TMI Blog2006 (11) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditors are now to be paid as per the scheme of the Companies Act. Therefore, liability on them also cannot be fastened u/s 141 of the Negotiable Instruments Act. Here is a complaint u/s 138 of the Negotiable Instruments Act filed before an ordinary Criminal Court/Magistrate. Therefore, the governing section would be section 138 of the Negotiable Instruments Act which deals with offence and not transaction . It is held in number of cases that the cause of action for filing of the complaint arise only after the notice of dishonour of the cheque is given and payment is not made within 15 days of the receipt of the said notice. Therefore, date on which cheques were handed over would have no bearing and it is only when the cheque is presented for payment and is dishonoured and even after notice of dishonour is given and payment is not made by the drawer of the cheque within 15 days of the receipt of this notice, cause of action for filing of complaint would arise. In the instant case when the cheque was presented and the notice of dishonour was given the company had already been wound up. Hence, complaint u/s 138 of the Negotiable Instruments Act cannot be filed as on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board of Directors. It is not in dispute that complainant presented cheque dated 19-10-1999 for payment much after the winding up of the company. This cheque which was issued by the company and returned with the remarks "No Account/Account Closed". Notice of dishonour of the cheque was issued to the company in liquidation at the registered office of the company in liquidation and thereafter complaint filed under section 138 of the Negotiable Instruments Act. In this complaint the company is made accused No. 1 whereas petitioners are arraigned as accused Nos. 2 and 3. The cause title of the complaint reads as under : In the Court of Chief Metropolitan Magistrate, Karkardooma, Delhi Complaint No. .... of 2000 In the Matter of : Ceat Financial Services Ltd. 601, Adishwar Apartment, 34, Ferozshah Road, New Delhi through itself authorised representative Shri Vijay Pal SinghComplainant versus 1.Sakura Seimitsu India Ltd. E-115, Site B, UPSIDC Indl. Area, Surajpur, Distt. Ghaziabad also at: A-36, Sector VII NOIDA 2.Shri M.L.Gupta Director Sakura Seimitsu India Ltd. E-115, Site - B, UPSIDC Indl. Area, Surajpur, Distt. Ghaziabad (U.P.) also at: S-626, Mohan Park ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also become liable for penal action in addition to the company. It further held that if the offence is committed by a company it can be punished only if the company is prosecuted. However, if, instead of prosecuting the company, a payee opts to prosecute other persons falling within the description of section 141, it is permissible for him to do so. It would be of interest to reproduce the discussion as contained in this judgment on the aforesaid aspect. "Three categories of persons can be discerned from the said provision who are brought within the purview of the penal liability through the legal fiction envisaged in the section. They are: (1) The company which committed the offence, (2) Everyone who was in-charge of and was responsible for the business of the company, (3) Any other person who is a director or a manager or a secretary or officer of the company, with whose connivance, or due to whose neglect the company has committed the offence. Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. But there are offences which could be attributed to juristic persons also. If the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in section 141 of the Act." (p. 245) 6. The Court also noted the provisions of section 139 of the Act which draws a legal presumption in favour of holder, namely, to the effect that the holder of a cheque received the cheque of the nature referred under section 138 of the Act in discharge, in whole or in part, of any debt or any other liability and held that such a presumption mentioned in this section would operate not only against the drawer but against other persons who can be roped in by virtue of section 141 of the Act. The liability of the company as well as Directors under sections 138 and 141 of the Negotiable Instruments Act would remain if the cheque is presented after the winding up petition is filed and is pending but the orders of winding up have not been passed. This proposition stands concluded by the judgment of the Supreme Court in the case of Pankaj Mehra v. State of Maharashtra 2000 Crl. LJ 1781. The question which was posed for determination in the said case was "can a company esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed, for, the company may have to deal with very many day-to-day transactions, made payments of salary to the staff and other employees and meet urgent contingencies. An interpretation which could lead to such a catastrophic situation should be averted. That apart, if any such view is adopted, a fraudulent company can deceive any bona fide person transacting business with the company by stage-managing a petition to be presented for winding up in order to defeat such bona fide customers. This consequence has been correctly voiced by the Division Bench in the impugned judgment." 