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Whether a company and its director can be proceeded against for an offence under section 138 of the Negotiable Instruments Act after the expiry of the period of payment of the cheque amount before passing of the order of winding up under the Companies Act. Analysis: The judgment revolves around the question of whether a company and its director can be held liable for an offence under section 138 of the Negotiable Instruments Act after the expiry of the payment period of the cheque amount, but before the winding up order under the Companies Act. The case involved dishonored cheques issued by the company, leading to a complaint under various sections. The petitioner contended that after the winding up order, no steps could be taken for the realization of amounts due, thus the criminal proceedings should be quashed. The petitioner argued that once a winding up petition is filed, section 536(2) of the Companies Act comes into operation, preventing transfers or dispositions of properties, making any payment void. The petitioner also emphasized that the company and its director were legally disabled from making payments after the winding up order. The respondent, on the other hand, argued that the offence under section 138 of the Act is deemed to be committed on dishonor and non-payment within 15 days of the notice, regardless of a subsequent winding up order. The court highlighted that the offending cheques were issued before the winding up order, and after considering relevant legal provisions and a Supreme Court precedent, concluded that a company and its directors cannot escape penal liability under section 138 of the Act merely due to a pending winding up petition. The court relied on the authoritative pronouncement of the Supreme Court in a similar case to support its decision. In conclusion, the court dismissed the petitions, stating that the company and its director cannot avoid penal liability under section 138 of the Act based on the pendency of a winding up petition. The judgment emphasizes that the legal disability post-winding up order does not absolve the company and its director from the offence committed under section 138 of the Negotiable Instruments Act.
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