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TMI Blog2022 (11) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of persons other than the corporate debtor, Director or Managing Director, as the case may be, Section 14 of I B Code did not apply to Section 138 proceedings and further, issued direction that complaint is directed to continue against the Managing Director and Director, respectively and observing that Section 14 of I B code could not cover proceedings already initiated under Section 138 of NI Act, held that such a proceedings can continue against erstwhile Directors/persons in charge of and responsible for the conduct of the business of the corporate debtor. The main plank of the petitioner herein/A3 as to the maintainability of the criminal complaint against him, who is the Managing Director, after the moratorium period, stands negatived. After perusing legal notice exchanged between parties before initiation of proceeding, There is a dispute. Disputed facts cannot be gone into by this Court by holding a enquiry or a mini trial at this stage - Petition dismissed. - Crl.O.P.No.26935 of 2018 and Crl.M.P.No.15550 of 2018 - - - Dated:- 28-9-2022 - THE HONOURABLE MR. JUSTICE RMT. TEEKAA RAMAN For the Petitioner : Mr. M. A. Mathew Berchmans For the Respondent : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to the respondent/complainant stands as Rs.23,64,570/- i.e. a sum of Rs.15,00,000/- as principal amount and Rs.8,64,570/- as interest. (d) Towards the payment of principal sum, on 29.12.2017, the second accused namely one Ankit Agarwal on behalf of the 1st accused company alleged to have issued a cheque for a sum of Rs.15,00,000/- and on 30.12.2017 the respondent/complainant through his bankers namely Karur Vysya Bank, Thambu Chetty Street branch alleged to have presented the cheque issued by the 2nd accused. (e) On presentation of the cheque, the same was returned with an endorsement Account Blocked Situated covered in 2125 . As against the same, the respondent/complainant after the issuance of legal notice had filed the private complaint numbered as C.C.No.899 of 2018. Seeking to quash the said C.C.No.899 of 2018, the present petition has been filed by the petitioner herein/A3. 4. Heard the learned counsel for the petitioner as well the learned counsel for the respondent. 5. Both counsel admit that the Central Bank of India and State Bank of India as a financial creditors, initiated proceedings against the first accused company namely M/s.Ashok Magnetics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited therein, which are reproduced hereunder. (i) In Indorama Synthetics (I) Ltd. Nagpur Vs. State of Maharashtra and others reported in 2016 (4) Mh.L.J.249, the question that arose was whether the expression suit or other proceedings mentioned in Section 446(1) of the Companies Act, 1956 would include criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. In the said case, it was answered in the negative after observing that the main object of Section 138 of the Negotiable Instruments Act is to safeguard the credibility of commercial transactions and to prevent bouncing of cheques by providing a personal criminal liability against the drawer of the cheque in public interest. (ii) A learned Judge of this Court (Mr.Justice G.K.Ilanthiraiyan) vide order dated 02.04.2019 in Crl OP No.8869 of 2018 (M/S.Nag Leathers Pvt Ltd vs J.L.Sobhana), held that Section 138 of Negotiable Instruments Act is not a civil proceeding and that even fine imposed by the criminal court cannot be held to be a money claim or recovery against corporate debtor and that it is not covered under the prohibition set out in Section 14 of the Insolvency and Bankruptcy Code, 2016. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequence is that the erstwhile Directors can no longer represent it. (vi) The Hon'ble Supreme Court in Innoventive Industries Limited vs. ICICI Bank and another (2018) 1 SCC 407, has held that once an insolvency professional is appointed to manage the company, the erstwhile Directors who are no longer in management, obviously cannot maintain an appeal on behalf of the company. This petition has been filed only by the erstwhile Managing Director. He cannot maintain a prayer for quashing the entire prosecution. At best, he can confine the relief to himself. 11. Further, in P.Mohanraj Vs. Shah Bros. Ispat (P) Ltd., reported in 2021 (6) SCC 258 at paragraph No.102, the Hon'ble Supreme Court has held as follows: ....Thus, for the period of moratorium, since no Section 138/141proceeding 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 menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contends that at the time of issuance of alleged cheque, at the time of the presentation of the alleged cheque, at the time of presentation of the private complaint, and at the time of cognizance of the said complaint, the petitioner is in no way connected with the company and he has not signed the disputed cheque. 16. The petitioner herein is arrayed as an accused [A3] in the capacity of the Managing Director of the 1st accused Company. By virtue of the order passed by the National Company Law Tribunal, one Mr.Venkatramanarao Nagarajan was appointed as IRP in respect of 1st accused Company. As per the decision of the Hon'ble Supreme Court [P.Mohanraj's case], proceedings under Section 138 of the Negotiable Instruments Act, cannot be initiated or continued against the 1st accused company alone. As against the A2 and A3, such a proceedings can continue. 17. With regard to the affairs and disputed dates, my attention was drawn to the reply notice issued by the petitioner's counsel that the cheque was given by the accused as a security for the repayment of the amount deposited by the private complainant for the supply of TMT Steel Bars and as the petitioner/accused h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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