Proceedings under Section 138 of the NI Act are penal in nature and distinct from recovery proceedings. The initiation of insolvency proceedings under the IB Code or the approval of a resolution plan does not absolve the directors or signatories of their personal criminal liability under the NI Act.

ORAL JUDGMENT.

Heard. Issue Rule, returnable forthwith. Learned Senior Counsel appearing for Respondents, waive notice. By their consent, the matter is taken up for final disposal.

2. By present Writ Petition filed under Articles 226 and 227 of the Constitution of India, the petitioner’s challenge is to the common orders passed by the learned 10th Joint Civil Judge, Senior Division and Additional Chief Judicial Magistrate, Nagpur below Exhs.39 and 1 in Criminal Complaint Case No.7281/2019 on 31.01.2025, by which the application filed by the respondent nos. 2 and 3/original accused at Exh.39 came to be allowed and they were discharged of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and by another order of the same date at Exh.1, the learned Trial Court has held that in view of the order passed below Exh.39, the complaint is not maintainable against the accused no.1 and thus disposed of the said complaint.

3. The facts in brief are as under :

The petitioner is Proprietor of Ortho Relief Hospital and Research Centre, Nagpur, whereas the respondent no.1 is a Company engaged in the business of liquor distillation and respondent nos.2 and 3 are its Directors who are responsible for its financial and business operations. They are in control of the day to day activities of the affairs of the respondent no.1 Company, including the decision as regards financing, borrowings, repayments etc. That in October, 2015 the respondent nos.2 and 3 through one Deep Aditi Multi Services Pvt. Ltd. approached the petitioner for ashort term loan of Rs.15,00,000/-, which the petitioner extended on 15.10.2015. Towards the security of said loan, respondent nos.2 and 3 had issued a post dated cheque amounting to Rs.15,00,000/- drawn on Cosmos Bank, Amravati. The said cheque was signed by respondent no.2 in the capacity of Director and Authorized Signatory of respondent no.1 Company. It is the case of petitioner that the respondents acknowledged the liability and agreed to pay interest @ 18% p.a., which he received periodically. However, after January, 2018 respondents stopped making payments, and despite multiple reminders failed to respond to the same.

4. It is submitted that in February, 2018 the petitioner came to know about the insolvency proceedings initiated against respondent no.1 Company by Punjab National Bank under the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the IB Code” for short) and the order passed by the National Company Law Tribunal (NCLT) on 14.02.2018 admitting the insolvency petition and appointing an Interim Resolution Professional (IRP) to take over the affairs of the respondent no.1. Pursuant to the same, the petitioner lodged his claim before the IRP, but, no communication is received regarding the status of his claim or possibility of repayment. In the backdrop of the aforesaid fact, the petitioner started persuading respondent nos.2 and 3 to repay the loan amount, who assured him that the insolvency proceedings would not be successful and respondent no.1 Company would soon resume normal operations. They reassured the petitioner and asked him to present the cheque for encashment, which the petitioner presented to his Banker. However, on 14.12.2018, petitioner received a message regarding dishonor of the cheque with memo remarking “insufficient funds”. Accordingly, a legal notice was issued to respondents on 05.01.2019, and thereafter, a complaint under Section 138 of the Negotiable Instruments