Cheque dishonour prosecution can proceed against directors and signatories despite insolvency moratorium and a separate FIR.

Specific averments that directors were responsible for day-to-day affairs, that one coordinated delivery of the cheque, and that another was the signatory were sufficient to proceed under Sections 138 and 141 of the Negotiable Instruments Act; quashing was therefore unwarranted. The Section 14 moratorium under the Insolvency and Bankruptcy Code applied only to the corporate debtor and did not bar cheque dishonour proceedings against natural persons arrayed as accused, so the complaint could continue. Section 210 of the Code of Criminal Procedure was inapplicable because the FIR and complaint involved different offences and different factual substrata, so no stay was required.

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Issues: (i) Whether the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881 could be quashed against the petitioners on the ground that the complaint lacked sufficient averments or material to fasten vicarious liability. (ii) Whether the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 barred continuation of the cheque dishonour proceedings against the petitioners. (iii) Whether Section 210 of the Code of Criminal Procedure, 1973 required stay of the complaint proceedings because of a separate FIR and investigation.

Issue (i): Whether the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881 could be quashed against the petitioners on the ground that the complaint lacked sufficient averments or material to fasten vicarious liability.

Analysis: The complaint contained specific averments that the petitioners were responsible for and in charge of the day-to-day affairs of the company. One petitioner was alleged to have coordinated delivery of the cheque, and the other was the signatory to the cheque. In proceedings under Section 141, specific averments showing the role of the persons sought to be prosecuted are sufficient at the threshold, and a hyper-technical approach is not warranted. A signatory of the cheque stands on a higher footing for purposes of prosecution under Section 141(2). The petitioners also did not dispute the issuance of the cheque or the signatures thereon.

Conclusion: The complaint disclosed a sufficient factual foundation to proceed against the petitioners, and quashing was not warranted.

Issue (ii): Whether the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 barred continuation of the cheque dishonour proceedings against the petitioners.

Analysis: The cheque had been dishonoured before the company entered corporate insolvency resolution process. The legal position settled by the Supreme Court is that the moratorium under Section 14 operates against the corporate debtor, while proceedings under Sections 138 and 141 may continue against natural persons such as directors who are arrayed as accused. The protection under insolvency moratorium does not extend to such persons merely because the company is under CIRP.

Conclusion: The moratorium did not bar continuation of the proceedings against the petitioners.

Issue (iii): Whether Section 210 of the Code of Criminal Procedure, 1973 required stay of the complaint proceedings because of a separate FIR and investigation.

Analysis: Section 210 applies when there is a complaint case and a police investigation in respect of the same offence. Here, the FIR concerned allegations of cheating, forgery, and breach of trust, whereas the complaint concerned dishonour of cheque under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The offences, factual substratum, and jurisdictional setting were different, and the statutory precondition of identity of offence was absent.

Conclusion: Section 210 was inapplicable and did not require stay of the complaint proceedings.

Final Conclusion: The petitions seeking quashing of the cheque dishonour complaint failed, as the complaint disclosed a triable case, the insolvency moratorium did not protect the petitioners, and the parallel FIR did not attract Section 210.

Ratio Decidendi: In a prosecution under Sections 138 and 141 of the Negotiable Instruments Act, 1881, specific averments of responsibility and role are sufficient to proceed against directors and signatories, the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 applies only to the corporate debtor, and Section 210 of the Code of Criminal Procedure, 1973 is triggered only where the complaint and police investigation concern the same offence.

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