Saurabh Malik
Chandigarh, February 16
The Punjab and Haryana High Court has made it clear that proceedings in a cheque bounce case under Section 138 and 141 of the Negotiable Instruments Act can’t continue or be initiated against a “corporate debtor” during the period of moratorium.
Justice Vikas Bahl also made it clear that the proceedings under the provisions of the Act are to continue against “natural persons” or the Managing Director and Director impleaded as a party in the matter. The ruling by Justice Bahl came in a case where a corporate debtor was directed to deposit 20% of the compensation/fine awarded by the trial court in a cheque bounce case. The Bench was, among others, assisted by senior advocates Anand Chhibbar, Bipan Ghai and HS Brar.
The case has its genesis in an agreement to sell between a family and a real estate company through its MD. The total sale consideration for more than 15 kanals was stated to be Rs 3.95 crore. The accused got a cheque for Rs 1 crore issued to discharge the liability. But the cheque was dishonoured.
A judicial magistrate, vide judgment dated January 29, 2020, convicted the petitioners for an offence under Section 138 before sentencing them to two-year jail. They were also directed to pay Rs 2 crore or double the cheque amount as relief to the complainant. The petitioners were convicted in three other complaints and the sentence awarded was directed to run concurrently.
Justice Bahl asserted the moratorium ordered by the National Company Law Tribunal in the present case was still continuing. Referring to a plethora of the SC judgments, Justice Bahl added it was held that a corporate debtor would be covered by the moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code. The legal impediment contained in Section 14 would make it impossible for such proceeding to continue or to be instituted against the corporate debtor.
Justice Bahl added it was observed that the proceedings could not continue or be initiated against the corporate debtor for the moratorium period because of the statutory bar. But the same could continue against the MD and the Director or the “natural persons” as the provision will apply to the corporate debt.
Justice Bahl asserted: “In case the petitioner-corporate debtor is directed to deposit 20% of the relief/fine awarded by the trial court, the same would amount to the depletion of the debtor’s assets, which would directly impact the corporate insolvency resolution process and would be in the teeth of the ratio of law laid down by the SChellip;”
During moratorium, can’t go on against ‘corporate debtor’: Punjab and Haryana High Court
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