Bhagwati Prasad, J. - (1.) The point raised by the learned counsel for the petitioners in this case is that the criminal prosecution launched against the Company under Section 138 of the Negotiable Instruments Act, 1881 (referred to hereinafter as the Act) cannot be continued after an order is made under Section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985 (referred to hereinafter as the SICA).
(2.) This proposition of the learned counsel for the petitioners can be viewed from the angle of the law laid down by the Honble Supreme Court in the case of Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., and others reported in (2000) 2 SCC 745 wherein the Honble Supreme Court has observed as under:- "In our considered view Section 22 SICA does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence under Section 138 of the NI Act against a company or its directors. The Section as we read it only creates and embargo against disposal of assets of the company for recovery of its debts. The purpose of such an embargo is to preserve the assets of the company from being attached or sold for realisation of dues of the creditors. The Section does not bar payment of money by the company or its directors to other persons for satisfaction of their legally enforceable dues."
(3.) Learned counsel for the petitioners urges that the law laid down by the Honble Supreme Court in the aforesaid case deserves to be viewed in view of a subsequent decision rendered by the Honble Supreme Court in the case of BSI Ltd. and another v. Gift Holdings Pvt. Ltd. and another, reported in (2000) 2 SCC 737 wherein the Honble Supreme Court has observed as under : "A criminal prosecution is neither for recovery of money nor for enforcement of any security etc. Section 138 of the NI Act is a penal provision the commission of which offence entails a conviction and sentence on proof of the guilt in duly 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. What was considered in Maharashtra Tubes Ltd. is whether the remedy provided in Section 29 or Section 31 of the State Finance Corporation Act, 1951 could be pursued notwithstanding the ban contained in Section 22 of SICA. Hence the legal principle adumbrated in the said decision is of no avail to the appellants.";