Interim moratorium under the Insolvency and Bankruptcy Code does not absolve personal criminal liability under the Negotiable Instruments Act.

ORDER :

This application under Section 482 of Cr.P.C. has been filed seeking the following reliefs:

“i. This Hon'ble Court may be pleased to call for the records of the CRA/102/2024 pending before II Additional Session Judge, Burhanpur below and examine the proceedings to see if the case mentioned against the Petitioner are present therein;

ii. This Hon'ble Court be pleased to quash the condition to deposit Rs.13,73,890/- imposed in impugned order dated 16/04/2024 against the Petitioner in the application under Section 389 CrPC seeking suspension of the execution of sentence (including the order to pay compensation) during the pendency of appeal on account of effect of interim moratorium as per Section 96 of Insolvency and Bankruptcy Code, 2016 as imposed by Hon'ble National Company Law Tribunal, Indore Bench, for initiating/undergoing the insolvency resolution process, vide Company Petition(IB)/74(MP)2022, with effect from 14/10/2022;

iii. Such other and further orders that to this Hon'ble Court may deem fit, be passed.”

2. It is submitted by counsel for applicant that by judgment dated 13.03.2024 passed by J.M.F.C., Burhanpur in SC-NIA/723/2019, applicant has been convicted under Section 138 of Negotiable Instruments Act and has been directed to undergo the jail sentence of 6 months with compensation amount of Rs.68,69,457.24/-.

3. Being aggrieved by said judgment of conviction, applicant filed an appeal alongwith an application under Section 389 of Cr.P.C.

4. It is submitted by counsel for applicant that applicant was the Guarantor of M/s Shree Geeta Textiles Private Limited, who has committed a default due to non-payment of borrowed debts. Accordingly, borrower moved an application under Section 94 of Insolvency Resolution Process of the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as “Code, 2016”) before National Company Law Tribunal, Indore Bench for initiating/undergoing the insolvency resolution process vide Company Petition(IB)/74(MP)2022. It is submitted that as per Section 96 of Code, 2016, interim moratorium starts from the date of filing qua personal insolvency w.e.f. 14.10.2022 and therefore, interim moratorium was effective as on the date of judgment of conviction dated 13.03.2024 and it is still in operation as on the date of filing of appeal and thus, the conviction as well as direction to pay compensation as a condition precedent for suspension of sentence is contrary to Section 96 of Code, 2016.

5. To buttress his contentions, counsel for petitioner has relied upon the judgment passed by Supreme Court in the case of P. Mohanraj and others v. Shah Brothers Ispat Private Limited, reported in (2021) 6 SCC 258 and also the judgment passed by Punjab and Haryana High Court in the case of Vijay Kumar Ghai vs. Pritpal Singh Babbar reported in 2022 SCC OnLine P&H 1672.

6. Considered the submissions made by counsel for applicant.

7. In order to challenge the condition of deposit of an amount of Rs. 13,73,890/- for suspension of sentence, the only contention of counsel for applicant is that since borrower has initiated the proceedings for insolvency under the Code, 2016, therefore, in the light of Section 96 of Code, 2016, the debt cannot be recovered.

8. The aforementioned submission made by counsel for applicant is no more res integra.

9. The Supreme Court after taking note of judgment passed in the case of P. Mohanraj (supra) has held in the case of Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Limited, reported in (2023) 10 SCC 545 as under:

“16. The issue whether the respondent is a secured financial creditor or an unsecured financial creditor within the meaning of the said Code is not something we can deal with as that is the matter of the proceedings under the said Code or any appeal preferred therefrom. The only issue with which we are concerned with is whether during the pendency of the proceedings under the said Code which have been admitted, the present proceedings under the NI Act c