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shailendra patadia (director)     24 May 2016

Abatment of criminal proceedings


            need information on abatment of criminal proceedings under NI Act if it is against a company and the said compoany is ordered to be wound up during the trial of the criminal case will the case against the company abate since it is ordered to be wound up and there after dose not exist leagly and if such case againt a non exist company abates then what will happen to the case againts its directors under the 138 NI Act


 10 Replies


Winding up is the process of selling all the assets of a business, paying off creditors, distributing any remaining assets to the principals or parent company, and then dissolving the business in compliance with section 439 of Indian Companies Act 1956.

Criminal case under NI Act is against the company represented by its directors.Hence this is a separate case and has nothing to do with winding up of the company. 


Yes it is a criminal case but it will abate against the co only which is being wound up and not personally against directors.


The law says giving a dud cheque is crime.

shailendra patadia (director)     25 May 2016


             under the companies act once the official liquidator has take charge of the compay there after the directors become Ex Directors and only the liquidator can represent for and on behalf of the company and as such the directors are barred to act for and on behalf of the comapny in any suit or criminal proceedings and further the liquidator represents the company  till pending  winding up and once the company  is order to be wound up the registration of the comapany form ROC is canclled under section 560 of the comapnies act as such there after the company dose not leagely exists  there for the criminal proceedings of NI Act  against the company who is   the actual drawer of the cheque is not available for prosecution so for this reason it was my specific question that directors of a company are liable under section 141 of the NI Act but if the drawer of the cheque the company who now  is no existent then how will the prosecution against a non existent compoany be continued who will reperesent the comany and how the prosecution against the Ex Directors be continued without the proceedings against the company kindly help me with some court judgments on abatment of criminal proceeding against a wound up company.


When was the case under NI Act initiated,before liquidation or after? If before then the case under NI Act exists.Official Liquidator has nothing to do with other criminal cases against the company before the winding up order.The accused have to defend the NI Act case or else NBW can be issued .

shailendra patadia (director)     25 May 2016

Sir thanks for reply the case is filed prior to winding up but the section 457of the companies act prohibit's the ex directors to represent the company so the question is that by the provision of law under the companies act under which the accused company is governed the directors after the appointment of liquidator cannot represent so the question if put like this that what happens to a case where the accused dies during the trial ( as in our case the accused company is non existing as wound up ) and no one can represent a non existing entity today even if the case was filed when there was no winding up the situation is that today when the matter is still in trial court and the company is non existing and cannot be represented by prohibition of law under the companies act then how can the case proceed against the company let the proceeding against the director presumed be continued but how can the proceeding against the company can be proceeded kindly help me with the above situation

shailendra patadia (director)     26 May 2016

Sir some one kindly guide me in my above situation same will be highly appreciated


I stand by my suggestion.The Directors (NOW KNOWN AS EX DIRECTORS AFTER THE COMPANY HAS BEEN WINDED UP BY THE ORDER OF THE HIGH COURT) have to attend the proceedings of the case under NI Act,in the capacity of Ex Directors.The company would be A! and the rest of the directors A2 etc).The Official Liquidator has nothing to do with the criminal cases filed against the company before winding up.


Better visit the Office of the Official Liquidator in UR state Capital and U can get all the requisite information.


If one director dies or absconds either before winding up or after winding up,the liabilities fall on the other directors/ex directors.The proceedings shall be continued  as QUA against the other ex directors.


First of all you and all other accused of cheque bounce cases must understand that NI 138 is document based summery trial.


Once process is isuued it can not be recalled so trial haS to go on and result will  be at the end of the trial.


In the present case the matter is simple if the cheque is issued prior to winding up  process  than the trial will go on since offense is commited earlier before the start of winding up.process. And winding up  is all for civil liabilites and not for criminal liabilities.


It is better you engage an advocate who haa contested and won cheque cases since there are many other simple ways to win the case other than your arguments.



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