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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.JAYACHANDRAN
Vasan Healthcare Pvt Ltd, Rep. by Mr.Vimal Chandrasekran, Head HR – Appellant
Versus
India Infoline Finance Ltd, Rep. by Authorised Signatory & Regional Credit Manager – Respondent
| Table of Content |
|---|
| 1. accusation against the petitioner company. (Para 1 , 2) |
| 2. resolution plan impacts prosecution status. (Para 3 , 4) |
| 3. approval of the resolution plan invokes corporate immunity. (Para 5 , 8 , 13) |
| 4. criminal liability of corporate debtor under ibc. (Para 6 , 12) |
| 5. directors face liability despite corporate debtor's resolution. (Para 10) |
| 6. prosecution against the corporate debtor quashed. (Para 14 , 15) |
ORDER :
G. JAYACHANDRAN, J.
1. The petitioner company is accused in the complaints initiated by the respondent under section 138 of Negotiable Instruments Act. For dishonouring the cheques issued to discharge the liability, the petitioner company is facing prosecution.
2. Brief facts of the case leading to the petition to quash the complaints:-
For purchase of medical equipments, the petitioner company namely, M/s.Vasan Health Care (P) Ltd., borrowed loan from the respondent company, namely, M/s.India Infoline Finance Ltd (IIFL) which is a financial Institution. To discharge the liability, the Managing Director/Authorised Signatory of the petitioner company issued the cheques which are subject matter of the complaints. The cheques, on presentation for collection, returned
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.
(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....
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.
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.
IBC moratorium applies solely to corporate debtor, not shielding directors from Section 138 NI Act criminal proceedings, which continue independently despite company liquidation.
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.
After declaration of moratorium, directors lose liability for cheques issued on behalf of the company, as all powers transfer to the resolution professional.
The approved Resolution Plan under the IBC extinguishes non-included claims, ensuring new management operates on a clean slate while meeting legal compliance.
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