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- Interpretation of section 171 of the Companies Act regarding legal proceedings against a company - Allegation of cheating against the manager of a bank - Effect of a stay order in criminal proceedings Interpretation of Section 171 of the Companies Act: The judgment addressed the application for quashing criminal proceedings against the manager of a bank based on the provisions of section 171 of the Companies Act. The court analyzed whether the criminal case fell under the purview of this section, which mandates that legal proceedings against a company cannot proceed without leave of the court after a winding-up order or appointment of a provisional liquidator. The court concluded that the criminal proceedings were not against the bank but against the accused manager, emphasizing that a bank, as a juridical person, cannot be charged with cheating due to the lack of mens rea. Therefore, section 171 of the Companies Act did not apply in this case. Allegation of Cheating Against Bank Manager: The judgment delved into the allegation of cheating against the bank manager, who allegedly misrepresented that a cheque would be honored upon a cash deposit, despite the bank being in liquidation. The court acknowledged the evidence of the representation made by the accused and the circumstances surrounding the dishonored cheque. While the court did not determine the guilt at that stage, it found the evidence sufficient to warrant the framing of a charge for cheating. The court highlighted that the offense's proof would be determined after a full examination of all evidence in the case. Effect of Stay Order in Criminal Proceedings: The judgment also discussed the impact of a stay order issued in the criminal proceedings. It noted that the criminal proceedings were stayed initially due to an order in a company matter until the disposal of an application for the sanction of a scheme of amalgamation. The proceedings resumed after the stay order lapsed following the disposal of the application. The court rejected the argument that the criminal case should not have proceeded due to the stay order, emphasizing that the proceedings against the bank manager were distinct from actions against the bank itself, thus not falling under the ambit of section 171 of the Companies Act. In conclusion, the court dismissed the application for quashing the criminal proceedings, ruling that the case against the bank manager should continue as the legal provisions cited did not apply in this context.
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