M/S. RAJESH EXPORTS LTD. vs M/S. JEWELS DE PARAGON PVT. LTD WP 14571 of 2024
Facts:
1) Petitioner is one M/s. Rajesh Exports Limited and the respondent is the ex-Managing Director of one M/s Jewels De Paragon Private Limited (‘the Company’ for short). The petitioner enters into an agreement with the Company for supply of gold jewellary on 23-08-2000 and the respondent in his personal capacity gives a cheque for `3,00,00,000/- (without indicating the date on the cheque) in favour of the petitioner for repayment of the value of gold received by the Company from the hands of the petitioner.
2. After about 7 years, on 05-04-2007, the petitioner presents the cheque only to be dishonoured and returned with an endorsement “account closed” in the concerned Bank. This leads the petitioner to issue a demand notice to the respondent seeking payment of the outstanding amount. That having gone unheeded, the petitioner invoking Section 200 of the Cr.P.C., files a petition before the learned Magistrate who then registers a criminal case in C.C.No.19781 of 2007 in accordance with law.
3. One M/s Lalchand K. Chabria prefers a company petition before this Court in Company Petition No.221 of 2013 invoking Sections 433(e) and (f), 434 r/w. 439 of the Companies Act, 1956 (‘the Companies Act’ for short) seeking winding up of the Company. On 07-08-2014, this Court allows the company petition and orders winding up of the Company. Thus, the Company gets wound up
4. On 23-09-2023, a coordinate Bench of this Court allows Writ Petition No.33761 of 2018 filed by the Company and restores the order dated 11-11-2014 by which the stay was operating. Therefore, the stay granted by the learned Magistrate stood restored. On 19-03-2024, the other writ petition in W.P.No.33760 of 2018 comes up before another coordinate bench. The said coordinate bench though allows the writ petition and sets aside the order dated 07-07-2018, reserves liberty to the present petitioner to challenge the order dated 11-11-2014. It is, therefore, the present petition is preferred by the petitioner.
Issue: whether a cheque issued in his personal capacity as a personal guarantor to the subject transaction amount should be stalled on account of the Company being wound up.
Arguments:
Petitioner:
1) Counsel submitted that learned Magistrate could not have stayed his own proceedings erroneously invoking Section 446 of the Act. He would, therefore, contend that the proceedings be permitted to be continued and a time line for its closure be directed by this Court as admittedly the issue dates back to more than two decades.
Respondent:
1) Counsel submitted that there is no error committed by the learned Magistrate as Section 446 of the Companies Act springs into operation the moment a company is wound up in terms of Section 446 of the Companies Act and all suits and proceedings would automatically remain stayed. The coordinate Bench in Writ Petition No.33761 of 2018 has appropriately restored the stay order which was sought to be tinkered with by the Presiding Officer of the concerned Court.
Decision: Hon’ble HC allowed the petition.
Rationale:
1) Hon’ble HC noted that judgments of the coordinate benches are to be held as per incuriam. Per incuriam is one of those exceptions, to the rule of precedent and a decision rendered by the Apex Court not being followed by the High Court notwithstanding the fact that the judgments of the Apex Court preceded the orders of the High Court for manifold reasons, one of which would be that it was not brought to the notice of the High Court. Therefore, those decisions would become per incuriam
2) It held that personal liability of personal guarantors or Directors cannot be seen to be washed away by the winding up orders under Section 446 of the Companies Act for the offences punishable under Section 138 of the Act on a clear interpretation of Section 141 of the Act.
Order:
