TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 172
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....d 54 came to be allowed, and the proceedings are stayed till insolvency resolution in process till final moratorium is reached. 3. The petitioner is the original complainant, who filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the NI Act" for short), against the respondents. The respondent No. 1 is a Company and is arrayed as original accused No. 1. Respondent no. 2 is the Chairman-cum-Whole Time Director of the respondent No. 1 Company, whereas the respondent no.3 is the Managing Director of respondent No. 1 Company. Both are arrayed as original accused nos. 2 and 3 respectively and they are responsible and in-charge of the day to day business/affairs of the respondent No. 1 Company. It further appears that the respondent nos. 2 and 3 had issued cheques dated 03.10.2016 bearing Nos. 118857 to 118867 drawn on United Bank of India, CIT Road, Kolkata in favour of the present petitioner. All the accused purchased cotton bales from time to time, totaling to Rs. 4,34,46,276/- from 05.05.2016 to 29.06.2016 from the petitioner/complainant. Out of the said amount, the accused paid an amount of Rs. 1,78,68,088/- through RTGS to the c....
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....inal accused filed applications vide Exhs.43 and 54 before the learned Magistrate praying therein to stay the proceedings of Summary Criminal Case to which the petitioner filed its reply. The learned Judicial Magistrate, First Class was pleased to pass the impugned order as stated above. 7. I have heard the learned Counsel for the parties. The learned Senior Counsel Shri Kaptan, appearing on behalf of the petitioner submits that the learned Judicial Magistrate has failed to take into consideration the latest law laid down by the Hon'ble Supreme Court. He further submits that the respondent nos. 2 and 3 are natural persons, and respondent No. 1 is a Company, therefore, as laid down by the Hon'ble Supreme Court the proceedings under Section 138 of the Negotiable Instruments Act cannot be stayed and further it may go on. The Supreme Court has already interpreted the provisions of 'Insolvency and Bankruptcy Code' and in the light of penal provisions contained in the Negotiable Instruments Act, the Supreme Court has clarified that the object of the Negotiable Instruments Act would be frustrated, if proceedings under the said Act are stayed or quashed, only on the ground of moratorium b....
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....ied in staying the proceedings ?". 10. At the outset, it would be useful to refer to the judgments relied on by the parties. The Supreme Court in case of P. Mohanraj (supra) has observed as under : "32. Viewed from another point of view, clause (b) of Section 14(1) also makes it clear that during the moratorium period, any transfer, encumbrance, alienation, or disposal by the corporate debtor of any of its assets or any legal right or beneficial interest therein being also interdicted, yet a liability in the form of compensation payable under Section 138 would somehow escape the dragnet of Section 14(1). While Section 14(1)(a) refers to monetary liabilities of the corporate debtor, Section 14(1)(b) refers to the corporate debtor's assets, and together, these two clauses form a scheme which shields the corporate debtor from pecuniary attacks against it in the moratorium period so that the corporate debtor gets breathing space to continue as a going concern in order to ultimately rehabilitate itself. Any crack in this shield is bound to have adverse consequences, given the object of Section 14, and cannot, by any process of interpretation, be allowed to occur. .... 102. Sinc....
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....d covered under Section 141 of the NI Act. They will have to continue to face the prosecution in view of the law laid down in Aneeta Hada (supra). Where the company continues to remain even at the end of the resolution process, the only consequence is that the erstwhile directors can no longer represent it. .... 98. As per Section 138 of the NI Act, when the cheque was dishonoured and a statutory notice demanding the cheque amount was issued, the accused shall pay the cheque amount within 15 days from the date of receipt of the said notice. The moment the said 15 days expired, the cause of action arises. In other words, the offence under Section 138 of the NI Act is complete. Once the cause of action arose for the offence committed, the complainant has to approach the criminal court within one month to take penal action under Section 138 of the NI Act. To put it clearly, the complainant approaches the criminal court not for recovery of the legally enforceable debt, but for taking penal action under Section 138 of the NI Act for the offence already committed by the accused by not making the payment of the cheque amount despite the receipt of the statutory notice. The only ques....
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....athing space to the corporate debtor, allowing them to reorganize their financial affairs without the immediate threat of creditor actions. However, this moratorium is not intended to shield individuals from personal criminal liabilities arising from their actions outside the scope of corporate debt restructuring. The respective appellants / petitioners, having filed insolvency applications as personal guarantors under Section 94 IBC, cannot extend this protection to avoid prosecution under Section 138 of the N.I. Act, 1881. ... 24. On the other hand, the proceedings under Section 138 of the N.I. Act, 1881, pertain to the dishonor of cheques issued by the respective appellants / petitioners in their personal capacity. These proceedings are distinct from the corporate insolvency proceedings and are aimed at upholding the integrity of commercial transactions by holding individuals accountable for their personal actions. The scope and nature of the proceedings under the IBC may result in extinguishment of the actual debt by restructuring or through the process of liquidation. But such extinguishment will not absolve its directors from the criminal liability. Section 141 of the N....
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....ection 32 A of the IB Code, Criminal proceedings under Section 138 of the NI Act will stand terminated only in relation to corporate debtor, provided that the old management is taken over by the new management. However, the said protection shall not be available to the corporate debtor in the resolution plan, if the management or control of the corporate debtor is given to a person or debtor who abated or conspired in commission of offence. So far as the present case is concerned, the respondent nos. 2 and 3 are natural persons and managing the day to day affairs of the respondent No. 1 Company. The respondent No. 2 is the signatory to the cheques. The complaint under Section 138 of the NI Act would also demonstrate that the respondent nos. 2 and 3 are Chairman and Managing Director of the Company respectively. 16. Considering the purport of Section 32 of the IB Code, the protection of cessation of liability for prior offence is applicable only to a corporate debtor in the contingency if the management of the company is changed by the adjudicating Authority in the approval resolution. However, this protection is not available to natural persons in view of the law laid down by the ....