporated in the Negotiable Instruments Act, though the Act contains certain special provisions in order to safeguard the rights of the Company under liquidation. In support of this contention he relies upon the decision of this Court in K.P. Devassy s case (supra) already referred to above. In that case the learned single Judge of this Court relying upon the decision of the Supreme Court in Damji Valji Shah v. LIC of India AIR 1966 SC 135 to the effect that the provisions of the special Act viz., the Life Insurance Corporation Act will override the provisions of the general Act viz., the Companies Act, which is an Act relating to the companies in general, held that the special provisions contained i .....

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..... ing section 446. Therefore, the subsequent Act enacting certain special provisions has got overriding effect over the previous statute though contained the special provisions. Therefore, the contentions raised by the applicant against the finding of the learned single Judge of this Court in the above decision in K.P. Devassy s case ( supra ) are absolutely unsustainable and I am in respectful agreement with the observations made by the learned single Judge in the above judgment regarding this aspect. Hence the contention of the applicant that section 138 of the Negotiable Instruments Act has no overriding effect against section 446 Act is also not sustainable. 16. It is clear from my foregoing discussions that the contention of the .....

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