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2022 DIGILAW 364 (GUJ)

YARLAGADA SHIVARAMPRASAD v. STATE OF GUJARAT

2022-03-08

VIPUL M.PANCHOLI

body2022
JUDGMENT : VIPUL M. PANCHOLI, J. 1. Heard, learned Advocate, Mr. Kabir Hathi, for learned Advocate, Mr. A.V. Nair, for the respective petitioner and learned APP, Mr. L.B. Dabhi, for Respondent No. 1-State. 2. Since, all these petitions involve identical question of law and facts, with the consent of the learned Advocates for the parties, they are taken-up for final hearing at the admission stage and being disposed of by this common judgment and order. 3. The present petitions are filed under Article 226 of the Constitution of India, read with Section 482 of the Code of Criminal Procedure, 1973 (in brief ‘the Code’) for quashing and setting aside the criminal complaint filed by Respondent No. 2 against the present petitioners, being Criminal Complaint Nos. 27831, 11055, 26300, 2499 and 8351 of 2016, which are pending before the learned JMFC, Vadodara, for adjudication. 4. For the sake of convenience, the facts are drawn from Special Criminal Application No. 1055 of 2022, which reads as under: 4.1 Respondent No. 2-original complainant filed a complaint, being Criminal Complaint No. 27831 of 2016, against the petitioner in Special Criminal Application No. 1055 of 2022 and others for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘NI Act’) before the concerned Magisterial Court. 4.2 In the said complaint, it is alleged that certain goods were delivered by Respondent No. 2-original complainant to original accused No. 1-Company during the period between June, 2014 to October, 2014. Accused No. 1-Company, therefore, issued three cheques in favour of Respondent No. 2-original complainant, i.e. the cheques bearing No. 841284, Dated 14.01.2016, No. 841285, Dated 29.01.2016 and No. 841286, Dated 13.02.2016 for the amount of Rs. 5,00,000/- each, drawn on Indian Overseas Bank. 4.3 When the aforesaid three cheques were presented on 24.02.2016, the same were dishonored with the endorsement “Funds Insufficient.” 4.4 Respondent No. 2-original complainant, therefore, issued statutory notice to all the accused persons, including the present petitioners, as required under Section 138 of the NI Act on 14.03.2016. Said notice was duly served on the accused persons. 4.3 When the aforesaid three cheques were presented on 24.02.2016, the same were dishonored with the endorsement “Funds Insufficient.” 4.4 Respondent No. 2-original complainant, therefore, issued statutory notice to all the accused persons, including the present petitioners, as required under Section 138 of the NI Act on 14.03.2016. Said notice was duly served on the accused persons. Here, it may be noted that the original accused No. 1-Company did not accept the said notice and therefore, the same was returned with the endorsement “Unclaimed.” 4.5 It is averred that since the amounts of the cheques are not paid, Respondent No. 2- original complainant instituted the proceedings under Section 138 of the NI Act before the concerned Magisterial Court, where, the Court concerned issued the process to the accused persons. 4.6 It is, further, stated that Respondent Nos. 3/original accused No. 1-Company were sick industrial units and therefore, original accused No. 1-Company was registered with the Board for Industrial and Financial Reconstruction (hereinafter ‘BIFR’) as BIFR No. 107 of 2015 on 13.08.2015, where, the Registrar issued notice dated 13.08.2015, restraining original accused No. 1-Company from disposing of or alienating, in any manner, fixed assets of accused No. 1-Company without the permission of the BIFR. 4.7 It appears that original accused No. 1-Company and the petitioners, therein, then, preferred a petition under Section 482 of the Code, being Special Criminal Application No. 4344 of 2017, seeking to quash the impugned complaint. However, the Coordinate Bench of this Court (Coram: Mr. A.S. Supehia, J.) dismissed the said petition vide order dated 18.07.2019. 4.7.1 The petitioners challenged the order dated 18.07.2019 before the Hon’ble Apex Court, by filing Special Leave Petition (Criminal) No. 8993 of 2019. However, the Hon’ble Apex Court also dismissed the same vide order dated 04.10.2019. 4.8 It may be noted that in the meantime, an application under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘IB Code’) for liquidation of original accused No. 1-Company was filed and consequently, the National Company Law Tribunal (in brief ‘the NCLT’) Chennai, passed the order dated 24.08.2018 to liquidate original accused No. 1-Company. 4.9 In the above background, the petitioners, i.e. the erstwhile directors of original accused No. 1-Company, have preferred the present petitions seeking to quash and set aside the impugned complaints. 5. Learned Advocate, Mr. Hathi, assisted by learned Advocate, Mr. 4.9 In the above background, the petitioners, i.e. the erstwhile directors of original accused No. 1-Company, have preferred the present petitions seeking to quash and set aside the impugned complaints. 