IMPORTANT POINT
Dishonour of cheque – Return of cheques dishonoured simpliciter does not create offence under Section 138 NI Act – Cause of action arises only when demand notice is served and payment is not made pursuant to such demand notice within stipulated fifteen-days period.

JUDGMENT

SUDHANSHU DHULIA, J.

1. Leave granted.

2. The appellant before this court has challenged the order dated 21.12.2021 of the learned Single Judge of the Punjab and Haryana High Court by which the appellant’s petition under section 482 of Criminal Procedure Code, 1973 (‘CrPC’), seeking quashing of proceedings initiated under Section 138 of Negotiable Instruments Act, 1881 (‘NI Act’) against the appellant, has been dismissed.

3. Admittedly, the appellant was the director of M/s Xalta Food and Beverages Private Limited (hereinafter ‘corporate debtor’). There was a contract between the corporate debtor and the RespondentM/s Shakti Trading Company where the respondent was to function as a super stockist of the corporate debtor. As a consequence of the business relationship between the two companies, the appellant, in his capacity as director of the corporate debtor, had drawn eleven cheques in favour of the respondent of varying amounts, the total amount being Rs.11,17,326/- (approximately). These cheques were dishonoured on 07.07.2018. A legal notice under Section 138 of the NI Act was issued to the appellant by the respondent as the cheque amounts were not furnished to the respondent by the bank. Consequently, in September 2018, a complaint was filed before the appropriate Court by the respondent against the appellant for offences under Section 138 of NI Act. Meanwhile, on 25.07.2018, insolvency proceedings against the corporate debtor, of which the appellant was the director, commenced and a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (hereafter ‘IBC’) was imposed. On the same day i.e. 25.07.2018, the interim resolution professional (hereinafter ‘IRP’) was appointed in regard to the corporate debtor.

4. Meanwhile, vide order dated 07.09.2018, the Court had issued summons to the appellant in the proceedings initiated by the respondent against the appellant under section 138 of the NI Act. Aggrieved, the appellant approached the High Court under section 482 of CrPC challenging the summoning order and further, prayed for the quashing of the section 138 NI Act case against him in view of the moratorium issued under Section 14 of the IBC. By the impugned order dated 21.12.2021, the High Court, all the same, dismissed the appellant’s petition and declined to quash the complaint against him. Now, the appellant is before us.

5. We have heard both sides and perused the material on record.

6. The case of the appellant is that the corporate debtor is presently facing insolvency proceedings before the National Company Law Tribunal (NCLT) and a moratorium order was issued on 25.07.2018 under Section 14 of the IBC. The relevant portion of Section 14 of the IBC reads 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 created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor…”

7. Relying upon the above provision, the appellant submits that since the moratorium order was imposed on 25.07.2018 and was in operation, therefore, the proceedings under section 138 of the NI Act could not have been initiated against the appellant. He would