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of <h1>Petitions to Quash Complaint Under Section 138/141 NI Act Dismissed; Trial Against Directors to Proceed Despite IBC Moratorium</h1> The court dismissed the petitions seeking to quash the complaint under Section 138/141 of the NI Act, allowing the trial to proceed. It held that the ... Dishonour of Cheque - vicarious liability of Director and Additional Director - specific averments against the petitioners herein that they were responsible and in-charge of the day-to-day affairs of the accused company, being its director and additional director - HELD THAT:- In the present case, the cheque was issued by the accused company in favour of complainant, towards the repayment of dues in the normal course of business transactions. The said cheque was handed over to the AR of complainant company by both the petitioners upon assurance that the same would get encashed, and the cheque was signed by the petitioner Ramji Sharma. The cheque upon presentation was dishonoured on 19.05.2018, whereas the application under Section 7 of IBC, 2016 was allowed by the Hon’ble NCLT on 08.06.2018, i.e. subsequent to dishonor of cheque. Thus, in view of the ratio of Hon’ble Supreme Court in P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT], reiterated in M/S. NAG LEATHERS PVT. LTD. VERSUS M/S. DYNAMIC MARKETING AND ANOTHER [2022 (4) TMI 1153 - SUPREME COURT] and NARINDER GARG AND ORS. VERSUS KOTAK MAHINDRA BANK LTD. AND ORS. [2022 (3) TMI 1534 - SUPREME COURT], the proceedings under Section 138/141 of NI Act can continue against the directors and persons responsible and incharge of accused company, i.e. the petitioners herein even after moratorium period under Section 14 of IBC, 2016 has commenced. This Court notes that Section 210 deals with the procedure to be followed by a Magistrate when there is a complaint case and police investigation in progress, in respect of the ‘same offence’, and provides that in such a case, the Magistrate shall stay the proceedings before it. In the case at hand, while the offence alleged in the FIR registered in Noida, Uttar Pradesh on the complaint of petitioner Ramji Sharma relates to forgery, cheating, breach of trust committed by some other persons in relation to some cheques, the present complaint case pertains to offence under Section 138/141 of NI Act for dishonor of cheque in question - the arguments regarding applicability of Section 210 of Cr.P.C. are bereft of any merit. However, it is also clarified that if pursuant to conduct of investigation in the said FIR and trial if any, any crucial fact qua the financial capacity or the balance in bank accounts of the accused company emerges, the petitioners shall be at liberty to bring the same to the knowledge of the learned Trial Court during the course of trial/arguments and the Court shall consider the same as per law. This Court finds no reasons to quash the present proceedings under Section 138/141 of NI Act - Petition dismissed. Issues Involved:1. Quashing of Complaint Case under Section 138 of the Negotiable Instruments Act, 1881.2. Applicability of Moratorium under Insolvency and Bankruptcy Code, 2016.3. Invocation of Section 210 of the Code of Criminal Procedure, 1973.Summary:Issue 1: Quashing of Complaint Case under Section 138 of the Negotiable Instruments Act, 1881The petitioners sought quashing of Complaint Case No. 4350/2018, arguing that the cheque issued had been dishonored due to a fraud involving forged signatures and RTGS transactions. They contended that they were not responsible for the affairs of the company at the time of the offence due to the commencement of the Corporate Insolvency Resolution Process (CIRP). The court, however, noted that the complaint contained specific averments against the petitioners, indicating their responsibility and involvement in the issuance of the cheque. The court also emphasized that the liability of a director who is a signatory to the cheque is higher than that of other directors. The petitioners did not deny the issuance or signatures on the cheque.Issue 2: Applicability of Moratorium under Insolvency and Bankruptcy Code, 2016The petitioners argued that the proceedings should be stayed under the moratorium provisions of Section 14 of IBC, 2016, as per the Supreme Court's decision in P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. The court referred to this decision and clarified that the moratorium under IBC applies only to the corporate debtor and not to the natural persons such as directors. Thus, proceedings under Section 138/141 of NI Act can continue against the directors even after the commencement of the moratorium period.Issue 3: Invocation of Section 210 of the Code of Criminal Procedure, 1973The petitioners contended that the trial court should have stayed the proceedings under Section 210 of Cr.P.C. due to a pending police investigation related to the same offence. The court noted that the FIR registered in Noida pertained to different offences of forgery and cheating, which were not the subject matter of the present complaint under Section 138/141 of NI Act. Additionally, the court highlighted that the police investigation was outside the territorial jurisdiction of the trial court, making Section 210 Cr.P.C. inapplicable in this case.Conclusion:The court found no reasons to quash the proceedings under Section 138/141 of NI Act and dismissed the petitions, allowing the trial to proceed. The judgment emphasized that any crucial facts emerging from the FIR investigation could be presented during the trial.
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