Syed Najam Ahmed Vs State of Odisha (Orissa High Court)
The case before the Orissa High Court challenged an order of the Judicial Magistrate First Class JMFC that rejected a plea for the discharge of the accused, Syed Najam Ahmed (Managing Director), and the accused company, Zenith Mining Private Ltd., from a criminal complaint under Section 138 of the Negotiable Instruments NI Act, 1881.
Background and Legal Issue
The complaint was filed by M/s. Dewy Developers Pvt. Ltd. after a cheque for ₹ 1 crore, issued by Zenith Mining Private Ltd. (through its Managing Director as repayment for a friendly loan, was dishonoured twice with the endorsement “refer to drawer.”
The primary legal contention raised by the petitioner was that the JMFC should have discharged the accused because the company had been declared insolvent, and a Resolution Professional RP had been appointed under the Insolvency and Bankruptcy Code, 2016IBC, pursuant to an order of the National Company Law Tribunal NCLT. The petitioner argued that, in light of Section 32A of the IBC, the complainant should have approached the RP, who alone was competent to represent the corporate debtor.
Court’s Analysis and Reliance on Judicial Precedents
The Orissa High Court rejected the petitioner’s application, confirming the trial court’s finding that the criminal prosecution under Section 138 of the NI Act must continue against the directors/signatories. The court relied extensively on the principles established by the Supreme Court of India:
