Isabella Mariam

The High Court of Kerala Single Bench of Justice Viju Abraham has recently held that the leave of the National Company Law Tribunal is not required to pursue criminal complaints when a company has been ordered to be wound up by the High Court under the Companies Act, 1956. In the case concerning Kalpetta Janakshema Maruthi Chits Pvt. Ltd., in liquidation, the Court permitted the Official Liquidator to continue six cheque-dishonour prosecutions under Section 138 of the Negotiable Instruments Act, 1881 before the Chief Judicial Magistrate Court, Kalpetta, ruling that such proceedings do not affect the company’s assets and thus fall outside the leave requirement under Section 279 of the 2013 Act or Section 446 of the 1956 Act.

The matter arose in connection with M/s. Kalpetta Janakshema Maruthi Chits Pvt. Ltd., a company ordered to be wound up by the High Court of Kerala under the provisions of the Companies Act, 1956. Following the winding-up order, several criminal complaints under Section 138 of the Negotiable Instruments Act, 1881 were pending before the Chief Judicial Magistrate Court, Kalpetta, relating to dishonour of cheques issued by the company.

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On 25 March 2025, the Chief Judicial Magistrate Court, Kalpetta, by official memorandum, directed the company in liquidation to obtain leave of the National Company Law Tribunal under Section 279 of the Companies Act, 2013 before proceeding with those criminal complaints. In response, the Official Liquidator approached the High Court seeking permission to continue the pending complaints—registered as S.T. Nos. 370/2016, 380/2016, 46/2022, 165/2022, 175/2022, and 68/2023—without obtaining such leave.

The report submitted by the Official Liquidator contended that the winding-up order was passed under the Companies Act, 1956 and that the matter remained under the jurisdiction of the High Court in terms of Section 434 of the Companies Act, 2013 and the Companies (Transfer of Pending Proceedings) Rules, 2016. It was argued that therefore the requirement of seeking leave under Section 279 of the Companies Act, 2013 was inapplicable.

The dispute thus concerned whether leave of the Tribunal was necessary to continue criminal proceedings for dishonour of cheques when the winding-up was ordered by the High Court under the earlier enactment.

Justice Viju Abraham observed that the company “was wound up and orders were passed as per the provisions of the Companies Act, 1956 and is still under the jurisdiction of this Court… the matter has not been transferred to NCLT and hence the proceedings still remain before this Court.”

Referring to Section 446 of the Companies Act, 1956, the Court stated that “the provisions of the Companies Act, 1956 will apply in the present case and Section 446 of the Companies Act, 1956 which is the corresponding Section to Section 279 of the Companies Act, 2013 for obtaining leave will have no application in the present case.”

Considering whether leave of the Court is necessary for complaints under Section 138 of the Negotiable Instruments Act, the Court cited Jose Antony v. Official Liquidator, 1998 (2) KLT 176 and recorded that “the criminal proceedings which relate to the assets of the company alone will come within the ambit of the legal proceedings contemplated under Section 446 of the Companies Act.”

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The Court further quoted that “Section 138 of the Negotiable Instruments Act… is enacted in order to safeguard the credibility of commercial transactions… no civil liability or any liability against the assets of the drawer of the cheque is contemplated… therefore… the provisions under Section 446 of the Companies Act have no application to proceedings under Section 138 of the Negotiable Instruments Act.”

The Court finally allowed the relief sought by the Official Liquidator. It held: “I am of the opinion that the relief sought for in the report can be allowed by permitting the Official Liquidator to proceed with the criminal complaints pending under Section 138 of the NI Act before the Chief Judicial Magistrate Court, Kalpetta as S.T. Nos. 370 of 2016, 380 of 2016, 46 of 2022, 165 of 2022, 175 of 2022 and 68 of 2023, without the necessity of obtaining leave from NCLT.”

Advocates Representing the Parties

For the Petitioners: Sri. K. Moni, Standing Counsel for the Official Liquidator
For the Respondents: Not specified in the judgment

Case Title: In the matter of M/s. Kalpetta Janakshema Maruthi Chits Pvt. Ltd. (In Liquidation)
Neutral Citation: 2025:KER:66124
Case Number: Report No. 32 of 2025 in C.P. No. 43 of 2016
Bench: Justice Viju Abraham