Kerala High Court Rules NCLT Approval Not Needed for Criminal Proceedings Against Wound-Up Companies

Kerala High Court Rules NCLT Approval Not Needed for Criminal Proceedings Against Wound-Up Companies

Introduction

The Kerala High Court has ruled that the leave of the National Company Law Tribunal (NCLT) is not required to pursue criminal complaints against companies ordered to be wound up under the Companies Act, 1956.

Factual Background

The official liquidator sought permission to continue with pending criminal complaints before the Chief Judicial Magistrate (CJM) Court without approaching the NCLT. The CJM had directed the company under liquidation to seek the Tribunal's leave before proceeding with the cases.

Issues

1.  NCLT Permission: Whether the leave of the NCLT is required to pursue criminal complaints against companies ordered to be wound up.
2.  Applicability of Section 446: Whether Section 446 of the Companies Act, 1956 (corresponding to Section 279 of the Companies Act, 2013) applies to criminal complaints under Section 138 of the Negotiable Instruments Act (NI Act).

Contentions of the Parties

• Official Liquidator's Contention: The official liquidator argued that NCLT permission is not required to pursue the criminal complaints.

Reasoning and Analysis

The court noted that the company was wound up under the Companies Act, 1956, and the matter was pending before the High Court, not the NCLT. The court relied on previous decisions, including Jose Antony v. Official Liquidator and M/s Indorama Synthetics (I) Ltd v. State of Maharashtra, which held that criminal complaints under Section 138 of the NI Act do not fall under Section 446 of the Companies Act, 1956.

Decision

The Kerala High Court held that:

1. The provisions of the Companies Act, 1956, will apply in the present case, and Section 446 of the Act will have no application.
2. The official liquidator can continue with the pending criminal complaints under Section 138 of the NI Act without seeking NCLT permission.

Implications

The court's decision clarifies that NCLT permission is not required to pursue criminal complaints against companies ordered to be wound up, particularly those related to Section 138 of the NI Act.