The interim-moratorium under Section 96 of the IBC applies to all legal actions, including those under the N.I. Act, thereby staying such proceedings during insolvency resolution.

ORDER

Pleadings are complete, therefore, with the consent of learned counsel for the parties, the matter is heard finally.

2. This petition under Article 227 of the Constitution of India , has been filed questioning the validity of order dated 23.09.2023 passed by the XXII Additional Sessions Judge, Indore, in Criminal Revision No.377/2023 filed under Section 397 r/w Section 399 and 401 of the Code of Criminal Procedure, preferred against the order dated 15.06.2023 passed by the Judicial Magistrate First Class, Indore, rejecting the application moved by the petitioner in a pending criminal case seeking stay on the proceedings pending before the trial Court on the basis of interim-moratorium declared by the National Company Law Tribunal, Indore [hereinafter referred to as the ‘NCLT’] upon the application filed by the creditor-Bank of Baroda.

3. To decide the controversy involved in this case, it is apt to mention the facts of the case, which in nutshell, are:-

(3.1) That, the petitioner and the respondent are the parties to the proceedings pending before the Judicial Magistrate Court initiated by the respondent by filing an application under Section 138 of the Negotiable Instruments Act, 1881 [hereinafter referred to as the ‘N.I. Act’]. The petitioner is one of the Directors of a company registered under the Companies Act. One of the creditors of the petitioner, namely, Bank of Baroda, filed an application for initiating insolvency resolution process under Section 95 of the Insolvency & Bankruptcy Code, 2016 [hereinafter referred to as the ‘IBC’] before the NCLT, Indore. The said case was registered as case No.CP(IB)/16(MP)2021 titled as 'Bank of Baroda Vs. Surendra Kumar Patwa'.

(3.2) The NCLT in accordance with Section 95 r/w 96 of the IBC, by order dated 18.06.2021, declared interim-moratorium from the date of application with respect to all the debts of the petitioner and all the proceedings pending against him in terms of Section 96 of the IBC. A copy of order dated 18.06.2021 is available on record as Annexure-P/1.

(3.3) As per the petitioner, the moratorium as has been declared by the NCLT is applicable in respect of all the debts of the petitioner and ‘any legal action or proceedings’. Undisputably, the order dated 18.06.2021 passed by the NCLT declaring interim-moratorium has been continuing and is still in operation.

(3.4) That, the respondent has preferred a complaint under Section 138 of the N.I. Act before the Magistrate seeking issuance of process against the petitioner in respect of a cheque said to have been issued by the petitioner in lieu of legally enforceable liability, in favour of the complainant, which got dishonored. The said complaint was registered as SC-PPM/146/2021. In the said case, the petitioner preferred an application seeking stay on the proceedings initiated under Section 138 of the N.I. Act, on the ground that in pursuance of the order passed by the NCLT on 18.06.2021, the said proceedings cannot be initiated against him.

(3.5) The application was replied to by the respondent and the Court vide order dated 03.08.2023 rejected the application saying that the interim- moratorium issued under Section 96 of the IBC will not be applicable to the proceedings initiated under Section 138 of the N.I. Act as the said proceedings are ‘criminal’ in nature.

(3.6) Against the order dated 03.08.2023, a revision was preferred by the petitioner before the Court of Sessions, which was registered as Criminal Revision No.377/2023 and the revisional Court finally dismissed the revision holding that the IBC does not contain any provision regarding stay on the proceedin