2019 ALL MR (Cri) JOURNAL 38
(KERALA HIGH COURT)
B. SUDHEENDRA KUMAR, J.
K. P. Francis & Ors. Vs. Fair Kuries Pvt. Ltd. & Ors.
Crl.M.C. No.6039 of 2014
14th March, 2018.
Petitioner Counsel: Shri DINESH R. SHENOY, Shri SANIL JOSE, Smt. K.K. JYOTHILAKSHMY, Smt. S. SOUMYA ISSAC
Respondent Counsel: Shri K.MONI, Shri P. SANTHOSH, Shri B. JAYASURYA
Negotiable Instruments Act (1881), Ss.141, 138 - Companies Act (2013), S.334 - Complaint against company and its Directors - After winding up of company - Maintainability - Effect of winding up is that Directors and other employees cease to act - Affairs of company taken over by official liquidator - Payment of dues now made in accordance with Companies Act - If cheque is presented at this stage, payment is barred - In any case, maintainability of complaint depends on cause of action - If cause of action i.e. cheque dishonour and failure of payment (pursuant to notice) arises after winding up order, complaint u/S.138 and 141 would not be maintainable - Date of handing over cheque, would be irrelevant - Complaint would be maintainable only on showing that cause of action arose before winding up.
By operation of law, i.e., by virtue of the Companies Act, the order of winding up would result in discharge of all the employees and the officers from the service of the company, including the Board of Directors. Affairs of such a company are taken over by the Official Liquidator and the Official Liquidator has to disburse the payment in accordance with the Companies Act.
Section 536 in Chapter V of Part (vii) of the Companies Act 1956, which corresponds to Section 334 of the Companies Act 2013, now comes into play fully and disbursement of any amount would be void. After passing the order of winding up, the amount to be given by the company shall be distributed as provided under chapter V of Part (vii) of the Companies Act 1956 (Sections 326 and 327 of the Companies Act 2013). If the cheque is presented at this stage, the payment thereof, is legally barred. The bank from which the cheque is issued is precluded from honouring the cheque. In the instant case itself, the account was frozen by the official liquidator and that was stated to be the reason for dishonour of the cheque. It is also to be born in mind that after the winding up orders and the taking over of the affairs of the company by the official liquidator, the erstwhile Directors ceased to be the Directors as on the date of presentation of the cheque. Therefore, on that day, they were not in charge of the day to day affairs of the company. The offence under Section 138 of the N.I. Act is attracted only if the payment of the cheque amount is not made within the statutory period after the receipt of the demand notice issued after the dishonour of the cheque. Section 141(1) makes it clear that only those persons who were in charge and responsible for the conduct of the business of the company at the time when the offence was committed, shall be deemed to be guilty of the offence. Therefore, if a person was not in charge and was not responsible to the company for the conduct of the business of the company at the time when the offence was committed, that person cannot be proceeded against under Section 138 of the N.I. Act. [Para 14,15]
If the dishonour of the cheque by the bank and failure to make payment of the amount by the company or its Directors were for reasons beyond the control of the company or its Directors, it cannot be said that the offence under Section 138 of the N.I. Act was complete. [Para 24]
The upshot of the above discussion is that if the cause of action arose subsequent to the order of winding up of the company, it cannot be said that the offence under Section 138 of the N.I.Act is completed. The date on which the cheque was handed over would have no bearing. The cause of action arises only when the cheque presented for encashment is dishonoured and the drawer fails to make payment of the cheque amount within the statutory period, after the receipt of demand notice. Therefore, if the company is wound up as per the order of the court prior to the completion of the offence under Section 138 of the N.I. Act, no complaint against the company and its erstwhile Directors, is maintainable. On the other hand, if the company is ordered to be wound up by the court subsequent to the completion of the offence under Section 138 of the N.I. Act, the prosecution under Section 138 of the N.l.Act is maintainable against the company and its Directors notwithstanding the order passed by the court for winding up of the company. [Para 27]
Cases Cited:
Pankaj Mehta & Anr. Vs. State of Maharashtra & Ors., 2000 ALL MR (Cri) 736 (S.C.)=(2000) 2 SCC 756 [Para 5,21,25]
