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2024 (11) TMI 45

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..... has clarified that the insolvency proceedings against the individuals will not protect them from proceedings under Section 138 N.I.Act. Even prior to the enactment of IBC. This Court through Justice M.Karpagavinayagam (as he was then) in Bharath N.Mehtha and another case [ 1999 (2) TMI 733 - MADRAS HIGH COURT ] had considered the consequence of issuing cheques after adjudication as insolvent and had explained the expressions that suit or other legal proceedings found in Section 72 of the Presidency Town Insolvency Act that ' The wordings any suit or other legal proceedings would mean the suit or other legal proceedings relating to the property of the insolvent and not with reference to the personal act committed by the accused constitut .....

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..... by the complainant and there is no enforceable liability are raised by the petitioner herein in support of the quash petition. 3. This Court finds that except the legal issue whether the criminal prosecution under Section 138 of Negotiable Instruments Act is sustainable against the adjudicated insolvency, all other issues raised in the petition are factual in nature and it has to be adjudicated only before the trial Court. The issue regarding sustainability of criminal prosecution under Section 138 of N.I.Act against adjudicated insolvency is no more res integra in view of judgment rendered by this Court and the Hon'ble Supreme Court in the following judgments i). Bharath N.Mehtha and another Vs. Mansi Finance (Chennai) Ltd., B.Venkate .....

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..... Negotiable Instruments Act is a statutory offence and these proceedings are totally different from that of the insolvency proceedings and by any stretch of imagination, it cannot be said that section 17(2) prohibits the continuation of criminal proceedings initiated for dishonour of the cheque under Section 138 of the Negotiable Instruments Act. 7. Thus, finally the Court has held that there is no bar in any of the provisions of insolvency Act or in the Negotiable Instruments Act, restricting the complainant to resort Section 138 of N.I.Act, after adjudication proceedings under Insolvency Act and it is open to the petitioner/accused to establish the fact regarding the alleged enforceable liability and the factum of impossibility to pay in .....

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