Case Note & Summary
The petitioners, a company and its directors, challenged the order dated 20.04.2018 passed by the 25th Joint Civil Judge (Junior Division) and Judicial Magistrate First Class, Nagpur, issuing process against them for an offence under Section 138 of the Negotiable Instruments Act, 1881, in Criminal Complaint Case No. 3866 of 2011. The petitioners also challenged the earlier order dated 07.12.2017 permitting the complainants to amend the complaint. The petitioners contended that the company was registered with the Board for Industrial and Financial Reconstruction (BIFR) w.e.f. 03.12.2008 and was declared a sick unit on 16.07.2009, and a direction under Section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was issued restraining the company from disposing of assets. The respondents, a partnership firm and its partners, had filed the complaint alleging dishonour of cheques. The court examined the bar under Section 22A of SICA, which prohibits the continuation of any proceedings against a sick company without the consent of BIFR. The court noted that proceedings under Section 138 of the NI Act are civil in nature and thus covered by the bar. The court also held that the amendment of the complaint after cognizance was impermissible as the complaint must be complete at the time of filing. Consequently, the court quashed the order issuing process and the order allowing amendment, and dismissed the complaint as not maintainable.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Issuance of Process - Bar under SICA - Proceedings under Section 138 of the Negotiable Instruments Act, 1881 are civil in nature and covered by the bar under Section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985, which prohibits continuation of proceedings against a sick company without the consent of the Board for Industrial and Financial Reconstruction (BIFR). The court held that the Magistrate erred in issuing process without considering the bar. (Paras 5-8) B) Criminal Procedure Code - Amendment of Complaint - After Cognizance - The Magistrate permitted amendment of the complaint after taking cognizance, which is impermissible as the complaint must be complete at the time of filing. The court held that the order allowing amendment was without jurisdiction. (Para 9)
Issue of Consideration
Whether the issuance of process under Section 138 of the Negotiable Instruments Act, 1881 against a company declared sick under the Sick Industrial Companies (Special Provisions) Act, 1985 is barred by Section 22A of SICA, and whether the amendment of the complaint after cognizance was valid.
Final Decision
The court allowed the petition, quashed the order dated 20.04.2018 issuing process and the order dated 07.12.2017 permitting amendment, and dismissed the complaint as not maintainable.
Law Points
- Section 22A of SICA bars continuation of proceedings against a sick company without BIFR consent
- Section 138 NI Act proceedings are civil in nature and covered by the bar
- amendment of complaint after cognizance is impermissible
