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.

JUDGMENT :

J.C. DOSHI, J.

1. Rule. Learned APP waives service of rule for the respondent State.

2. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as ”the Code”), the petitioners have prayed for quashing and setting aside proceedings of Criminal Case No.5849 of 2019 pending before the learned CJM, Ahmedabad Rural at Mirzapur qua the petitioners herein.

3. Brief facts taken out from the pleadings are as under:-

3.1 The Complainant is A Partnership Firm, engaged in the business/trading/Supplies of Raw Cotton Bales and is managing the said business from the address mentioned in the present cause title and the same comes within jurisdiction of this Hon'ble Court.

3.2 The Opponent/Accused No. 1 is a company incorporated under Companies Act, 1996 and is engaged in the business of Spinning, Weaving and Finishing of textiles and manages its business from the address mentioned in the present cause title and Accused No. 2 and 3 are the Director of the Accused No. 1. Accused No.2 and 3 are in charge of and responsible to the Accused No.1 for operations, management and conduct of its business. It is stated that, Accused No.2 and 3 are concerned with the day-to-day functioning of the running of the business of Accused No.1 Company, hence are responsible and liable for the offence committed by Accused No.1. and such offence was committed with their knowledge and connivance. The Accused had not exercised due diligence to prevent the commission of said offence. The offence so committed by the Accused No. 1 Company has been committed with the knowledge, consent or connivance of such Accused no. 2 and Accused No.3, jointly as well as severally.

3.3 The Complainant and accused are having business relationship since considerably long time and are engaged in business ansaction and for that, the accused had placed purchase order for Cotton Bales, 90 in Number from the Complainant. The Complainant had accepted and complied with purchase order and has supplied the said materials, which was duly received by the accused/Respondents in proper condition.

3.4 The invoice bearing No. 398 dated 07.11.2014 for the payment in lieu of the aforementioned sale of goods have been raised for Rs.13,53,381/- (Rupees Thirteen Lakh Fifty Three Thousand Three Eighty One Only) by the complainant Firm and the Burdon/liabilities towards Opponents/Respondents against the invoice bearing No. 398 dated 07.11.2014 for the aforesaid commercial transaction.

3.5 The accused is liable to pay Rs.13,53,381/- (Rupees Thirteen Lakh Fifty Three Thousand Three Eighty One Only) for the aforementioned purchase as per the books of account maintained by the complainant Firm and that the accused had issued cheques in the favour of the Complainant Firm which the Complainant Firm is holding in due course.

3.6 The Opponent Firm maintains its Accounts in HDFC Bank, Near Manju Cinema, G.T Road, Ludhiana, Punjab-141003. Pursuant to repeated reminders and on assurance of discharge of all their liabilities given by the Opponents, the Cheque Duly signed by Director of the Opponent No. 1 Company was given to the Complainant Firm and the Complainant Firm presented the cheque before Kotak Mahindra Bank Limited branch at Sardar Patel Br. Ahmedabad-13, Gujarat [380-485- 031]. It is stated and submitted that, the Complainant Firm maintains its Account in Kotak Mahindra Bank Limited at Shivranjni Char Rasta, Satellite, Ahmedabad. However, the said cheque duly signed by the Director of Accused No. 1 Company Drawn in favour of the Complainant Firm to the tune of Rs. Rs.13,53,381/- against the Invoice No. 398 da