IMPORTANT POINT
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 Act.

ORDER :

THE HONOURABLE DR.JUSTICE G. JAYACHANDRAN

The petitioners herein are the second and third accused, convicted in a private complaint initiated under Section 138 of the Negotiable Instruments Act, 1881. Aggrieved by the judgement of conviction and sentence, they along with the first accused company had preferred appeal and the same is pending on the file of the Session Court at Chennai. The petitions filed for suspension of sentence was allowed on conditions to deposit 20% of the compensation amount. The petitioners not complied the said conditions, instead citing pendency of their applications under Section 94(a) of IBC before the NCLT, Mumbai, had filed a memo to stay further proceedings in the Appeal in view of Sections 94, 96 and 101 of Insolvency and Bankruptcy Code, 2016, which provides for an interim moratorium of legal action or proceedings pending in respect of any debt. Those memos were rejected by the learned Sessions Judge by a docket order. Against the rejection order dated 22/09/2023 the present petition under Section 482 of Cr.P.C is filed.

2. The docket order which is impugned in this petition read as below:-

“Perused representation conditional order passed by the Hon’ble Principal Judge. It appears none of the ground rises here (in the memo) have been agitated before the Hon’ble Principal Judge. Till date, no extension of time was also sought for by the petitioners before the Hon’ble Principal Judge. In such circumstances, this Court is not inclined to accept the memo. Hence, memo rejected.”

Sd/

XXI Additioonal Judge at Allikulam”

3. The learned counsel appearing for the petitioners submitted that C.C.No:1425/2016 taken cognizance by the Metropolitan Magistrate, Fast Track Court at Magistrate Level-V, Saidapet, Chennai, is a private complaint presented by M/s Redington India Limited through its Power of Attorney against M/s Pacific Infotech Private Limited represented by its Directors. The two Directors of the first accused Company are the petitioners herein. The trial Court vide, its judgement dated 19/06/2023 held that the first accused company and its two Directors are guilty of offence under Section 138 of the Negotiable Instruments Act, 1881 for issuing cheques for Rs.1,34,23,970/- without sufficient fund, but instructing the bank to stop payment. The trial Court sentenced these two petitioners to undergo simple imprisonment for a period of Nine months and all the accused to pay jointly the cheque amount as compensation to the complainant.

4. Against the judgement of conviction and sentence, these petitioners preferred Crl A.No.405/2023 along with application to suspend the sentence, pending appeal. The Learned Principal Session Judge at Chennai allowed the application for suspension of sentence on condition to deposit 20% of the compensation amount. The Appeal was then made over to XXI Additional City Civil Court, Allikullam at Chennai. Before the XXI Additional City Civil Court, Allikullam at Chennai, a memo was filed reporting pendency of insolvency proceedings and the moratorium provided under the Insolvency and Bankruptcy Code, 2016 (in short “IBC”) for the insolvent. The Court instead of recording the pendency of insolvency proceedings and stay further proceedings in the criminal appeal had rejected the memo with an endorsement that the conditional order imposed by the Principal Session Judge not complied and therefore, the memo rejected.

5. According to the learned counsel for the petitioners, they have preferred an application before the National Company Law Tribunal, Mumbai to initiate insolvency resolution process and the same is now taken up for consideration by the National Company Law Tribunal, Mumbai and the matter is pending for adjudication. So, the petitioners are entitled for interim moratorium provided under Section 96 of the IBC.

6. According to the learned counsel appearing for the petitioners, in P.Mohanraj and others -vs- Shah Brothers Ispat Pvt. Ltd reported in [(2021) 6 SCC 258], the