7. Therefore, even up to this stage there is no problem. From the aforesaid discussion, the two propositions, which can be culled out are as under: A.When the complaint under section 138 of the Negotiable Instruments Act is filed against the company and its Directors and during the pendency of this complaint, orders of winding up of the company are passed, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was in liquidation and the creditors are now to be paid as per the scheme of the Companies Act. Therefore, liability on them also cannot be fastened under section 141 of the Negotiable Instruments Act. 10. However, some of the observations made by the Supreme Court in the case of Pankaj Mehra ( supra ) were referred to by the learned counsel for the respondent to contend that complaint can be maintainable against the Directors even after the company has been wound up. It was submitted that the Court has hinted in this judgment that even if a company goes into the liquidation, enforcement of debt due from the company is only made subject to conditions prescribed therein. It would not mean that the debt has become enforceable altogether. Para 26 of the judgment deals with this aspect. It would be apposite to reproduce the same at this stage to understand its implication : "26. There is no provision in the Companies Act, which prohibits enforcement of the debt due from a company. When a company goes into liquidation, enforcement of debt due from the company is only made subject to the conditions prescribed therein. But that does not mean that the debt has become unenfor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion in that case was in a different fact situation, namely, filing of complaint under section 138 of the N.I. Act during the pendency of winding up petition where no orders for winding up of the company had been passed, as on the date when the complaint was filed. The manner in which this question was answered has already been noticed above. It is thus clear that the question involved was totally different as is clear from the very first para of the said judgment formulating the judgment in the following manner : "Can a company escape from penal liability under section 136 of the Negotiable Instruments Act ( the NI Act ) on the premise that a petition for winding up of the company has been presented and was pending during the relevant time?" 13. The observation made in paras referred to above are with a view to answer the aforesaid question formulated by the Court. The entire judgment has to be read in that context. It is a trite law that the ratio of a judgment is what it decides and not what logically follows from it. Judgments are not to be interpreted as statutes. In the case of Divisional Controller K.S.R.T.C v. Mahadeva Shetty AIR 2003 SC 4172 the Supreme Court c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obviously the debt does not become enforceable as rightly pointed out in para-26 of the judgment, but at the same time it is payable only in accordance with Scheme of the Act. The observation in this para if at all would go against the respondent herein. 15. Insofar as interpretation of the expression "fails to make payment" is concerned, no doubt what is clarified is that failure to pay is different from disability to pay . However, in para-29 while giving an example, the Court has specifically excluded a company, and has given the illustration of an individual. What is to be noted is that the discussion is qua the drawer who fails to make payment. Drawer in the case before us would be a company which has gone into liquidation and case of a company is on different footing and is governed by the statute, namely, the Companies Act. It would also be interest to note that in the case of Anil Hada ( supra ) which is also incidentally a judgment by Hon ble Mr. Justice K.T. Thomas who is the author of the judgment in the case of Pankaj Mehra ( supra ) as well. It is remarked that : "12. . . .The effect of reading section 141 is that when the company is the drawer of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) during the period beginning with the recording of opinion by the Board for winding up of the company under sub-section (1) of section 20 and up to commencement of the proceedings relating to the winding up before the concerned High Court. This exercise of the power by the Board is conditioned by the prescription that the Board is of the opinion that such a direction is necessary in the interest of the sick industrial company or its creditors or shareholders or in the public interest. In a case in which the BIFR has submitted its report declaring a company as sick and has also issued a direction under section 22A 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 under section 138 of NI 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 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the bank/complainant was that Special Court had jurisdiction to entertain the complaint in view of provisions of section 3(2) of the Special Court Act which mentioned that all those transactions which took place between 1-4-1991 and 6-6-1992 could be entertained by the Special Court. Therefore, it was interpretation of section 3 of the Special Court Act which was involved and the relevant portion which reads as under : ". . .any offence relating to transactions in securities after the 1st day of April, 1991 and on and before the 6th June, 1992. . . ." (p. 505) 19. The question which was posed for consideration is mentioned in para 5 of the judgment in the following words : "The question is - does the period specified qualify the word offence or the word transactions ? If it is the former, the jurisdiction of the Special Court would be, as contended by the appellant, limited to offences committed within the period specified whenever the transactions may have taken place. The respondent has, however, contended that the period qualifies the word transactions and that this was not only clear from the language of the statutory provisions but also supported by authority." ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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