5. Learned Advocate, Mr. Hathi, assisted by learned Advocate, Mr. Nair, for the petitioners submitted that the order of liquidation of original accused No. 1-Company has already been passed by the NCLT, as per the provisions of Section 33(5) of the IB Code and therefore, the proceedings under Section 138 of the NI Act cannot be continued against original accused No. 1-Company as well as the petitioners-erstwhile directors. 5.1 It was submitted that it is always open to Respondent No. 2-original complainant to approach the liquidator in connection with the claim made in the complaint filed under Section 138 of the NI Act. 5.2 If, the complainant is allowed to prosecute original accused No. 1-Company and its erstwhile directors, i.e. the present petitioners, under Section 138 read with Section 141 of the NI Act for recovery of the cheque amount and at the same time it is allowed to recover the money under the IC Code, the same would disturb the liquidation process and would defeat the claims of other creditors. 5.3 It was, further, submitted that the erstwhile directors of original accused No. 1- Company, i.e. the present petitioners, are arraigned as accused for being vicariously liable for the act of original accused No. 1-Company, as per Section 141 of the NI Act, and therefore, when the proceedings cannot be continued against original accused No. 1-Company, in view of the bar under the IB Code, present petitioners-erstwhile directors of original accused No. 1-Company cannot be prosecuted with. 5.4 It was submitted, in the facts of the present case, that the petitioners-erstwhile directors of accused No. 1-Company were neither in charge nor had any authority to deal with the assets of accused No. 1-company under Section 22A of the Sick Industrial Companies Act, 1985 (in brief ‘SICA’) and accordingly, prima-facie, no offence is made out qua the present petitioners-erstwhile directors. 5.5 In support of his submissions, learned Advocate, Mr. Hathi, placed reliance on the decision of the Apex Court, rendered in the case of P. Mohanraj and Others vs. Shah Brothers Ispat Private Limited, (2021) 6 SCC 258 , more particularly, Paragraphs-49 to 51 thereof. 5.6 Learned Advocate, Mr. 5.5 In support of his submissions, learned Advocate, Mr. Hathi, placed reliance on the decision of the Apex Court, rendered in the case of P. Mohanraj and Others vs. Shah Brothers Ispat Private Limited, (2021) 6 SCC 258 , more particularly, Paragraphs-49 to 51 thereof. 5.6 Learned Advocate, Mr. Hathi, next placed reliance on the decision of the Apex Court in the case of M/s. Gimpex Private Limited vs. Manoj Goel, rendered in Criminal Appeal Nos. 1069-1075 of 2021 in SLP (Criminal) Nos. 7632-7638 of 2019 and more particularly, Paragraphs-27 and 28 of the said decision. 5.7 After referring to the aforesaid decisions of the Apex Court, it was submitted that the prime object of Section 138 of the NI Act is to recover the dues, which a creditor-complainant can recover by placing his claim before the liquidator of the concerned company, once, such a company is ordered to be liquidated under the provisions of the IB Code. 5.8 At this stage, it was contended that the present petitions, which are the successive quashing petitions, are maintainable in view of the decision of the Apex Court in the case of Anil Khadkiwala vs. State (Government of NCT) and Another, (2019) 17 SCC 294 . 5.8.1 Relying on the aforesaid decision, it was submitted that the plea with regard to the effect of passing of the order of liquidation by the NCLT, on the proceedings under Section 138 of the NI Act, was not raised before this Court at the time of hearing of Special Criminal Application No. 4344 of 2017, and therefore, the present petitions are maintainable. 6. On the other hand learned APP, Mr. Dabhi, appearing for Respondent No. 1-State strongly opposed these petitions and contended that the order of liquidation of original accused No. 1-Company was passed by the NCLT on 24.08.2018, whereas, this Court dismissed Special Criminal Application No. 4344 of 2017 filed by the present petitioners as well as original accused No. 1-company on 18.07.2019. Meaning thereby, aforesaid contention was very much available to the petitioners and therefore, the petitioners must have argued all the points available to it before this Court. Meaning thereby, aforesaid contention was very much available to the petitioners and therefore, the petitioners must have argued all the points available to it before this Court. 6.1 It was, further, submitted that, while dismissing the SLP filed by the petitioners, challenging the decision of this Court in the earlier round of litigation, i.e. in Special Criminal Application No. 4344 of 2017, the Hon’ble Apex Court did not interfere with the order of this Court, and therefore, the present successive petitions, filed under Section 482 of the Code, are not maintainable. 6.2 Learned APP, thereafter, submitted that even, as per the decision rendered by the Apex Court in the case of P. Mohanraj and Others (Supra), the moratorium proceedings, as provided under Section 14 of the IB Code, would apply only to the corporate debtors and the natural persons, mentioned under Section 141 of the NI Act, would continue to be statutorily liable under the proceedings of the NI Act. 6.3 It was, therefore, submitted that the present, successive petitions filed by the petitioners-erstwhile directors of original accused No. 1-Company may not be entertained. 