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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
URMILA JOSHI-PHALKE
Yatendra Singh s/o Rajendra Singh Panwar – Appellant
Versus
Ganga Iron and Steel Trading Company Limited – Respondent
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 s
After declaration of moratorium, directors lose liability for cheques issued on behalf of the company, as all powers transfer to the resolution professional.
Directors of a corporate debtor cannot be prosecuted for cheque dishonor under the NI Act for cheques issued during moratorium as per the IBC, voiding their authority to transact.
The moratorium provision under Section 14 of the Insolvency and Bankruptcy Code, 2016 does not apply to the natural persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act.
The imposition of moratorium under Sec. 14 of the I.B. Code applies to the corporate debtor, while the natural persons mentioned in Sec. 141 of the N.I. Act continue to be statutorily liable.
A partner of a firm can file a complaint under Section 138 of the Negotiable Instruments Act if authorized, as they act as agents of the firm, and the moratorium under IBC does not protect directors ....
The moratorium under the Insolvency and Bankruptcy Code does not protect individuals who are directors or guarantors of a corporate debtor from criminal proceedings under the Negotiable Instruments A....
(1) Dishonour of cheque – Offence by company – By operation of provisions of IBC, criminal prosecution initiated against the natural persons under Section 138 read with 141 of NI Act read with Sectio....
Section 32A of the IBC extinguishes criminal liability for the corporate debtor post-resolution but not for directors under Section 138 of the NI Act.
The moratorium under the IBC does not protect directors from criminal liability under Section 138 of the N.I. Act, as these proceedings are distinct from civil recovery actions.
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