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Stay of criminal proceedings under section 138 of the Negotiable Instruments Act, 1881 during the pendency of winding up petitions under section 446 of the Companies Act, 1956. Analysis: The judgment pertains to Company Petition Nos. 10 and 11 of 2007 filed under section 446 of the Companies Act, 1956, seeking a stay on criminal complaints under section 138 of the Negotiable Instruments Act, 1881. The petitioners, the President and Secretary of a Mutual Welfare Society, argued for a stay on the criminal proceedings initiated by the respondents. The petitioners contended that since they were directors of a group of companies under liquidation, the criminal complaints should be stayed. However, the Official Liquidator argued that the complaints were filed before the appointment of the provisional liquidator and were against the individuals, not the company under liquidation. The Court analyzed the provisions of section 446 of the Companies Act, which only bars proceedings against a company after a winding-up order or the appointment of an official liquidator, except with the court's permission. The Court cited a previous decision to emphasize that criminal proceedings against employees, managers, or directors for offenses like cheating do not require the court's leave if they are not against the company. In this case, the complaints were against the petitioners in their roles in the Mutual Welfare Society, not the company under liquidation. The cause of action for the complaints arose before the appointment of the provisional liquidator for the winding-up petitions related to the companies. Therefore, the Court concluded that the criminal complaints against the petitioners cannot be stayed under section 446 of the Companies Act. As a result of the analysis, the Court dismissed both petitions seeking a stay on the criminal proceedings under section 138 of the Negotiable Instruments Act, 1881, during the pendency of the winding-up petitions.
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