The Insolvency and Bankruptcy Code, 2016 does not bar criminal proceedings under Section 138 of Negotiable Instruments Act against a debtor, even if the debtor is declared insolvent.

(Prayer: Criminal Original Petition filed under Section 482 Cr.P.C. praying to call for the entire records in pursuant to the criminal proceedings in C.C.No.05 of 2018 pending on the file of Court of District Munsif Cum Judicial Magistrate at Ranipet and quash the same.

This petition has been filed as against the proceedings in C.C.No.05 of 2018 pending on the file of the learned District Munsif cum Judicial Magistrate, Ranipet.

2. The learned counsel for the petitioner submitted that the petitioner is the accused in the criminal proceedings initiated by the respondent for the offences punishable under Section 138 r/w 141 and 142 of Negotiable Instruments Act. The petitioner issued a post dated cheque in favour of the respondent for discharge of their debts arising out of supply of tanning chemicals for a sum of Rs.20,00,000/-. It was presented for collection and was returned dishonoured for the reason that ‘funds insufficient’. After causing statutory notice, the respondent initiated proceedings under the Negotiable Instruments Act. He further submitted that the petitioner categorically replied for the statutory notice stating that the company M/s.Nag Leathers Private Limited was already taken over by the Interim Insolvency Resolution Professional as per the Order of National Company Law Tribunal, Division Bench, Chennai. He further submitted that one of the creditors filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, Division Bench, Chennai, wherein the Interim Insolvency Resolution Professional was directed to take charge of the petitioner’s Corporate Debtor’s management immediately and also directed to cause public announcement as prescribed under Section 14 of the Insolvency and Bankruptcy Code, 2016 within three days. As such the institution of suits are continuation of suits or proceedings against the Corporate Debtor are barred after the Order of National Company Law Tribunal.

3. He further submitted that one, Mr.C.Ramasubramaniam was appointed as Interim Resolution Professional and made public announcement requesting all financial Creditors to submit their claims. In fact, the respondent submitted their claim and as such the proceedings initiated under Section 138 of Negotiable Instruments Act cannot be sustained against the petitioner. He further submitted that the alleged cheque was issued as security purpose and there is no legally enforceable debt over the respondent and as such the petitioner is not at all liable to pay anything to the respondent. Therefore, he prayed for quashment of the entire proceedings in C.C.No.05 of 2018.

4. Per contra, the learned counsel appearing for the respondent submitted that the petitioner is running a leather business in the name and style of M/s.Nag Leathers Private Limited. As requested by the petitioner, the respondent agreed to supply the tanning chemicals and supplied the same. During the course of business, the balance amount of Rs.20,00,000/- had become due and payable by the petitioner. The petitioner issued a post dated cheque in favour of the respondent for discharge of their debt arising out of supply of the tanning chemicals for the said sum. It was presented for collection and the same was returned dishonoured for the reason that ‘funds insufficient’. After issuance of statutory notice, the respondent initiated proceedings under Section 138 of Negotiable Instruments Act as against the petitioner.

5. He further submitted that the initiation of proceedings under Section 138 of Negotiable Instruments Act is a statutory one and it is entirely different from other proceedings under the provision of Insolvency and Bankruptcy Code, 2016. It cannot be said that Section 14 of the Insolvency and Bankruptcy Code, 2016 prohibits continuation of criminal proceedings initiated for the dishonour of the cheque and it prohibits the institution of suits or continuation of pending suits or proceedings against t