7. Having heard the learned Advocates for the parties and having perused the material on record, it emerges that, admittedly, these are the successive petitions filed by the petitioners-erstwhile directors of accused No. 1-Company under Section 482 of the Code, read with Article 226 of the Constitution of India. 7.1 It may be noted that the earlier petition, being Special Criminal Application No. 4344 of 2017, filed by original accused No. 1-company and its directors, i.e. the present petitioners, came to be dismissed by this Court vide order dated 18.07.2019. Further, the SLP filed against the said order also came to be dismissed by the Apex Court. 7.2 Now, the present petitions are filed by the petitioners-erstwhile directors of accused No. 1-Company, raising the contention that, once, the order of liquidation of accused No. 1-Company was passed by the NCLT, as per the provisions of the IB Code, the proceedings under Section 138 of the NI Act cannot be continued against original accused No. 1-Company and its directors, i.e. the present petitioners. 7.3 Thus, in the present petitions, this Court is required to address the two questions, which are as under: (i) Whether, the present successive petitions filed by the petitioners-erstwhile directors of accused No. 1-Company under Section 482 of the Code, in the facts and circumstances of the present case, are maintainable? (ii) Whether, the proceedings under Section 138 of the NI Act can be continued against the natural persons, i.e. the present petitioners-erstwhile directors of accused No. 1-Company, after the passing of order of liquidation of accused No. 1-Company by the NCLT? 7.4 From the material placed on record, it transpires that the original accused No. 1-Company and its erstwhile directors, including the present petitioners, in the earlier round of litigation had filed Special Criminal Application No. 4344 of 2017 before this Court for quashing and setting aside the impugned complaints, filed by Respondent No. 2-original complainant under Section 138 of the NI Act. 7.4.1 In the said petition, it was contended before this Court that original accused No. 1- Company is a sick industrial company and its case is duly registered with BIFR. Further, as per the provisions of Section 22 and 22A of the SICA, a restraint order was passed on 13.08.2015 and therefore, the impugned complaints are required to be quashed and set aside, where, this Court considered the question, as to whether, the provisions of Section 22 of the SICA as well as the order dated 13.08.2015, passed under the SICA shall apply to the criminal cases registered under the provisions of Section 138 of the NI Act. This Court, after hearing both the sides, dismissed Special Criminal Application No. 4344 of 2017, which was filed by original accused No. 1-Company vide order dated 18.07.2019. 7.5 At this stage, it is pertinent to note that before this Court dismissed Special Criminal Application No. 4344 of 2017 on 18.07.2019, the NCLT had already passed the order dated 24.08.2018, ordering liquidation of accused No. 1-Company. Therefore, the contention raised by the learned Advocate, Mr. Hathi, for the petitioners in this petition was very much available to them, while this Court was considering the submissions made by the learned Advocate for the petitioners on 18.07.2019 in earlier round of litigation. Therefore, the contention raised by the learned Advocate, Mr. Hathi, for the petitioners in this petition was very much available to them, while this Court was considering the submissions made by the learned Advocate for the petitioners on 18.07.2019 in earlier round of litigation. 7.5.1 It is not the case of the petitioners that the order of liquidation of accused No. 1- Company is passed by the NCLT, after the order dated 18.07.2019 passed by this Court and therefore, the same cannot be treated as a change of circumstances to file a successive petition under Section 482 of the Code. 7.5.2 So far as the argument advanced by the learned Advocate, Mr. Hathi, for the applicant is concerned that the aforesaid contention was not raised before this Court in the earlier round of litigation is concerned, the fact remains that the said argument was very much available to the petitioners, when this Court dismissed Special Criminal Application No. 4344 of 2017 on 18.07.2019. 7.5.3 On the contrary, if, such a contention raised by the learned Advocate, Mr. Hathi, for the present petitioners is accepted at this stage, then, the situation may arise that even after the dismissal of this petition also, the petitioners may file another successive petition by raising another contention that the same was not raised before this Court, at the time of disposal of the present successive petitions. Thus, practically, there would be no end of such a litigation and the petitioners would go on filing successive petitions, one after the other, by raising different contention on each occasion. This Court is, therefore, of the view that such a contention cannot be accepted, in the peculiar facts of the present case, at this stage. 