TMI Blog2000 (1) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... ciates (P.) Ltd., a company under liquidation, for the commission of an offence under section 138 of the Negotiable Instruments Act, 1881. It was alleged that a cheque for Rs. 1,12,000 issued by the accused on 19-1-1996 towards discharge of a liability to the complainant for the electrical works done by them, was dishonoured when presented for encashment, due to the insufficiency of funds in the accounts in the name of the accused and they had not cared to pay the amount in spite of demand through registered notice. Accordingly, the complainant filed the complaint after complying with all the legal formalities. 3. The first accused in the complaint Belhouse Associates (P.) Ltd., is a company under liquidation as per the order passed by the Company Court in C.P. No. 20 of 1994 and the official liquidator had been appointed as liquidator of the company. According to the appellant he issued the cheque as the managing director of the company and as there was no allegation made personally against him, the liability under C.C. No. 456 of 1996 was entirely upon the company and as such the entire proceedings of the case are to be stayed under section 446. The official liquidator filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, against the company, except by leave of the Court and subject to such terms as the Court may impose. [(2) The Court which is winding up the Company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceedings by or against the company; ( b )any claim made by or against the company (including claims by or against any of its branches in India); ( c )any application made under section 391 by or in respect of the company; ( d )any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960.] (3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplaint as defined under section 2( d ) of the Cr.P.C. A complaint filed before the Consumer Disputes Redressal Forum is not for imposing any punishment, but it is intended only to claim compensation. Hence the above decision is not of any avail to resolve the controversy in the present case." 7. The learned official liquidator argued that the proceedings envisaged under section 446 did not include all proceedings, but it includes proceedings only against the assets of the company and it did not take in all criminal proceedings. It was further argued that the penal proceedings envisaged under section 138 of the Negotiable Instruments Act regarding the dishonour of the cheque would prevail over the provisions contained in the Companies Act. In support of the above argument the learned counsel placed reliance on decisions of this Court as well as the Supreme Court. The Supreme Court had considered the scope of section 446 of the Companies Act vis-a-vis section 41 of the Life Insurance Act in Damji Valji Shah v. Life Insurance Corpn. of India AIR 1966 SC 135, and held that the provisions of the Special Act, viz., the Life Insurance Corporation Act will override the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor, Palai Central Bank (1987 Tax LR 1730) a Division Bench of this Court had considered the validity of an order passed by the Company Court declaring an assessment made by the Agricultural Income-tax authorities as null and void . There it was held : "Company Court in dealing with an application under section 446, Companies Act, 1956, has no jurisdiction to embark upon an investigation into the correctness or legality of an order of assessment. That is the matter which has to be considered by the appropriate authorities or by the High Court on a reference or by the Supreme Court in an appeal from the decision of the High Court. The jurisdiction of the Company Court in such matters is confined only to the question whether the debt arising from the orders of assessment being an unsecured debt, is and which is payable in terms of the relevant statutory provisions. The debt in question being an unsecured debt ranked pari passu with other debts in the order of preference to be applied in regard to the payment of debts. It is to that end that jurisdiction is conferred upon the liquidation Court in matters arising under section 446. On the facts, the Company Court was held to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feguard the assets of a company against wasteful or expensive litigations in regard to matters capable of being determined expeditiously and effectively by the winding up Court itself. Though the word legal proceedings in section 446 is wide enough to take in criminal proceedings also, such criminal proceedings must be in relation to the assets of the company. The criminal proceedings which are not in respect of the assets of the company but end in the conviction or acquittal of the accused cannot be stayed under section 446. The proceedings under section 138 can end only in the conviction or acquittal of the accused in the case and no recovery of any amount covered by the dishonoured cheques can be made in the criminal proceedings. As the criminal proceedings under section 138 of the Negotiable Instruments Act are not in respect of the assets of the company, the proceedings pending in the Criminal Courts cannot be stayed under section 446. Hence, the proceedings initiated against the appellant under section 138 before the Criminal Court cannot be stayed invoking section 446. 10. The official liquidator further argued that section 141 in respect of the offence committed by a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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