2007 (2) TMI 687 - HC - Companies Law

Summary

Issues involved:
Challenge to order quashing complaint u/s 138 of Negotiable Instruments Act due to lack of court's leave u/s 446 of Companies Act after company winding up by Gujarat High Court.

Comprehensive Details:

1. Background and Non-Appearance:
The revision application challenges the order quashing the complaint u/s 138 of the Negotiable Instruments Act due to lack of court's leave u/s 446 of the Companies Act after the company's winding up by the Gujarat High Court. Despite being on board for two weeks, no appearance was made for the applicant on various dates. Respondent No. 1, a company wound up by the Gujarat High Court, had a liquidator appointed. No appearance was made on behalf of the official liquidator or respondents Nos. 2 to 8.

2. Facts and Proceedings:
The complaint was filed by the applicant against respondent No. 1 for a dishonoured cheque. Despite notice, no payment was made, leading to the complaint in 1996. The Gujarat High Court's order directed winding up of respondent No. 1 and appointed an official liquidator. The accused filed an application to dismiss the complaint, citing the lack of court's leave u/s 446 of the Companies Act. The Metropolitan Magistrate quashed the proceeding based on this provision.

3. Interpretation of Section 446(1) of Companies Act:
Section 446(1) of the Companies Act states that no legal proceeding can be commenced or continued against a company after winding up without the court's leave. The term "other legal proceeding" includes criminal proceedings related to the company's civil liabilities. The liability under section 138 of the Negotiable Instruments Act arises from the company's civil liability, making it fall under "other legal proceeding" as per section 446(1).

4. Decision and Conclusion:
The record confirms the company's winding up and the appointment of a liquidator by the Gujarat High Court. Despite time given, the applicant failed to obtain leave from the court for continuing the proceedings under section 138. Therefore, the Metropolitan Magistrate's order to quash the proceeding was deemed appropriate. Consequently, the revision application was dismissed.