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TMI Blog2023 (4) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Learned counsel for the petitioners submits that the petitioners are Directors of M/s C & C Towers Limited, respondent No.3 company (hereinafter referred as to 'Corporate Debtor'). Learned counsel contends that prior to the institution of the complaint in question, proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2019 (hereinafter referred to as 'the IBC') had been instituted against the Corporate Debtor and Corporate Insolvency Resolution Process (hereinafter referred to as 'CIRP'), as per the provisions of the IBC, had commenced against respondent No.2. Resultantly, vide order dated 10.10.2019, moratorium in terms of Section 14(1) of the IBC had been declared by the National Company Law Tribunal (hereinafter referred to as 'NCLT'), Chandigarh, pursuant to which one Amit Gupta was appointed as an Interim Resolution Professional (IRP) of the Corporate Debtor, as per provisions of Section 16(5) of the IBC. Later one Gaurav Khanna was appointed as Resolution Professional (RP) of the Corporate Debtor. 4. Learned counsel has further brought to the notice of this Court that apart from proceedings under Section 7 of the IBC being instituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of the Hon'ble Supreme Court in State Bank of India Vs. Ramakrishnan and another : 2018 17 SCC 394, learned counsel submits that even therein it had been observed by the Hon'ble Supreme Court that Sections 96 and 101 of the IBC when contrasted with Section 14, would show that Section 14 of the IBC could not possibly apply to a personal guarantor, and it had been further held that the protection of the moratorium under Sections 96 and 101 of the IBC was far greater than that of Section 14 of the IBC, in respect of pending legal proceedings qua a debt. He, thus, submits that moratorium mentioned in Section 101 of the IBC would cover such persons, as such moratorium would be in relation to the debt and not the debtor. 8. Learned counsel further asserts that the objective of Sections 96 and 101 of the IBC is to give a breather to the partnership firm/individual to recuperate for a successful resolution of its debts, and to provide time to the debtor to negotiate with the creditors for foregoing a part of the debt, and also for restructuring the schedule of the debt. Learned counsel, therefore, submits that independent recovery as well as criminal proceedings cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed as under:- "35. When the language of Section 14 and Section 85 are contrasted, it becomes clear that though the language of Section 85 is only in respect of debts, the moratorium contained in Section 14 is not subject specific. The only light thrown on the subject is by the exception provision contained in Section 14(3)(a) which is that "transactions" are the subject matter of Section 14(1). "Transaction" is, as we have seen, a much wider expression than "debt", and subsumes it. Also, the expression "proceedings" used by the legislature in Section 14(1)(a) is not trammelled by the word "legal" as a prefix that is contained in the moratorium provisions qua individuals and firms. Likewise, the provisions of Section 96 and Section 101 are moratorium provisions in Chapter III of Part III dealing with the insolvency resolution process of individuals and firms, the same expression, namely, "debts" is used as is used in Section 85. 35.1. XXXX XXXX XXXX 35.2. A legal action or proceeding in respect of any debt would, on its plain language, include a Section 138 proceeding. This is for the reason that a Section 138 proceeding would be a legal proceeding "in respect of" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility companies, and it is clear that in the vast majority of cases, personal guarantees are given by Directors who are in management of the companies. The object of the Code is not to allow such guarantors to escape from an independent and coextensive liability to pay off the entire outstanding debt, which is why Section 14 is not applied to them. However, insofar as firms and individuals are concerned, guarantees are given in respect of individual debts by persons who have unlimited liability to pay them. And such guarantors may be complete strangers to the debtor - often it could be a personal friend. It is for this reason that the moratorium mentioned in Section 101 would cover such persons, as such moratorium is in relation to the debt and not the debtor." These observations, when viewed in context, are correct. However, this case is distinguishable in that the difference between these provisions and Section 14 was not examined qua moratorium provisions as a whole in relation to corporate debtors vis-à-vis individuals/firms." 15. Therefore, it is abundantly clear that when the provisions of Section 14 and 96 of the IBC are viewed in context of Corporate Debtors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of financial liability per se. To say that under a scheme which may be approved, a part amount will be recovered or if there is no scheme a person may stand in a queue to recover debt would absolve the consequences under Section 138 of the N.I. Act, is unacceptable." 17. Adverting to the submissions made by learned counsel qua the petitioners not being vicariously liable in view of their status being that of 'suspended Directors', it would be pertinent to notice that the cheques in question had been issued on 15.09.2019 i.e. prior to the order dated 10.10.2019 passed by the NCLT, Chandigarh Branch, appointing Amit Gupta as IRP. Therefore, there can be no manner of doubt that on the date of issuance of the cheque in question, the petitioners were still in-charge of the management of the affairs of the Corporate Debtor as it was a matter of record that they were its Managing Directors. Not only this, a perusal of the complaint in question also reveals that specific averments were made therein against the petitioners of being responsible for the day to day affairs of the Corporate Debtor. Even if the submissions made by learned counsel are accepted qua no statutory notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the directors, whose names the payee may not even be aware of at that stage. Under Second proviso to Section 138, the notice of demand has to be made within 30 days of the dishonour of cheque and the third proviso gives 15 days time to the drawer to make the payment of the amount and escape the penal consequences. Under clause (a) of Section 142, the complaint must be filed within one month of the date on which the cause of action arises under the third proviso to Section 138. Thus a complaint can be filed within the aggregate period of seventy five days from the dishonour, by which time a complainant can gather requisite information as regards names and other details as to who were in charge of and how they were responsible for the affairs of the Company. But if we accept the logic that has weighed with the High Court in the present case, such period gets reduced to 30 days only. Furthermore, unlike proviso to clause (b) of Section 142 of the Act, such period is non-extendable. The summary remedy created for the benefit of a drawee of a dishonoured cheque will thus be rendered completely cumbersome and capable of getting frustrated " 20. As a sequel to the above discussion, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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