Anil Hada Vs. Indian Acrylic Ltd., 2000 ALL MR (Cri) 136 (S.C.)=2001(1) SCC 1 [Para 9,10]
Aneeta Hada Vs. M/s. Godfather Travels and Tours Private Ltd. and Another, 2012 ALL SCR 1424=2012 KHC 4244 : AIR 2012 SC 2795 [Para 10,11]
J.K. (Bombay) Private Limited Vs. M/s.New Kaiser-I-Hind Spinning and Weaving Co. Ltd. and others, 1968 ALLMR ONLINE 511 (S.C.) : AIR 1970 SC 1041 [Para 12,13]
M/s. BSI Ltd. & Anr. Vs. Gift Holdings Pvt. Ltd. & Anr., 2000 ALL MR (Cri) 730 (S.C.)=2000 Crl.L.J. 1424 [Para 16,17,19]
Kusum Ingots & Alloys Ltd. Vs. Pennar Peterson Securities Ltd., 2000 ALL MR (Cri) 1223 (S.C.)=2001 KLT 846 (SC) : 2002 (SC) 745 [Para 23,24]
JUDGMENT
JUDGMENT :- The question arises for consideration in this Crl.M.C is as to whether a complaint under Section 138 of the Negotiable Instruments Act (in short, 'the N.I.Act') can be filed against the company or its Directors including the Managing Director when the cause of action arises after the winding up of the company pursuant to the order passed by the court.
2. The former Managing Director and former Directors of Kshemanidhi Kuries and Loans Private Limited have approached this court to get them extricated from the clutches of prosecution proceedings pitted against them, consequent to the non-payment of the amount covered by the cheques issued by the said company. The contention of the petitioners is that the cause of action in Annexure-A1 complaint arose after passing the order of winding up of the company by the court.
3. The company involved in this Crl.M.C. will be referred to as "the company". The cheque leaf issued by the company is dated 30.01.2010 and the amount covered by the cheque is Rupees seven lakh. When the said cheque was presented for encashment, the said cheque was dishonoured by the bank on 2.2.2010. The payee of the cheque issued notice to the company on 2.3.2010 calling upon the company to pay the amount. The company received the notice on 12.03.2010. As the company failed to pay the amount, Annexure-A1 complaint was filed before the Court of the Chief Judicial Magistrate, Thrissur on 27.3.2010 against the company and its directors for the offence under Section 138 of the N.I. Act. The learned Magistrate took cognizance of the offence and issued process against the petitioners, who are the accused persons in the above case. It was then that the petitioners challenged the criminal proceeding by means of the above Crl.M.C. contending that before arising the cause of action for filing the complaint, the company was wound up as per the order of the court.
4. The order of winding up of the company was passed on 30.9.2009 in Company Petition No.9 of 2009 of this Court. The complaint was filed in this case on 27.03.2010. The 15 days period after the receipt of notice in this case was complete on 27.03.2010. Therefore, there can be no doubt that the order of winding up of the company was passed prior to the arising of cause of action in this Crl.M.C.
5. The Apex Court in Pankaj Mehta and Another v. State of Maharashtra and Others [(2000) 2 SCC 756) : [2000 ALL MR (Cri) 736 (S.C.)] had occasion to consider the question as to whether a company could escape from penal liability under Section 138 of the N.I.Act on the premise that a petition for winding up of the company had been presented and was pending during the relevant time. The Apex Court held that merely by reason of a winding up petition being presented, there was no bar or legal disability in filing complaint before the court. The cases decided by the Apex Court in Pankaj Mehta [2000 ALL MR (Cri) 736 (S.C.)] (supra) were cases where complaints were filed during the pendency of the petition for winding up and before passing the order of winding up by the court.
6. The question which arises for consideration in this case is whether the complaint is maintainable against the former Directors and the company if the cause of action arises after passing the order of winding up of the company. To answer this question, it is necessary to go through the provisions of the Negotiable Instruments Act as well as the provisions of the Companies Act. The offender in Section 138 of the N.I.Act is the drawer of the cheque. He alone would have been the offender thereunder, if the Act did not contain other provisions. It is because of Section 141 of the N.I. Act that penal liability under Section 138 of the N.I.Act is cast on other persons connected with the company. It will be profitable to extract Section 141 of the N.I.Act, which reads as follows:-
"141. Offences by companies. - (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.- For the purposes of this section,-
a) "company" means any body corporate and includes a firm or other association of individuals; and
b) "director", in relation to a firm, means a partner in the firm."
