After declaration of moratorium, directors lose liability for cheques issued on behalf of the company, as all powers transfer to the resolution professional.

JUDGMENT :

URMILA JOSHI-PHALKE, J.

1. These applications are filed by applicants for quashing Criminal Case Nos.691/2023; 696/2023; 695/2023; 693/2023; 692/2023; and 694/2023 filed under Section 138 read with 141 of the Negotiable Instruments Act (the NIA ).

2. Brief facts necessary for disposal of applications are as under:

Applicants were Directors of company namely “Venus Rolling Mills Private Limited” which is arraigned as accused No.1 in above mentioned criminal cases. The non-applicant company is also involved in business of manufacturing and processing of Steel and Iron Goods. In the year 2015, accused No.1 company and the non-applicant company entered into business for purchasing goods from the non-applicant company. As per allegations, the accused company obtained goods on credit and huge amount was due from the accused company. Allegedly, applicant No.1, being Director of the said company, against the said dues issued 16 cheques drawn on Federal Bank, Nagpur Branch, which came to be “dishonoured”. Cheque Nos.003874, 003875, and 003876 drawn in favour of the non-applicant company dated 29.10.2022 of Rs.25.00 lacs each were issued in favour of the non-applicant company. The said cheques were returned with endorsement “account closed” and, therefore, Criminal Complaint No.691/2023 was registered against accused No.1 company and applicant Nos.1 to 4.

Cheque Nos.004340, 004341, and 004342 dated 31.10.2022 of Rs.25.00 lacs drawn on the Federal Bank were also deposited and the same were returned as “dishonoured” and, therefore, Criminal Complaint No.696/2023 was registered.

Cheque Nos.004554 and 004555 dated 2.11.2022 of Rs.50.00 lacs each were also returned as “dishonoured” with endorsement “account closed”. Regarding the same, Criminal Complaint No.695/2023 was registered.

Cheque Nos.003871; 003872; and 003873 dated 28.10.2022 of Rs.25.00 lacs each and cheque Nos.003868; 003869 and 003870 dated 27.10.2022 of Rs.25.00 lacs each and cheque Nos.004343 and 004344 dated 1.11.2022 were also returned with endorsement “account closed” and, therefore, Criminal Complaint No.693/2022; 692/2023, and 694/2023 were registered.

The process is issued in all complaints by the Additional Chief Judicial Magistrate, Nagpur.

3. As per contentions of applicants, applicant No.1 Mr.Yatendra Singh s/o Rajendra Singh Panwar was Director from 3.6.2005, till commencement of CIRP Proceeding, applicant No.2 was Director from 4.3.2014 to 10.6.2017; applicant No.3 was Director from 14.5.2015 till commencement of proceeding of Corporate Insolvency Resolution Process (CIRP); and applicant No.4 was Director from 3.6.2005 to 21.5.2015.

4. As per contentions of applicants, applicant No.2 Smt.Neha Panwar resigned as Director of the accused company on 10.6.2017 and applicant No.4 Mr.Narendra Singh s/o Rajendra Singh Panwar resigned as Director on 21.5.2015. Their resignation letters along with DIR-11 i.e. notice of resignation are filed on record. In the year 2018, the accused company issued said cheques as security to the non-applicant company. Thereafter, the accused company in the year 2019 suffered major losses in business and, therefore, applied for initiation of proceeding by filing CP