Individual directors remain liable for dishonoured cheques even after a corporate debtor enters insolvency, as personal criminal liability under the NI Act persists irrespective of corporate status.

JUDGMENT :

HARPREET SINGH BRAR, J.

1. The present petition has been filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS’) seeking quashing of complaint bearing No. COMA/4885/2023 dated 15.03.2023 filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter ‘NI Act’ read with Section 420 of the Indian Penal Code, 1860 titled ‘Daljit Singh Grewal vs. Swani Motors Services Pvt. Ltd.’ as well as summoning order dated 16.03.2023 (Annexure P-1) passed by the learned Judicial Magistrate Ist Class, Ludhiana.

2. Briefly, the facts, as alleged, are that on 01.11.2015, the respondent-complainant and his brother leased a property in Ludhiana to the company of the petitioner. However, the company of the petitioner failed to pay the agreed rent, causing the parties to enter into another Extended Leave and License deed dated 10.11.2021. According to this agreement, the multiple cheques were issued by the accused, however on presentation for encashment, the same was dishonoured. Thereafter, a second agreement dated 14.10.2022 was entered into by the parties by virtue of which the old cheques were replaced with fresh ones. Consequently, one of the cheques bearing No.707443 dated 01.02.2023 for Rs.5,00,000/- was presented for encashment. However, the same was dishonoured vide memo dated 03.02.2023 with the remarks ‘funds insufficient.’ Hence, the present complaint.

3. Learned counsel for the petitioner inter alia contends that the company of the petitioner, that is the drawer of the cheque, was admitted to Corporate Insolvency Resolution (CIR) process under the Insolvency and Bankruptcy Code, 2016 (for short ‘IBC) vide order dated 28.10.2022 (Annexure P-3) by the learned National Company Law Tribunal, Chandigarh. In furtherance of the same, Interim Resolution Professional (IRP) was appointed and a moratorium was declared under Section 14 of the IBC. Per Section 17 of IBC, the board of directors of the accused company stands suspended with immediate effect on commencement of the CIR process and the management of affairs of the accused company i.e. the corporate debtor falls under the purview of the Interim Resolution Professional. However, the legal notice dated 14.02.2023, much after the dishonor of the disputed cheque, was issued to the company and not the IRP. As such, the learned trial Court ought not to have entertained the complaint(supra) as it was instituted after the commencement of CIR proceedings. As such, the petitioner and the accused company cannot be implicated in the present proceedings under the NI Act. Reliance in this regard is placed on the judgment rendered by the Hon’ble Supreme Court in Vishnoo Mittal vs. M/s Shakti Trading Company , 2025 (2) R.C.R. (Criminal) 371.

4. Having heard learned counsel for the petitioner and after perusing the record with his able assistance, it appears that the complaint(supra) was instituted on 15.03.2023 while the CIR process had commenced against the accused company on 28.10.2022. Admittedly, the petitioner was the Director in the said company and responsible for maintaining its day-to-day affairs.

5. Pertinently, the IBC defines ‘corporate debtor’ under Section 3(8), which reads as follows:

Section 3. Definitions

(8) “corporate debtor” means a corporate person who owes a debt to any person Moreover, Section 32-A was added to the IBC vide Act 1 of 2020 and came into effect from 28.12.2019. The same is reproduced below:

Section 32A. Liability for prior offences, etc.—

(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the