Proceedings in bounced cheque cases under Negotiable Instruments Act will continue even if there is a scheme to revive the sick company

Proceedings in bounced cheque cases under Negotiable Instruments Act will continue even if there is a scheme to revive the sick company

JIK Industries Limited & Ors. Vs. Amarlal V. Jumani (Supreme Court)- It was held that  cases of bounced cheque are independent of the revival bid of a sick company.

Proceedings in bounced cheque cases under the Negotiable Instruments Act will continue even if there is a scheme to revive the sick company. The revival attempt under the Companies Act will not affect prosecution of charges under Section 138 of the Act. The charges cannot be compounded as in other cases under the Criminal Procedure Code (CrPC). The Supreme Court dismissed appeals of the companies against the Bombay high court judgment which rejected their argument. The charges cannot be compounded as provided under Section 320 of the CrPC without the consent of the secured and unsecured creditors. Though Section 147 of the Negotiable Instruments Act provides for compounding, it does not provide for a special procedure. In its absence, the procedure under the CrPC should be followed. Therefore the consent of the creditors is essential, the court said.

Supreme Court of India

JIK Industries Limited & Ors.

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