TMI Blog2006 (3) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... he Negotiable Instruments Act. 3. It has been alleged in the complaint that the complainant-company financed the first accused company for the purchase of plant and machinery and the second accused in his capacity as a Director of the first accused company issued cheques to discharge the liability of the first accused company. It is further alleged in the complaint that when the cheques were presented, the same were returned with the endorsement Accounts Freezed . After issuing the statutory notice calling upon the first and second accused to pay the cheque amount, the complaints were filed against the first and second accused for the offence under Section 138 of the Negotiable Instruments Act, as there was no positive response from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot escape from the criminal liability just because the Company was wound up. It is his vehement argument that the complainant had not proceeded against the assets of the company, but against the persons for their criminal liability and that therefore Section 446 of the Companies Act is not a bar to such criminal proceedings. 7. It is found that the statutory notices were issued by the complainant to the registered address of the accused. But it is found that the notices were returned unserved. Therefore the accused cannot validly contend that the statutory notice was not properly given to the accused. 8. Of course, the account of the accused was freezed on account of the winding up proceedings as against the accused-company, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceeds of the assets distributed among them 'pari passu'. 11. But here in the instant case, there is no question of claiming any right over the assets of the company, after winding up proceedings were over. The criminal liability is enforced on the company and the Director of the Company for their act. 12. The Division Bench of the Kerala High Court in Jose Antony Kakkad v. Official Liquidator 2000 Comp Cas 811 affirming the decision of the single Judge in Jose Antony Kokkad v. Official Liquidator (1999) 98 Comp Cas 275 has categorically held as follows:- The expression other legal proceedings in Section 446 of the Companies Act, 1956, does not take in all proceedings and proceedings under a special Act have an overr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets of the company, the proceedings pending in the criminal Courts cannot be stayed under Section 446 of the Companies Act. Moreover, Section 138 to 142 in Chapter XVII were introduced in the Negotiable Instruments Act by Central Act 66 of 1988 with effect from April 1, 1989. The above provisions were incorporated in the Negotiable Instruments Act with the intention of safeguarding and sustaining the credibility of commercial transactions and those provisions were introduced while Section 446 of the Companies Act was in force. When specific provision has been made with respect to the commission of an offence under Section 138 of the 1881 Act by a company or its directors or its employees, it has to be presumed that Parliament int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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