A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Sick Industrial Companies (Special Provisions) Act (1 of 1986), Section 22 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Constitution of India, Article 227 -- Dishonour of Cheque -- Prosecution of the Company/ Directors – SICA proceedings -- Maintainability of complaint u/s 138 of NI Act -- Section only creates an embargo against disposal of assets of the company for recovery of its debts -- 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 -- Section does not bar payment of money by the company or its directors to other persons for satisfaction of their legally enforceable dues -- Section 22 SICA does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence u/s 138 of the NI Act against a company or its Directors.

(Para 18)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Sick Industrial Companies (Special Provisions) Act (1 of 1986), Section 22-A – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Constitution of India, Article 227 -- Dishonour of Cheque -- Prosecution of the Company/ Directors – Company declared Sick -- Maintainability of complaint u/s 138 of NI Act -- In a case in which the BIFR has submitted its report declaring a company as ‘sick’ and has also issued a direction u/s 22-A restraining the company or its directors not to dispose of any of its assets except with consent of the Board then the contention raised that a criminal case for the alleged offence u/s 138 NI Act cannot be instituted during the period in which the restraint order passed by the BIFR remains operative cannot be rejected outright -- Whether the contention can be accepted or not will depend on the facts and circumstances of the case -- For instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the BIFR u/s 22-A was passed against the company then it cannot be said that the offence u/s 138 NI Act was completed -- In such a case it may reasonably be said that the dishonoring of the cheque by the bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused -- In such circumstances it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case.

(Para 19, 20)