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TMI Blog2002 (8) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... ecame critical to satisfy the demands of the depositors. A case under sections 420, 408 and 120B of I.P.C. was registered on a complaint by one of the depositors. The petitioners were arrested and subsequently, released on bail. The petitioners were also taken in custody to Hyderabad, Visakhapatnam and other places. The affairs of the RBF Nidhi are looked after by a Special Officer appointed by the Company Law Board by Order, dated 18-11-1999. The Special Officer took over the administration from 20-12-1999. The managers of the branches of the RBF Nidhi at Chennai, Visakhapatnam and Hyderabad were left with cheques, signed by any one of the petitioners, when they were in office as Directors. These petitioners were removed from the Board of Directors of RBF Nidhi, by order dated 18-1-2000 by the Company Law Board. In the place of erstwhile directors, a new set of seven persons was appointed by the Company Law Board and they took over the administration. 3. The Company Law Board in its order, approved a scheme for repayment of the dues to the depositors and in respect of the cheques issued on behalf of the RBF Nidhi Limited signed by any of the Directors. As per the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the recipients of these cheques be asked to return these cheques at the time of making payment of the first instalment as ordered above." The counsel for petitioner further submitted that when the petitioners were Directors, interest warrants were issued on an arrangement with State Bank of India, Gill Nagar, Chennai; such interest warrants were issued for payment between 21-12-1999 and 21-1-2000; these warrants were signed by two of the petitioners. These cheques were presented on 22-1-2000 and they were dishonoured; complaint was filed on 24th April, 2000. Since these petitioners were removed as Directors on the date when the cheques in the name of the respondents were drawn, the petitioners were not Directors. The Company Law Board frozen the interest on deposits from 1-11-1999. The Company Law Board had all the powers of Court; since the Company Law Board cancelled all the cheques issued, the liability to pay interest has already ceased. Therefore, all the cheques issued subsequent to 18-1-2000 are not payable; therefore, it is not an existing liability; this amount is not payable. The private complaint was filed in April, 2000. Learned Magistrate has issued summons to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn for discharging a legally enforceable debt or other liability. But the second limb of the contention is tenuous as the debt would not cease to be legally enforceable merely because somebody has filed a petition for winding up." Relying upon this decision, learned counsel for the respondent submitted that subsequent to the issue of cheque, even in cases where petition for winding up of the company is filed or if the person is adjudged an insolvent, the liability under section 138 of the Negotiable Instruments Act, is not absolved. Therefore, once a cheque has been issued for the existing liability on the date when it was payable, any subsequent development will not absolve the liability. Therefore, the persons who gave the cheques cannot be absolved of their criminal liability; therefore, the complaint filed cannot be dismissed. 9. Learned counsel for the petitioners submitted that an order passed by the Company Law Board at the instance of the Central Government can be challenged only under section 10 of the Companies Act. The order passed by the Company Law Board is binding, on all persons until it is set aside by the appellate forum. Inasmuch as that order has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by drawer, subsequent notice by the drawer to the drawee or to the bank on which it is drawn intimating stoppage of payment would not preclude action, under section 138 of the Negotiable Instruments Act. Further, as held by the Supreme Court in the case of Pankaj Mehra ( supra ) referred to above, even the commencement of the proceedings of winding up of a company does not absolve the liability for payment and it will not have any effect on the applicability of section 138 of the Negotiable Instruments Act. Once a cheque is issued and it is dishonoured and the demand has been made to pay the amount by notice, on the completion of notice period, the offence is complete. 12. According to the Supreme Court, the Companies Act does not prohibit enforcement of debt due from company. Even initiation of winding up proceedings will not have any effect of nullifying the offence under section 138 of the Negotiable Instruments Act. The Supreme Court in BSI Ltd. v. Gift Holdings (P.) Ltd. [2000] 2 SCC 737 1 , has held, the offence committed by the company under section 138 of the Negotiable Instru- ments Act, 1881, is complete by reason of non-payment of the amount covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that date, the petitioners before this Court were not directors. They have been removed by the Company Law Board by order dated 18-1-2000. Therefore, these persons were not directors on the date when the offence was committed. 13. Though a complaint against the company is maintainable, such a complaint is not maintainable against these petitioners who were not the directors on the date when the offence was committed. Therefore, the complaint insofar as it relates to these petitioners, is not maintainable. Therefore, insofar as these petitioners, the complaint is liable to be quashed. The complaint filed already as against those persons who are directors on the date of the commission of the offence, is maintainable. 14. Further, the Supreme Court has also held that even the order of adjudication of a person as an insolvent by competent Courts will not absolve the person who issued a cheque of his liability under section 138 of the Negotiable Instruments Act. Therefore, in case of an offence under section 138 of the Negotiable Instruments Act; the offenders cannot be absolved merely on the ground that some other legal consequences would emerge because of any order passed by Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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