7.6 In Anil Khadkiwala (Supra), the Hon’ble Apex Court has held that successive petition under Section 482 of the Code is maintainable, if, there is change in circumstances. 7.6.1 However, in the present case, it cannot be said that there is change in circumstance for filing the present petitions. As observed herein above, aforesaid contention was very much available to the petitioners at the time of disposal of Special Criminal Application No. 4344 of 2017, and therefore, it is to be presumed that the petitioners had taken all the contentions at the time of hearing of the earlier petition in the first round of litigation. As observed herein above, aforesaid contention was very much available to the petitioners at the time of disposal of Special Criminal Application No. 4344 of 2017, and therefore, it is to be presumed that the petitioners had taken all the contentions at the time of hearing of the earlier petition in the first round of litigation. Thus, this Court is of the view that, under the circumstances, the present, successive petitions, filed under Section 482 of the Code, are not maintainable. 7.6.2 Thus, the answer to question No. (i) framed by this Court, as mentioned above, is essentially to be given in NEGATION. 8. Though, this Court is of the opinion that the present petitions are not maintainable, since, the learned Advocate for the petitioners has argued the matters on merit, this Court deems it fit not to dismiss the same solely on the ground of maintainability, but, to decide the same on merit as well. 8.1 In the present petitions, it is mainly contended on behalf of the petitioners that the petitioners are the erstwhile directors of accused No. 1-Company, which has been ordered to be liquidated and therefore, it is always open to the complainant-Respondent No. 2 to submit its claim before the liquidator and thereby, the outstanding amount can be recovered in the liquidation proceedings and in view of the provisions contained in the IB Code, the proceedings under Section 138 of the NI Act cannot be continued against accused No. 1-Company and its directors, i.e. the petitioners, herein. 8.2 It was mainly contended on behalf of the petitioners that, as held by the Apex Court in the case of P. Mohanraj and Others (Supra), the proceedings under Section 138 can be said to be a “civil sheep” in a “criminal wolf’s” clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases. The Apex Court, further, observed and held as under: “49. A cursory reading of Section 142 will again make it clear that the procedure under the Cr.P.C. has been departed from. First and foremost, no court is to take cognizance of an offence punishable under Section 138 except on a complaint made in writing by the payee or the holder in due course of the cheque - the victim. A cursory reading of Section 142 will again make it clear that the procedure under the Cr.P.C. has been departed from. First and foremost, no court is to take cognizance of an offence punishable under Section 138 except on a complaint made in writing by the payee or the holder in due course of the cheque - the victim. Further, the language of Section 142(1) (b) would again show the hybrid nature of these provisions inasmuch as a complaint must be made within one month of the date on which the “cause of action” under clause (c) of the proviso to Section 138 arises. The expression “cause of action” is a foreigner to criminal jurisprudence, and would apply only in civil cases to recover money. Chapter XIII of the Cr.P.C. consisting of Sections 177 to 189, is a chapter dealing with the jurisdiction of the criminal courts in inquiries and trials. When the jurisdiction of a criminal court is spoken of by these Sections, the expression “cause of action” is conspicuous by its absence. xxx xxx xxx 51. By another amendment made in 2018, the hybrid nature of these provisions gets a further tilt towards a civil proceeding, by the power to direct interim compensation under Sections 143A and 148 which are set out herein below: “143-A. Power to direct interim compensation: (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant: (a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint. (b) in any other case, upon framing of charge. (2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque. (3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque. (3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque. (4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant. (5) The interim compensation payable under this Section may be recovered as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) The amount of fine imposed under Section 138 or the amount of compensation awarded under Section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this Section.” “148. Power of Appellate Court to order payment pending appeal against conviction: (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal by the drawer against conviction under Section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court: Provided that the amount payable under this sub-section shall be in addition to any interim compensation paid by the appellant under Section 143-A. (2) The amount referred to in sub-section (1) shall be deposited within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the appellant. (3) The Appellate Court may direct the release of the amount deposited by the appellant to the complainant at any time during the pendency of the appeal: Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to the appellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.” 