LexM/S. BSI LTD. AND ANR. versus GIFT HOLDINGS PVT. LTD. AND ANR. ETC.
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M/S. BSI LTD. AND ANR. A ,.... v. GIFf HOLDINGS PVT. LTD. AND ANR. ETC. FEBRUARY 15, 2000 [K.T. THOMAS AND D.P. MAHOPATRA, JJ.] B Negotiable Instruments Act, 1872-Section 138-Dishonour of che- ques-Complaint u/s. 138 against companies-Companies declared sick after institution of complaints u/s 138-Whether they are liable to be prosecuted c in view of embargo contained in Section 22(1) of Sick Industrial Companies (Special Provisions) Ac~ 1985-Held, Yes. Cheques issued by the appellant company and their Directors were dishonoured by the drawee bank on the ground of insufficiency of amount in the account concerned. A complaint was filed against the company and D its Directors for the offence u/s. 138 of the Negotiable Instruments Act. Those companies, subsequent to the filing of complaints against them, sought for declaration before the Board for Industrial Finance and Reconstruction, that those companies became sick as envisaged in the Sick Industrial Companies (Special Provisions) Act, 1985 and a declaration was made by the Board as per Section 22(3) of SICA. The appellants contended E that they were not liable to be prosecuted in view of the ban against maintainability of a complaint u/s. 138 of the Negotiable Instruments Act, for the recovery of amount as contained in Section 22(1) of SICA, since a court would not be able to effectively impose a sentence on a company after convicting it of the offence u/s. 138 of the NI Act. The appellants' case was F "- dismissed both by the trial court as well as by the High Court. Hence this appeal. Dismissing the Special Leave Petition and appeal, this Court .. HELD : 1.1. If commission of the offences under Section 138 of G the Negotiable Instruments Act was completed before the commencement of proceedings under Section 22(1) of Sick Industrial Companies (Spe- cial Provisions) Act, there is no hurdle in any of the provisions of SICA against the maintainability and prosecution of a criminal complaint duly, instituted under Section 142 of the NI Act. [824-F] H 815 816 SUPREME COURT REPORTS [2000) 1 S.C.R. . A 1.2. If Parliament intended to exempt sick companies rrom prosecu· tion proceedings, necessary provision would have been included in Section 141 or the NI Act. More significantly, when Section 22(1) or SICA was amended in 1994 by inserting words ;'(and no suit for the recovery or money or for enforcement or any security against industrial company or or B guarantee in respect of any loans or advance granted to industrial com- pany)". Parliament did not specifically include prosecution proceedings within the ambit of the ban. [824-E] 1.3. Section 138 of the NI Act is a penal provision the commission or which offence entails a conviction and sentence on proof of the guilt in a C duty conducted criminal proceedings. Once the offence under Section 138 is completed the prosecution proceedings can be initiated not for recovery of the amount covered by the cheque but for bringing the offender to penal liability. [823-H; 824-A] D 1.4. The word "suit" envisaged in Section 22(1), SICA, cannot be stretched to criminal prosecutions. The suit mentioned therein is restricted to recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company. As the suit is clearly delineated in the provision itself, the context would not admit of any other stretching E process. [823-G] 1.5. Maintainability of a prosecution proceeding is not to be tested on the touchstone of any practical hurdle in enforcing the sentence which might be imposed on a company after conviction. Second is, there is no p insurmountable hurdle for recovery of the fine covered by the sentence even from a sick industrial compa.ny because the ban contained in Section 22(1) is only conditional as could be discerned from the last limb thereof which reads thus: 'Except with the consent of the Board or, as the case may be, the Appellate Authority." It means that with such consent the court would be In a position to resort to proceedings for distress against the G properties of the sick industrial company. [822-F-G] Anil Hada v. India Acrylic Ltd., [2000] 1 SCC 1, relied On. Maharashtra Tubes Ltd. v. State l11dustrial & Investment Corporation H of Maharashtra Ltd. & Anr., [1993) 2 SCC 144, distinguished. ·- B.S.I. v. GII<T HOLDINGS PVT. LTD. ~THOMAS, J.j
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