M/S. Bsi Ltd. & Anr vs Gift Holdings Pvt. Ltd. & Anr

The Supreme Court held that under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), no legal proceedings can be initiated against a company once it is declared sick and reconstruction efforts are underway. The Court clarified that the embargo on prosecution applies to both the company and its directors as per Section 138 and Section 141 of the Negotiable Instruments Act, 1881. The appeals were dismissed, affirming that the companies and their directors could not evade prosecution for dishonored cheques while under BIFR proceedings.