8.3 In M/s. Gimpex Private Limited (Supra), the Apex Court has observed and held as under: “27 The nature of the offence under Section 138 of the NI Act is quasi-criminal in that, while it arises out of a civil wrong, the law, however, imposes a criminal penalty in the form of imprisonment or fine. The purpose of the enactment is to provide security to creditors and instil confidence in the banking system of the country. The nature of the proceedings under Section 138 of the NI Act was considered by a three judge Bench decision of this Court in P. Mohanraj and Others vs. Shah, (1999) 7 SCC 510 and Brothers Ispat Private Limited, where Justice R.F. Nariman, after adverting to the precedents of this Court, observed that: “53. A perusal of the judgment in S.A.L. Narayan Row vs. Ishwarlal Bhagwandas, (1966) 1 SCR 190 : AIR 1965 SC 1818 would show that a civil proceeding is not necessarily a proceeding which begins with the filing of a suit and culminates in execution of a decree. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. Given these tests, it is clear that a Section 138 proceeding can be said to be a “civil sheep” in a “criminal wolf’s” clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases, as has been seen by us in the analysis made hereinabove of Chapter XVII of the Negotiable Instruments Act.” 28. Given that the primary purpose of Section 138 of the NI Act is to ensure compensation to the complainant, the NI Act also allows for parties to enter into a compromise, both during the pendency of the complaint and even after the conviction of the accused. The decision of this Court in Meters and Instruments (P) Ltd. vs. Kanchan Mehta, summarises the objective of allowing compounding of an offence under Section 138 of the NI Act: “18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court.” xxx xxx xxx 31. Thus, under the shadow of Section 138 of the NI Act, parties are encouraged to settle the dispute resulting in ultimate closure of the case rather than continuing with a protracted litigation before the court. This is beneficial for the complainant as it results in early recovery of money; alteration of the terms of the contract for higher compensation and avoidance of litigation. Equally, the accused is benefited as it leads to avoidance of a conviction and sentence or payment of a fine. It also leads to unburdening of the judicial system, which has a huge pendency of complaints filed under Section 138 of the NI Act. In Damodar S. Prabhu (supra) this Court had emphasised that the compensatory aspect of the remedy under Section 138 of the NI Act must be preferred and has encouraged litigants to resolve disputes amicably. It also leads to unburdening of the judicial system, which has a huge pendency of complaints filed under Section 138 of the NI Act. In Damodar S. Prabhu (supra) this Court had emphasised that the compensatory aspect of the remedy under Section 138 of the NI Act must be preferred and has encouraged litigants to resolve disputes amicably. The Court observed: “18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute. Furthermore, the written submissions filed on behalf of the learned Attorney General have stressed on the fact that unlike Section 320 Cr.P.C. Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court. 19. As mentioned earlier, the learned Attorney General’s submission is that in the absence of statutory guidance, parties are choosing compounding as a method of last resort instead of opting for it as soon as the Magistrates take cognizance of the complaints. One explanation for such behaviour could be that the accused persons are willing to take the chance of progressing through the various stages of litigation and then choose the route of settlement only when no other route remains. While such behaviour may be viewed as rational from the viewpoint of litigants, the hard facts are that the undue delay in opting for compounding contributes to the arrears pending before the courts at various levels. If the accused is willing to settle or compromise by way of compounding of the offence at a later stage of litigation, it is generally indicative of some merit in the complainant’s case. In such cases it would be desirable if parties choose compounding during the earlier stages of litigation. If the accused is willing to settle or compromise by way of compounding of the offence at a later stage of litigation, it is generally indicative of some merit in the complainant’s case. In such cases it would be desirable if parties choose compounding during the earlier stages of litigation. If however, the accused has a valid defence such as a mistake, forgery or coercion among other grounds, then the matter can be litigated through the specified forums. [.....] 