7. The three categories of persons, who are brought within the purview of the penal liability through the legal fiction envisaged in the Section, 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 was a Director or a Manager or a Secretary or an Officer of the company, with whose connivance or due to whose neglect the company committed the offence.
8. Normally an offence can be committed by human beings who are natural persons. Such offences can be tried according to the procedure established by law. But there are offences which could be attributed to juristic persons also. If the drawer of a cheque happens to be a juristic person like a body corporate, it can be prosecuted for the offence under Section 138 of the N.I.Act. There is no scope for any doubt regarding the aspect that in view of the clear language employed in Section 141 of the Act, other persons can be also brought within the ambit of the provisions of Section 138 of the N.I.Act. In the expanded ambit of the word "company", even firm or any other association of persons is included and as a necessary adjunct thereof, a partner of the firm is treated as the Director of the company.
9. The Apex Court in Anil Hada v. Indian Acrylic Ltd. [(2001(1) SCC 1] : [2000 ALL MR (Cri) 136 (S.C.)] held that the offender under Section 138 of the N. I. Act is the drawer of the cheque, who alone would have been the offender thereunder, if the Act did not contain other provisions. Therefore, normally, in the case of the company incorporated under the Companies Act, it is the company which would be the offender. However, by virtue of Section 141 of the N.I.Act, penal liability under Section 138 is cast upon other persons connected with the company. Therefore, those persons also become liable for penal action in addition to the company. It was further held by the Apex Court in Anil Hada [2000 ALL MR (Cri) 136 (S.C.)] (supra) that if the offence is committed by a company, it can be punished only if the company is prosecuted. The Apex Court further held in Anil Hada [2000 ALL MR (Cri) 136 (S.C.)] (supra) that if instead of prosecuting the company, a payee opts to prosecute other persons falling within the description of Section 141 of the N.I.Act, it is permissible for him to do so.
10. The Apex Court in Aneeta Hada v. M/s.Godfather Travels and Tours Private Ltd. and Another (2012 KHC 4244 : AIR 2012 SC 2795) : [2012 ALL SCR 1424] held that the decision in Anil Hada [2000 ALL MR (Cri) 136 (S.C.)] (supra) has to be treated as not laying down the correct law as far as it states that the Director or any other Officer can be prosecuted without impleadment of the company. However, in all other aspects, the decision in Anil Hada [2000 ALL MR (Cri) 136 (S.C.)] (supra) was followed in the three-Judge Bench decision in Aneeta Hada [2012 ALL SCR 1424] (supra). It was held by the Apex Court in Aneeta Hada [2012 ALL SCR 1424] (supra) thus:-
"Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted."
11. It was further held in Aneeta Hada [2012 ALL SCR 1424] (supra) thus:-
"In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision."
The above discussion would make it clear that if the offender is the company, no prosecution under Section 138 of the N.I. Act is maintainable without arraigning the company as an accused.
12. Now, we will consider the effect of winding up of a company. A three Judge Bench of the Apex Court in J.K. (Bombay) Private Limited v. M/s.New Kaiser-I-Hind Spinning and Weaving Co. Ltd. and others (AIR 1970 SC 1041) : [1968 ALLMR ONLINE 511 (S.C.)] held in paragraph 38 thus:-
"The effect of a winding up order is that except for certain preferential payments provided in the Act, the property of the company is to be applied in satisfaction of its liabilities pari passu. Pari passu distribution is to be made in satisfaction of the liabilities as they exist at the commencement of the winding up (cf. S. 528 and 529 of the Act ; Ghosh on Indian Companies Law, 11th Ed. Vol.2, p. 1073). The effect of a winding up order on rights already completed as against rights yet to be completed is succinctly stated by Lord Halsbury in the Bank, of Scotland v. Machleod, 1914 AC 311 at pp.317, 318 as follows:
"Rights in security which have been effectually completed before the liquidation must still receive the effect which the law gives to them. But the company and its liquidators are just as completely disabled by the winding up from granting new or completing imperfect rights in security as the individual bankrupt is by his bankruptcy. This, indeed, is the necessary effect of the express provisions of the Companies Act that the estate is to be distributed among the creditors pari passu. Every creditor is to have an equal share, unless any one has already a part of the estate in his hands, by virtue of an effectual legal right."
