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Insolvency moratorium under the IBC protects the corporate...
Insolvency moratorium does not shield company officers from cheque dishonour prosecution for liability arising before corporate insolvency proceedings.
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Insolvency moratorium under the IBC protects the corporate debtor and postpones civil debt enforcement, but does not halt cheque dishonour prosecution against directors or other natural persons subject to vicarious liability under the Negotiable Instruments Act. Liability is assessed by the accused's status when the cheques were issued and dishonoured; subsequent appointment of an insolvency professional or liquidator, and resulting loss of managerial control, does not erase criminal liability already crystallised. Whether an accused was in charge of and responsible for the company's business at the relevant time remains a matter for trial on evidence.
Insolvency moratorium under the IBC protects the corporate debtor and postpones civil debt enforcement, but does not halt cheque dishonour prosecution against directors or other natural persons subject to vicarious liability under the Negotiable Instruments Act. Liability is assessed by the accused's status when the cheques were issued and dishonoured; subsequent appointment of an insolvency professional or liquidator, and resulting loss of managerial control, does not erase criminal liability already crystallised. Whether an accused was in charge of and responsible for the company's business at the relevant time remains a matter for trial on evidence.
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