23. We are also in agreement with the learned Attorney General’s suggestions for controlling the filing of multiple complaints that are relatable to the same transaction. It was submitted that complaints are being increasingly filed in multiple jurisdictions in a vexatious manner which causes tremendous harassment and prejudice to the drawers of the cheque. For instance, in the same transaction pertaining to a loan taken on an instalment basis to be repaid in equated monthly instalments, several cheques are taken which are dated for each monthly instalment and upon the dishonour of each of such cheques, different complaints are being filed in different courts which may also have jurisdiction in relation to the complaint. In light of this submission, we direct that it should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed under Section 200 Cr.P.C. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively.” xxx xxx xxx 37. Allowing prosecution under both sets of complaints would be contrary to the purpose of the enactment. As noted above, it is the compensatory aspect of the remedy that should be given priority as opposed to the punitive aspect. The complainant in such cases is primarily concerned with the recovery of money, the conviction of the accused serves little purpose. In fact, the threat of jail acts as a stick to ensure payment of money. As noted above, it is the compensatory aspect of the remedy that should be given priority as opposed to the punitive aspect. The complainant in such cases is primarily concerned with the recovery of money, the conviction of the accused serves little purpose. In fact, the threat of jail acts as a stick to ensure payment of money. This Court in R. Vijayan vs. Baby, (2012) 1 SCC 260 , emphasised how punishment of the offender is of a secondary concern for the complainant in the following terms: “17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation Under Section 357(1)(b) of the Code. Though a complaint Under Section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged Under Section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque. Under Section 357(1)(b) of the Code and the provision for compounding the offences Under Section 138 of the Act most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary.” 8.4 Thus, relying upon the aforesaid observations made by the Hon’ble Apex Court, learned Advocate, Mr. Hathi, for the petitioners submitted that the nature of offence under Section 138 of the NI Act is quasi-criminal in nature, where, it, though, arise out of civil wrong, the law imposes criminal penalty in the form of imprisonment as well as the fine. 8.5 It was further submitted that in such cases, the complainant is primarily concerned with the recovery of the money and the conviction of the accused serves little purpose. Learned Advocate, Mr. Hathi, therefore, urged that as the original accused No. 1-Company is under liquidation, Respondent No. 2-complainant can recover the money under the provisions of the IB Code and hence, the proceedings under Section 138 of the NI Act qua the present petitioners-erstwhile directors of accused No. 1-Company are required to be quashed and set aside. 8.6 This Court is of the view that the aforesaid contention raised by the learned Advocate, Mr. Hathi, is misconceived. If, the decision rendered by the Hon’ble Apex Court in the case of P. Mohanraj and Others (Supra) is carefully seen, the Apex Court, on the contrary, has specifically observed as under in Paragraphs-101 and 102 thereof: “WHETHER NATURAL PERSONS ARE COVERED BY SECTION 14 OF THE IBC 101. As far as the Directors/persons in management or control of the corporate debtor are concerned, a Section 138/141 proceeding against them cannot be initiated or continued without the corporate debtor - see Aneeta Hada (supra). This is because Section 141 of the Negotiable Instruments Act speaks of persons in charge of, and responsible to the company for the conduct of the business of the company, as well as the company. The Court, therefore, in Aneeta Hada (supra) held as under: (SCC pp. 686-688, Paras 51, 56 and 58-59) “51. We have already opined that the decision in Sheoratan Agarwal, (1984) 4 SCC 352 : 1984 SCC (Cri) 620 runs counter to the ratio laid down in C.V. Parekh (1970) 3 SCC 491 : 1971 SCC (Cri) 97 which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada (2000) 1 SCC 1 : 2001 SCC (Cri) 174 has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. On the aforesaid ratiocination, the decision in Anil Hada (2000) 1 SCC 1 : 2001 SCC (Cri) 174 has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.” xxx xxx xxx “56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term “as well as” in the Section is of immense significance and, in its tentacle, it brings in the company as well as the Director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the Directors or other officers is tenable even if the company is not arraigned as an accused. The words “as well as” have to be understood in the context.” xxx xxx xxx “58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (1970) 3 SCC 491 : 1971 SCC (Cri) 97, which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (1984) 4 SCC 352 : 1984 SCC (Cri) 620 does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (2000) 1 SCC 1 : 2001 SCC (Cri) 174, is overruled with the qualifier as stated in Para-51. The decision in Modi Distillery (1987) 3 SCC 684 : 1987 SCC (Cri) 632, has to be treated to be restricted to its own facts as has been explained by us hereinabove.” 