13. The Apex Court further in paragraph 39 held in J.K. (Bombay) Private Limited [1968 ALLMR ONLINE 511 (S.C.)] (supra) thus:-
"It is thus well established that once a winding up order is passed, the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay from out of the sale proceeds its creditors. Such creditors aquire on such order being passed the right to have the assets realised and distributed among them pari passu. No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditors' right to have the proceeds of the assets distributed among them pari passu."
14. By operation of law, i.e., by virtue of the Companies Act, the order of winding up would result in discharge of all the employees and the officers from the service of the company, including the Board of Directors. Affairs of such a company are taken over by the Official Liquidator and the Official Liquidator has to disburse the payment in accordance with the Companies Act.
15. Section 536 in Chapter V of Part (vii) of the Companies Act 1956, which corresponds to Section 334 of the Companies Act 2013, now comes into play fully and disbursement of any amount would be void. After passing the order of winding up, the amount to be given by the company shall be distributed as provided under chapter V of Part (vii) of the Companies Act 1956 (Sections 326 and 327 of the Companies Act 2013). If the cheque is presented at this stage, the payment thereof, is legally barred. The bank from which the cheque is issued is precluded from honouring the cheque. In the instant case itself, the account was frozen by the official liquidator and that was stated to be the reason for dishonour of the cheque. It is also to be born in mind that after the winding up orders and the taking over of the affairs of the company by the official liquidator, the erstwhile Directors seized to be the Directors as on the date of presentation of the cheque. Therefore, on that day, they were not in charge of the day to day affairs of the company. The offence under Section 138 of the N.I. Act is attracted only if the payment of the cheque amount is not made within the statutory period after the receipt of the demand notice issued after the dishonour of the cheque. Section 141(1) makes it clear that only those persons who were in charge and responsible for the conduct of the business of the company at the time when the offence was committed, shall be deemed to be guilty of the offence. Therefore, if a person was not in charge and was not responsible to the company for the conduct of the business of the company at the time when the offence was committed, that person cannot be proceeded against under Section 138 of the N.I. Act.
16. The learned counsel for the complainant has argued that even though there is exclusion in respect of some persons under 2nd proviso to Section 14(1) of the N.I. Act, no such exclusion is provided under the N.I. Act in respect of the Companies under winding up and in the said circumstances, the company cannot be exonerated from the liability under Section 138 of the N.I.Act on the mere reason that the company is under order of winding up. The learned counsel has relied on the decision of the Apex Court in M/s. BSI Ltd., and another v. Gift Holdings Pvt. Ltd. and another [2000 Crl.L.J. 1424] : [2000 ALL MR (Cri) 730 (S.C.)] to support his argument.
17. In M/s. B.S.I. Ltd. [2000 ALL MR (Cri) 730 (S.C.)] (supra), the Apex Court observed thus:-
"In the above context, it is pertinent to point out that Section 138 of the N.I. Act was introduced in 1988 when SICA was already in vogue. Even when the amplitude of the word "company" mentioned in Section 141 of the N.I.Act was widened through the Explanation added to the section, Parliament did not think it necessary to exclude companies falling under Section 22 of SICA from the operation thereof. If the Parliament intended to exempt sick companies from prosecution proceeding, necessary provision would have been included in Section 141 of the N.I. Act. More significantly, when Section 22(1) of SICA was amended in 1994 by inserting the words ["and no suit for the recovery of money or for enforcement of any security against industrial company or of any guarantee in respect of any loans or advance granted to industrial company"]. Parliament did not specifically include prosecution proceedings within the ambit of the said ban."
