IMPORTANT POINT
Section 14 of I.B.C. applies only to the corporate debtor and not to natural persons like directors, making the director liable despite the insolvency proceedings.

JUDGMENT :

Arun Kumar Singh Deshwal, J.

1. Heard learned counsel for the applicant and Sri Rajeev Kr. Singh, learned A.G.A. for the State.

2. The instant application has been filed seeking quashing of the impugned order dated 12.1.2024 passed by Additional District & Sessions Judge, Court No.8/Special Judge (NDPS Act), Gorakhpur in Criminal Revision No. 107 of 2023 (Gurmeher Singh Majithia vs. State of U.P. & others) as well as the order dated 23.3.2023 passed by Addl. Civil Judge (J.D.), court No.8, Gorakhpur and stay the further proceeding of Complaint Case No. 6272 of 2020 (Harish Chand Jaiswal vs. M/s Saraya Industries Ltd. & others), u/s 138 N.I. Act, P.S. Kotwali, District Gorakhpur, pending before Addl. Civil Judge (J.D.), Court No.8, Gorakhpur.

3. Facts giving rise to the present case are that opposite party No.2 had filed an application u/s 138 N.I. Act against the applicant and his company, namely, M/s Saraya Industries Ltd. Learned trial court, after perusal of the complaint and other evidences on record, issued summon to the present applicant being the active director of the company by order dated 8.2.2021. That order was challenged by the applicant by way of Revision No. 107 of 2023 before Addl. District & Sessions Judge, Court No.8, Gorakhpur, but the said revision was also rejected by order dated 12.1.2024. Feeling aggrieved by both the orders, the applicant has filed the present application.

4. The contention of learned counsel for the applicant is that the applicant is the director of the company on whose behalf the cheque in question was issued. As the insolvency proceeding is going on against the company under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I.B.C."), therefore, as per Section 14 of I.B.C. any proceeding including the proceeding u/s 138 N.I. Act cannot be executed or proceeded further against the company and the applicant, being the director, has not given any guarantee for any amount payable under cheque in question. It is also submitted that no finding was recorded that the applicant being the director has an active role in day to day business. In support of her submission learned counsel for the applicant has relied upon the judgement of the Apex Court in the case of P. Mohanraj and others vs. M/s Shah Brothers Ispat Pvt. Ltd.; (2021) 6 SCC 258 in which the Apex Court observed that once the insolvency proceeding is pending against the company, then no proceeding including the proceeding u/s 138 N.I. Act can be executed against the company.

5. Per contra, learned A.G.A. has submitted that Section 14 of I.B.C. prohibits the execution only against the company and not against the natural person. It is further submitted that specific allegations were made against the applicant who actively played role in persuading opposite party No.2 to invest money in the company of the applicant.

6. Considering the submissions of learned counsel for the parties and on perusal of record, it is clear that the applicant, being director of the company, has played active role in day to day business of the company and also persuaded opposite party No.2 to invest money in the liquor business. So far as the Section 14 of I.B.C. is concerned, this Section prohibits any proceeding against the corporate debtor. Section 14 of the I.B.C. is quoted as under:-

"14. Moratorium.—(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely—

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

(c) any action to foreclose, recover or enforce any security interest cre