102. Since the corporate debtor would be covered by the moratorium provision contained in Section 14 of the IBC, by which continuation of Section 138/141 proceedings against the corporate debtor and initiation of Section 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted, what is stated in paragraphs 51 and 59 in Aneeta Hada (supra) would then become applicable. The legal impediment contained in Section 14 of the IBC would make it impossible for such proceeding to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act.” 8.7 Thus, from the aforesaid observations, it is clear that moratorium provision contained under Section 14 of the IB Code would apply only to the corporate debtor and the proceedings under Chapter-XVII of the NI Act can be continued against natural persons mentioned under Section 141 of the NI Act. 8.8 At this stage, this Court would like to refer to the decision of the Apex Court in Nag Leathers Pvt. Ltd. vs. Dynamic Marketing Partnership, 2021 SCC Online SC 1123, wherein, at Paragraphs-7 to 11, the Apex Court observed and held as under: “7. In that case, apart from the corporate debtor, certain natural persons who were stated to be in-charge of and responsible for the affairs of the corporate debtor were also arrayed as accused and, as such, the proceedings under Section 138/141 of the Act were allowed to be continued as against such natural persons. 8. However, in the instant case, the complaint was filed only against the corporate entity and none of the natural persons who were stated to be the in-charge of and responsible for the affairs of the corporate entity were arrayed as accused. 9. The decision rendered by this Court in P. Mohanraj (supra) has since then been followed by another three-Judge Bench of this Court in Gimpex Private Limited vs. Manoj Goel, 2021 SCC Online SC 925 : 2021 (12) SCALE 269 . 10. It must therefore be held that the corporate debtor, namely, the appellant herein cannot now be proceeded against under Section 138 of the Act. Consequently, the proceedings initiated against the appellant deserve to be quashed. 11. Since no natural person was arrayed as accused, the exception carved out in the decision of this Court in P. Mohanraj (supra) does not arise in the instant case. 12. The appeal is thus allowed. Consequently, the proceedings initiated against the appellant deserve to be quashed. 11. Since no natural person was arrayed as accused, the exception carved out in the decision of this Court in P. Mohanraj (supra) does not arise in the instant case. 12. The appeal is thus allowed. The decision under challenge is set-aside; the Criminal Original Petition preferred by the appellant under Section 482 of the Code is allowed and the proceedings against the appellant are quashed.” 8.9 Thus, the Hon’ble Apex Court also considered the observations made by the Apex Court in the earlier decision in P. Mohanraj and Others (Supra). 8.10 In M/s. Gimpex Private Limited (Supra), the Apex Court was considering the issue, as to whether, the parallel prosecution arising from a single transaction under Section 138 of the NI Act can be sustained. The relevant observations made at Paragraph-23 thereof reads thus: “23. The question before this Court is whether parallel prosecutions arising from a single transaction under Section 138 of the NI Act can be sustained. In this case, a set of cheques were dishonoured, leading to filing of the first complaint under Section 138 of the NI Act. The parties thereafter entered into a deed of compromise to settle the matter. While the first complaint was pending, the cheques issued pursuant to the compromise deed were dishonoured leading to the second complaint under Section 138 of the NI Act. Both proceedings are pending simultaneously and it is for this Court to decide whether the complainant can be allowed to pursue both the cases or whether one of them must be quashed and the consequences resulting from such quashing.” 8.11 In the matter before the Apex Court, the first complaint filed under Section 138 of the NI Act was pending before the concerned Court and thereafter, the parties executed a deed of compromise to settle the matter. However, the cheques issued pursuant to such compromise were also dishonored and therefore, the second complaint under Section 138 of the NI Act came to be filed. As both the proceedings were pending simultaneously, the Hon’ble Apex Court decided the issue, as to whether, the complainant can be allowed to pursue both the cases or one of them must be quashed, where, the Hon’ble Apex Court observed and held as under: “39. As both the proceedings were pending simultaneously, the Hon’ble Apex Court decided the issue, as to whether, the complainant can be allowed to pursue both the cases or one of them must be quashed, where, the Hon’ble Apex Court observed and held as under: “39. A contrary interpretation, which allows for the complainant to pursue both the original complaint and the consequences arising out of the settlement agreement, would lead to contradictory results. First, it would allow for the accused to be prosecuted and undergo trial for two different complaints, which in its