18. It is true that no exclusion is provided for the companies under Section 141 of the N.I. Act. As per proviso 2 to Section 141 of the N.I. Act, where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under Section 138 of the N.I. Act. This would show that certain officers who are nominated in Government companies are exempted from prosecution under Section 138 of the N.I. Act.
19. The Apex Court in M/s. B.S.I. Ltd. [2000 ALL MR (Cri) 730 (S.C.)] (supra) concluded thus:-
"The conclusion which we have to draw is that if commission of the offence under Section 138 of the N.I. Act was completed before the commencement of proceedings under Section 22(1) of SICA there is no hurdle in any of the provisions of SICA against the maintainability and prosecution of a criminal complaint duly instituted under Section 142 of the N.I. Act."
20. It is discernible from the above said conclusion of the Apex Court that if the commission of the offence under Section 138 of the N.I. Act is not complete before the commencement of the proceedings under Section 22(1) of SICA, the prosecution under Section 138 of the N.I. Act cannot be maintainable. On the other hand, if the commission of offence under Section 138 of the N.I.Act is complete before the commencement of the proceedings under Section 22(1) of SICA, there is no bar in maintaining the prosecution under Section 138 of the N.I. Act. The above discussion would show that even though there was no exclusion for the companies, if the commission of the offence under Section 138 of the N.I. Act cannot be completed before the commencement of the proceedings under Section 22(1) of SICA, the prosecution for the offence under Section 138 of the N.I. Act cannot be maintainable. In view of the above reason, the argument of learned counsel for the complainant that since no exclusion was provided under the N.I. Act in respect of the companies under winding up, there is no bar in prosecuting against the company under Section 138 of the N.I. Act, cannot be accepted.
21. The learned counsel for the complainant has argued that the expression 'fails to make payment' is different from 'refuses to make payment' and in the said circumstances, the inability to pay the cheque amount after the receipt of the notice cannot protect the companies from the penal liability under Section 138 of the N.I. Act. The learned counsel relied on the decision of the Apex Court in Pankaj Mehta [2000 ALL MR (Cri) 736 (S.C.)] (supra) to support his argument. The Apex court in Pankaj Mehta [2000 ALL MR (Cri) 736 (S.C.)] (supra) observed thus:-
"29. The words "the drawer of such cheque fails to make the payment" are obtensibly different from saying "the drawer refuses to make payment". Failure to make payment can be due to the reasons beyond the control of the drawer. An illustrative case is, if the drawer is not a company but an individual who has become so pauperised or so sick as he cannot raise the money to pay the demanded sum, can he contend that since failure to make payment was on account of such conditions he is entitled to be acquitted? The answer cannot be in the affirmative though the aforesaid conditions can be put forth while considering the question of sentence.
30. We therefore feel that the legislature has thoughtfully used the word "fails" instead of other expressions as failure can be due to a variety of reasons including disability to pay. But the offence would be complete when the drawer "fails" to make payment within the stipulated time, whatever be the cause for such failure.
31. The drawer of the cheque can have different explanations for the failure to pay the amount covered by the cheque. But no such explanations would be sufficient to extricate him from the tentacles of the offence contemplated in the section. Perhaps some kind of explanations would be sufficient to alleviate the rigour of the offence which may be useful to mitigate the quantum of sentence to be imposed. But that is no ground for consideration at this stage."
22. In paragraph 29, while giving an example, the court had specifically excluded the company and had given illustration of an individual. In the said decision, the Apex Court referred to the drawer who failed to make payment. The drawer in the case before this court is a company, which has gone into liquidation and the case of the company is on a different footing and is governed by the provisions of the Companies Act. Therefore, the argument in this regard advanced by the learned counsel for the complainant lacks merits.
