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TMI Blog2021 (12) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... e Vishnoo Mittal, who claims himself to be the suspended Director of the corporate entity, named as M/s Xalta Food and Beverates Pvt. Ltd. The learned counsel for the petitioner submits, that the clout of the moratorium, is omnibus, and, it also indemnifies, and, saves the liability, if any, of the petitioner herein. However, the afore made argument, cannot be accepted by this Court, as the Hon'ble Apex Court in judgment made a candid expostulation of law, that proceedings drawn under Section 138 of the Negotiable Instruments Act, though are covered by Section 14 of the IBC Code, but the afore drawn proceedings cannot rather continue only against the corporate debtor accused, but can continue against the erstwhile director/person incharge, and, responsible for the conduct of the business of the corporate debtor. Since the petitioner is a natural person, and, a suspended Director, and, hence falls within the domain of erstwhile director. Thereupon the immunity, as granted to a corporate debtor, cannot be extended to him. Since the petitioner is not a juristic person, but is a natural person, and, though he is a suspended director, yet when he is an erstwhile director of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e complainant, against the respondent-accused M/s Xalta Food and Beverages Pvt. Ltd., hence claiming therein, the relief of imposition of moratorium, in terms of Section 14 of the Insolvency and Bankruptcy Code (for short 'IBC Code'), upon the complainant, and, besides when, through an order made by the National Company Law Tribunal on 25.7.2018, rather the afore relief became granted to the complainant. Therefore, he further submits that also when the amount carried in the Negotiable Instrument concerned, is, encompassed with the domain of the afore made order. Consequently, he further contends, that the clout of the moratorium, imposed through the order (supra) also extends to proceedings drawn under the Negotiable Instruments Act, and, thereupon the summoning order, is made with the completest lack of profound legal wisdom, and, is liable to be quashed, and, set aside. He further submits, that since Section 14 of the IBC, provisions whereof stand extracted hereinafter, make it abundantly clear, that subject to exceptions contained in sub-Section 2 and 3, on the insolvency commencement date, the moratorium declared by the competent authority rather casting a prohibition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, named in the complaint(supra), could not be hence redeemed by it, during the moratorium period, as the statutory disablements entailed upon the assets, and, accounts of the corporate entity concerned, rather forbade it, and, also forbade him to redeem the debt. Therefore, he contends that when the relevant underlined hereinafter mandate, as occurring in the proviso, to Section 138 of the Negotiable Instruments Act, forbids the institution of a complaint against the accused concerned, unless all, the clauses carried therein, become completely, and, conjunctively satisfied. Consequently, he argues, that hence the afore statutory disablements, as encumbered, upon the assets and accounts of the corporate entity concerned, and, as arose, from the moratorium order, as became imposed prior to the issuance of the statutory notice, rather concomitantly incapacitated the accused corporate entity concerned, and, also all other non-juristic persons, hence to comply with the demand notice within 15 days since its issuance, and, receipt by the accused concerned. Therefore, he argues that the factum of the afore evident disablements, can not assign the relevant mens rea to all the accused conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) the provisions of sub-section (1) shall not apply to transactions as may be notified by the Central Government in consultation with any financial regulator. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act. 7. On the other hand, the learned counsel for the respondent has contended, with vigour before this Court, that the moratorium, as became imposed upon the operational creditor therein, and, who is the complainant in the apposite proceedings, drawn before the National Company Law Tribunal, and, also when the insolvency proceedings, become initiated by the operational creditor, who is also the complainant in the extant complaint, yet cannot result in any succor emanating to the accused, from the provisions of Section 14 of the IBC Code. He rests the afore argument on the ground that a reading of the afore made order, does not detail, that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nizance, and, also valid assumption of jurisdiction, being taken by the learned trial Magistrate, upon, the complaint concerned, does enjoin, qua its along with all the clauses carried in the proviso, rather being conjunctively satisfied. Therefore, in the wake of the moratorium order (supra), thus, its mandate is to be conjunctively satisfied along with the mandate of all other clauses carried in the proviso concerned. Therefore, he submits that with the taking of cognizance rather occurring during the spell, of operation of the moratorium order (supra), and, the clout of the moratorium order, covering also the statutory notice issued, upon, the accused concerned. Consequently, when during the above spell, the accused concerned, were obviously financially disabled, to hence operationalize the accounts, and, assets of the corporate entity concerned. In sequel, the apposite statutory mens rea, was not made out against the accused, mentioned in the complaint, nor obviously any valid cognizance, nor any valid assumption of jurisdiction could be taken by the learned Magistrate concerned, upon, the complaint concerned. The afore made argument is well rested, as the imposition of morator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, and, a suspended Director, and, hence falls within the domain of erstwhile director. Thereupon the immunity, as granted to a corporate debtor, cannot be extended to him. 120. Leave granted. 121. The complaint in the present case was filed by the respondent on 28.7.2016. An application under Section 7, IBC was admitted by the Adjudicating Authority only on 20.2.2018 and moratorium imposed on the same date. The impugned judgment rejected a petition under Section 482 of the Cr.P.C. on the ground that Section 138 proceedings are not covered by Section 14 of the IBC. 10. Moreover, since the sweep of the afore verdict covers with immunity any corporate debtor hence a juristic person, against rearings of proceedings under Section 138 of the Negotiable Instruments Act, and, does not likewise cover any natural person, working as a Director in the corporate entity concerned nor covers erstwhile directors. Therefore, since the petitioner is not a juristic person, but is a natural person, and, though he is a suspended director, yet when he is an erstwhile director of the corporate entity concerned, and, hence within the ambit of paragraph 121 (supra), rather prima facie, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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