Vishnoo Mittal vs M/s Shakti Trading Company

Court

Supreme Court of India

Date

17 March 2025

Case No.

Criminal Appeal No. 1287 of 2025

Result

Allowed

Bench

Sudhanshu Dhulia, Ahsanuddin Amanullah

Citation

[2025] 4 S.C.R. 41 : 2025 INSC 346

Acts & Sections

CrPC Negotiable Instruments Act, 1881 Insolvency and Bankruptcy Code, 2016

Issue for consideration

Whether the High Court was justified in relying upon P. Mohan Raj case which held that the immunity granted by the moratorium order issued under Section 14, IBC can only be obtained by a Corporate Debtor and not by a natural person such as the present appellant, while dismissing the s.482 application filed by the appellant for quashing of proceedings initiated u/s.138 of Negotiable Instruments Act, 1881.

Headnote

Code of Criminal Procedure, 1973 – s.482 – Negotiable Instruments Act, 1881 – s.138 – Insolvency and Bankruptcy Code, 2016 – ss.14, 17 – Moratorium order was imposed on 25.07.2018 – Demand Notice u/s.138, NI act was served on the appellant (former director of the corporate debtor), thereafter on 06.08.2018 – High Court relying on P. Mohan Raj case, dismissed the s.482 application filed by the appellant – Challenge to:

Held: Impugned order set aside – Under clause (c) of the proviso to s.138, NI Act cause of action arises only when demand notice is served and payment is not made pursuant to such demand notice within the stipulated fifteen-day period – The return of the cheques dishonoured simpliciter does not create an offence u/s.138, NI Act – High Court erred in relying on P. Mohan Raj since the facts of that case were completely different as the cause of action in the present case arose after the commencement of the insolvency process whereas in P. Mohan Raj cause of action u/s.138, NI Act arose before the imposition of the moratorium and on these facts, this Court had held that s.14, IBC bars or stays proceedings only against the corporate debtor and proceedings can be continued or initiated against the natural persons – Moreover, when the notice was issued to the appellant, he was not in charge of the corporate debtor as he was suspended from his position as the director of the corporate debtor as soon as IRP was appointed on 25.07.2018 – All the bank accounts of the corporate debtor were operating under the instructions of the IRP, hence, it was not possible for the appellant to repay the amount in light of s.17, IBC – Summoning order and the complaint are quashed. [Paras 7-9, 11, 13]

Judgment Sudhanshu Dhulia, J. 1. Leave granted. 2. The appellant before this court has challenged the order dated 21.12.2021 of the learned Single Judge of the Punjab and Haryana High Court by which the appellant’s petition under section 482 of Criminal Procedure Code, 1973 (‘CrPC’), seeking quashing of proceedings initiated under Section 138 of Negotiable Instruments Act, 1881 (‘NI Act’) against the appellant, has been dismissed. 3. Admittedly, the appellant was the director of M/s Xalta Food and Beverages Private Limited (hereinafter ‘corporate debtor’). There was a contract between the

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