23. At this juncture, it is relevant to mention about the decision of the Apex Court in Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. [2001 KLT 846 (SC) : 2002 (SC) 745] : [2000 ALL MR (Cri) 1223 (S.C.)]. That was a case where reference in respect of the Company was pending before the Board of Industrial and Financial Re-construction (for short 'the BIFR') under the Sick Industrial Companies (Special Provisions) Act 1985 (for short 'the SICA'). The Apex court held that mere registering the reference would not be sufficient to bar the proceedings under Section 138 of the N.I. Act even by virtue of Section 22 of the SICA as Section 22, which provided that no proceedings would be instituted against the company, would relate only to civil proceedings and would not include criminal proceedings. However, the court further held that the position would be different if an order is passed by the BIFR under Section 22 A of SICA restraining the company or its Directors from disposing of the assets of the company. The Apex Court in Kusum Ingots [2000 ALL MR (Cri) 1223 (S.C.)] (supra) held in paragraph 19 thus:-
"The question that remains to be considered is whether S.22A of SICA affects a criminal case for an offence under Section 138 of the N.I. Act. In the said section, provision is made enabling the Board to make an order in writing to direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets (a) during the period of preparation or consideration of the scheme under Section 18, and (b) during the period beginning with the recording of opinion by the Board for winding up of the company under sub-s.(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 appellant that a criminal case for the alleged offence under Section 138 of the N.I. 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 period of 15 days after notice, a restraint order of the BIFR under Section 22A was passed against the company, then it cannot be said that the offence under Section 138 of the N.I. Act was completed. In such a case it may reasonably be said that the dishonouring of the cheque by the bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused. It may also be contended that the amount claimed by the complainant is not recoverable from the assets of the company in view of the ban order passed by BIFR. In such circumstances, it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case."
24. The conclusion in Kusum Ingots [2000 ALL MR (Cri) 1223 (S.C.)] (supra) is that the prosecution under Section 138 of the N.I. Act would not be maintainable if a restraint order of the BIFR under Section 22A was passed against the company before the expiry of the statutory period of 15 days after the receipt of notice. It is clear from the ratio in Kusum Ingots [2000 ALL MR (Cri) 1223 (S.C.)] (supra) that if the dishonour of the cheque by the bank and failure to make payment of the amount by the company or its Directors were for reasons beyond the control of the company or its Directors, it cannot be said that the offence under Section 138 of the N.I. Act was complete.
25. The Apex Court in Pankaj [2000 ALL MR (Cri) 736 (S.C.)] (supra) held in paragraph 26 thus:-
"There is no provision in the companies Act which prohibits enforcement on 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 unenforceable altogether. Perhaps due to want of sufficient assets of the company, the realisation of a debt would be difficult. But that is no premise to hold that the debt is legally unenforceable. Enforceability of a debt is not to be tested on the touchstone of the modality or procedure provided for its realisation or recovery. Hence the contention that the special provision incorporated in the Companies Act regarding the debts and liabilities due from the company will render the debt unenforceable, cannot be accepted."
26. The above observation of the Apex Court would make it clear that even after passing an order of winding up, the amount covered by the cheque cannot be said to be unenforceable in law. However, enforceability can only be in accordance with the provisions of the Companies Act.
27. The upshot of the above discussion is that if the cause of action arose subsequent to the order of winding up of the company, it cannot be said that the offence under Section 138 of the N.I.Act is completed. The date on which the cheque was handed over would have no bearing. The cause of action arises only when the cheque presented for encashment is dishonoured and the drawer fails to make payment of the cheque amount within the statutory period, after the receipt of demand notice. Therefore, if the company is wound up as per the order of the court prior to the completion of the offence under Section 138 of the N.I. Act, no complaint against the company and its erstwhile Directors, is maintainable. On the other hand, if the company is ordered to be wound up by the court subsequent to the completion of the offence under Section 138 of the N.I. Act, the prosecution under Section 138 of the N.l.Act is maintainable against the company and its Directors notwithstanding the order passed by the court for winding up of the company.
28. In the case on hand, the court as per order dated 30.9.2009 ordered to wind up the company. The cheque in this case was dishonoured on 2.2.2010. The statutory notice was issued on 2.3.2010, which was received by the petitioners on 12.3.2010, which was, no doubt, subsequent to the order of winding up of the company. Since the cause of action arose in this case after the order of winding up of the company, Annexure-A1 complaint filed alleging offence under Section 138 of the N.I. Act, is not maintainable and hence, the summoning order issued by the court below is bad in law. Consequently, the above Crl.M.C. stands allowed and the summoning order stands set aside. Annexure-A1 complaint stands quashed.