Gyan Chand vs State of Rajasthan and Another

Shiv Kumar Sharma, J.—Challenge is made to the order dated April 7, 2005 of Judicial Magistrate Niwai District Tonk whereby the proceedings u/s 138 of Negotiable Instruments Act, 1881 were stayed in view of the provisions contained in Section 446 of the companies Act, 1956.

I have heard learned counsel for the parties and scanned the material on record.

Learned Single Judge of Kerala High Court in Jose Antony Kokkad Vs. Official Liquidator and Another, indicated that the provisions of Section 446 of the Companies Act have no application to the provisions of Section 138 of Negotiable Instruments Act.

I am also of the view that the provisions of Section 446 of Companies Act are intended to safeguard the assets of the company in liquidation which are in the hands of the Official Liquidator. Section 138 of the Negotiable Instruments Act is enacted in order to safeguard the credibility of commercial transactions and to prevent bouncing of cheques by providing a personal criminal liability against the drawer of the cheque in public interest.

Section 138 of Negotiable Instruments Act, in my opinion, has over riding effect against Section 446 of the Companies Act. Chapter XVII dealing with penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts consisting of Sections 138 to 142 is incorporated in the Negotiable Instruments Act by the Central Act 66 of 1988 with effect from April 1, 1989. Those special provisions are enacted with the special and specific intention of safeguarding and sustaining the credibility of commercial transactions. Those provisions are incorporated in the Negotiable Instruments Act while the entire provisions of the Companies Act including Section 446 were in force. Therefore, it has to be presumed that the Parliament enacted those provisions fully aware of the provisions of the Companies Act including Section 446. Therefore, the subsequent Act enacting certain special provisions has got over riding effect over the previous statute though contained the special provisions.

In this view of the matter, I allow the misc. petition and set aside the order April 7, 2005 passed by learned Judicial Magistrate Niwai District Tonk. Respondent Lokesh Singh is directed to appear before the learned Judicial Magistrate Niwai District Tonk on April 3, 2006.