TaxTMI 
TaxTMI 
2026 (9) TMI 1130
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....05, West District, Tis Hazari Courts, Delhi in Complaint Case No. 11995/2018, titled Shri Amarjeet Singh v. Shri Hardeep Singh, whereby the proceedings in the said complaint case were stayed. FACTUAL MATRIX 3. The dispute arises out of a friendly loan transaction between the parties. The petitioner alleges that, in June 2015, the respondent approached him for a loan of Rs. 30 lakhs owing to financial difficulties. Pursuant thereto, the petitioner advanced the said amount and the parties executed a loan agreement dated 06.07.2015. Towards repayment of the loan, the respondent issued six post-dated cheques of Rs. 5 lakhs each. 4. Two of the cheques were honoured, while the petitioner, at the request of the respondent, deferred presen....
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....ere pending, the respondent continued to seek time for payment and, on 23.09.2022, once again undertook before the learned Trial Court to clear the outstanding amount in instalments. It is the petitioner's case that, despite receiving a total sum of Rs. 13.50 lakhs out of the settled amount of Rs. 20 lakhs, the respondent failed to pay the remaining Rs. 6.50 lakhs. 8. On 17.11.2022, the respondent produced before the learned Metropolitan Magistrate certain orders passed by the National Company Law Tribunal and the National Company Law Appellate Tribunal in proceedings initiated under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC'). Relying upon the order dated 26.04.2022 passed by the NCLT, whereby an inte....
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.... In view of the order dt. 26.04.22, passed by the NCLT, the proceedings against the accused are hereby stayed." 9. Aggrieved thereby, the petitioner has filed the present petition contending, inter alia, that the learned Trial Court erroneously stayed the proceedings under Section 138 of the Negotiable Instruments Act,1881 and that the impugned order was passed without affording the petitioner an effective opportunity of hearing. SUBMISSIONS ON BEHALF OF THE PETITIONER 10. Learned counsel for the petitioner submits that the learned Trial Court has erred in staying the proceedings under Section 138 of the Negotiable Instruments Act,1881 solely on the ground that an interim moratorium under Section 96 of the Insolvency and Bankrup....
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....gotiable Instruments Act, 1881. 13. It is also contended that the impugned order was passed without supplying copies of the orders relied upon by the respondent and without affording the petitioner an effective opportunity of being heard, thereby causing serious prejudice to the petitioner. 14. Learned counsel further submits that in view of the law subsequently declared by the Supreme Court in Rakesh Bhanot (supra), the very foundation of the impugned order no longer survives. It is, therefore, prayed that the order dated 17.11.2022 be set aside and the learned Trial Court be directed to proceed further with Complaint Case No. 11995/2018 in accordance with law, including the proceedings initiated pursuant to the order dated 21.03.202....
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....ng in respect of any debt shall be deemed to have been stayed; and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. (2) Where the application has been made in relation to a firm, the interim-moratorium under sub-section (1) shall operate against all the partners of the 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." 19. The controversy, however, is whether the expression "legal action or proceeding in respect of any debt "occurring in Section 96 encompasses criminal proceedings initiated un....
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....onditions in the NI Act, 1881. Therefore, allowing the respective appellant-petitioners to evade prosecution under Section 138 by invoking the moratorium would undermine the very purpose of the NI Act, 1881, which is to preserve the integrity and credibility of commercial transactions and the personal responsibility persists, regardless of the insolvency proceedings and its outcome." 22. In view of the law declared by the Supreme Court in Rakesh Bhanot (supra), the basis on which the impugned order came to be passed cannot be sustained. The proceedings before the learned Trial Court arise out of a complaint under Section 138 of the Negotiable Instruments Act,,1881 which are criminal in nature. Mere initiation of insolvency proceedings ag....