TaxTMI 
TaxTMI 
2023 (5) TMI 716
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....or of Respondent no. 2. The respondent No. 1 alleged that the Petitioner and Respondent no 2 approached Respondent No. 1 for purchase of steel. On placing of purchase orders, materials have been alleged to have been supplied to Respondent no. 2 on credit. In discharge of debt, respondent no. 2 issued cheque no. 424055 dated 24th march 2018 drawn on Corporation Bank, Faridabad for a sum of Rs. 6 crores. The cheque was signed by the petitioner for and on behalf of respondent no. 2. The cheque on presentation was dishonored and hence the complaint. 4. During the pendency of complaint, the petitioner started facing mounting liabilities and two of his creditors, HDB Financial Services and Indian Overseas Bank invoked their respective guarantees in 2019 that had been given by the Petitioner for credit facilities that had been availed from them. In view of such liabilities, and his incapacity to pay his liabilities, the Petitioner was constrained to approach the National Company Law Tribunal, Chandigarh Bench for devising an effective resolution plan in respect of his debts. 5. During the pendency of the National Company Law Tribunal (herein after called NCLT) proceedings, an applicatio....
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....e firm as on the date of the application. (3) The provisions of sub-section (1) shall not apply to such transactions -as may be notified by the Central Government in consultation with any financial sector regulator." 10. It is further stated that legal proceeding in respect of any debt of the Petitioner is required to be stayed in terms of the mandate of the above provisions. The subject proceedings under Section 138 of the Negotiable Instrument Act, 1881 which concern the dishonour of the cheque issued under the signatures of the Petitioner would fall within the prohibition contained in Section 96 of the IBC reproduced above. 11. It is also stated that the cheque issued by the Respondent No. 2 under the signatures of the Petitioner herein becomes the Petitioner's debt under Section 141 of the NI Act. 12. Hence the subject proceedings under Section 138 read with Section 141 of the NI Act which is concerned with the dishonour of an alleged cheque under the signatures of the Petitioner would fall within the prohibition contained in Section 96 of the IBC. 13. He states that the Interim Moratorium comes into effect on the date of the filing of the application under Section 94....
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....n relation to a firm, means a partner in the firm." Petitioner arrayed as natural personal and not as personal guarantor. 16. The Petitioner has filed an application under Section 94 of the IBC before the NCLT, Chandigarh Bench, seeking initiation of the insolvency resolution process against himself as a Personal Guarantor towards Respondent no. 2 17. In the present case, the petitioner's application for insolvency before NCLT related to the personal liability of the Petitioner in his capacity as a surety in contracts of guarantee to Respondent no. 2. However, the Petitioner in the proceedings pending before the Ld. MM, Patiala House Court was facing trial as a 'Natural Person' under Section 141 of the NI Act i.e., for liability of the Company of which the Petitioner was the Managing Director/ person in charge. 18. The case would have been different if the personal liability of the petitioner was in question. In that case, the moratorium will apply to the petitioner. But in the present case, the proceedings pending before the MM were for bouncing of cheques issued by company where petitioner was the Managing Director. The debt of the Respondent No. 2 company is not the personal....
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....ebtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act. Conclusion 78. In conclusion, disagreeing with the Bombay High Court and the Calcutta High Court judgments in Tayal Cotton (P) Ltd. v. State of Maharashtra [Tayal Cotton (P) Ltd. v. State of Maharashtra, 2018 SCC OnLine Bom 2069 : (2019) 1 Mah LJ 312] and MBL Infrastructions Ltd. v. Manik Chand Somani [MBL Infrastructions Ltd. v. Manik Chand Somani, 2019 SCC OnLine Cal 9097], respectively, we hold that a Sections 138/141 proceeding against a corporate debtor is covered by Section 14(1)(a) IBC." Emphasis supplied 23. Thus, I am of the view that the judgment of P. Mohanraj (supra) is clear in this regard. Admittedly, in the present case, the petitioner had signed the cheque as the Managing Director of Respondent No. 2. The judgment of P. Mohanraj (supra) categorically states that the moratorium provisions u/s 14 IBC would apply only to the corporate debtor and the natural persons would continue to be liable. The petitioner is the natural person and merely because he has filed personal insolvency proceedings, the same would not bring him ....
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....ure and that the punitive element is incorporated only at enforcing the compensatory proceedings. The criminal liability and the fines are built on the principle of not honouring a negotiable instrument, which affects trade. This is apart from the principle of financial liability per se. To say that under a scheme which may be approved, a part amount will be recovered or if there is no scheme a person may stand in a queue to recover debt would absolve the consequences under Section 138 of the N.I. Act, is unacceptable." Emphasis supplied 25. In the present case as well, the petitioner is seemingly trying to escape his liability by trying to urge that his application u/s 94 of the IBC in his individual capacity would stay the complaint under section 138 NI Act against him. . It is clear that the petitioner is facing criminal proceedings for being signatory to the cheque which has been dishonoured. He is covered under natural person under section 141 NI Act. 26. The debt in the present case is not of the petitioner but that of Respondent No. 2. Section 141 of the NI Act fastens liability on every officer of the company who was in management and control of the affairs of the compa....