essence arise out of one underlying legal liability. Second, the accused would then face criminal liability for not just the violation of the original agreement of the transaction which had resulted in issuance of the first set of cheques, but also the cheques issued pursuant to the compromise deed. Third, instead of reducing litigation and ensuring faster recovery of money, it would increase the burden of the criminal justice system where judicial time is being spent on adjudicating an offence which is essentially in the nature of a civil wrong affecting private parties - a problem noted in multiple judgments of this Court cited above. Most importantly, allowing the complainant to pursue parallel proceedings, one resulting from the original complaint and the second emanating from the terms of the settlement would make the settlement and issuance of fresh cheques or any other partial payment made towards the original liability meaningless. Such an interpretation would discourage settlement of matters since they do not have any effect on the status quo, and in fact increase the protracted litigation before the court. xxx xxx xxx “50 We are unable to accept the line of argument on two grounds. First, as held above, a settlement agreement effaces the original complaint and thus, it is not up to the parties, either complainant or accused, to simply reverse the effects of that agreement and re-litigate the original complaint relating to the same underlying transaction under Section 138 of the NI Act. Second, the breach of the deed of compromise has arisen due to the dishonour of the cheques which were issued by the accused towards discharge of the remaining balance of Rs. 7 crores. In this backdrop, it was far-fetched for the High Court to have quashed the proceedings in exercise of its jurisdiction under Section 482. Second, the breach of the deed of compromise has arisen due to the dishonour of the cheques which were issued by the accused towards discharge of the remaining balance of Rs. 7 crores. In this backdrop, it was far-fetched for the High Court to have quashed the proceedings in exercise of its jurisdiction under Section 482. For as a two judge Bench of this Court held in HMT Watches Ltd. vs. M.A. Abida: “10..........Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties.” Following the above principle, another decision of a two judge Bench in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Ltd. held: “16. As is clear from the above observations of this Court, it is well settled that while dealing with a quashing petition, the court has ordinarily to proceed on the basis of averments in the complaint. The defence of the accused cannot be considered at this stage. The court considering the prayer for quashing does not adjudicate upon a disputed question of fact.” xxx xxx xxx 54. A submission was urged by the appellants that in the event the second complaint is found to be non-maintainable and the compromise deed is held to be invalid, they would be left remediless and thus, the first trial should be allowed to continue. We do not find any merit in this submission. In the event that the compromise deed is found to be void ab initio on account of coercion, the very basis for quashing of the first complaint is removed since the settlement agreement is deemed to have never existed and hence it had no effect on the liability subsisting under the first complaint. The appellants may then approach the competent court for reinstatement of the original complaint and the trial can proceed on that basis. Conclusion 55. The appellants may then approach the competent court for reinstatement of the original complaint and the trial can proceed on that basis. Conclusion 55. For the above reasons, we hereby pass the following order: (i) We are of the view that the Single Judge was in error in quashing the complaint C.C. No. 389/2017 pending on the file of the Seventh Metropolitan Magistrate, Chennai. The judgment of the Single Judge quashing the complaint is set aside. (ii) Based on our analysis in Section C.1 above, we hereby quash the complaint C.C. Nos. 3326-3329 of 2012 and C.C. Nos. 99-101 of 2013.” 8.12 Thus, keeping in mind the observations made by the Hon’ble Apex Court in the aforesaid decision, if, the issue raised before this Court in the form of present petitions is considered, in the opinion of this Court, the decision of the Apex Court in M/s. Gimpex Private Limited (Supra) would render no assistance to the case of the petitioners in the facts of the case on hand. 8.13 Thus, in view of the discussion as above, the answer to question (ii) would be in affirmative and that the proceedings under Section 138 of the Ni Act can be continued against natural persons, i.e. the erstwhile directors of accused No. 1-Company-petitioners, herein, even after the passing of order of liquidation by the NCLT under the provisions of the IB Code. 9. Resultantly, all these petitions fail and are DISMISSED, accordingly. 9.1 It is needless to say that the trial Court concerned shall proceed with the complaints pending before it and shall adjudicate the same in accordance with law, WITHOUT being influenced by the observations made by this Court, herein-above. No order as to costs.