M/S.B.S.I. LTD. vs GIFT HOLDINGS PVT. LTD.

The Supreme Court ruled that under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), no prosecution can be initiated against a company once it is declared sick and proceedings are pending before the Board for Industrial and Financial Reconstruction (BIFR). The Court clarified that the embargo on prosecution applies to both the company and its directors, as outlined in Section 138 and Section 141 of the Negotiable Instruments Act, 1881 (NI Act). Consequently, the appeals filed by the companies and their directors were allowed, and the prosecution was quashed.