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TMI Blog2024 (3) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... and both were stated to be incharge of and responsible to the Company i.e. Ms. Kudos Chemie Pvt. Ltd. for the conduct of its business - there remains no doubt that Signatories/Directors cannot escape their penal liability under Section 138/141 of the NI Act. A fortiori, Section 96 of the IBC, inter alia, envisages that during the interim moratorium period, any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed. Since, proceedings in the present case under the NI Act are not in respect of any debt; rather penal in nature and can invite imprisonment for a term which may extend to two years or fine which may extend to twice the cheque amount or with both. It cannot be countenanced that continuation of the proceedings under NI Act, against both the petitioners being Managing Director/Director of the company, deserve to be stayed or that Section 96 of the IBC would be treated as a bar to that effect, in any manner. The complaint under Section 138 of the NI Act is pending for the last 09 years; Hon ble the Supreme Court has repeatedly issued directions to expedite the proceedings under the NI Act. In the case in hand, notice of accusation was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 855 of 2023. Mr. Deepak Jain, Advocate for respondent No.1 in CRM-M Nos.42319, 42391, 42667 42669 of 2023. ORDER MAHABIR SINGH SINDHU, J. Controversy involved in the above cases is of similar nature; therefore, all 36 petitions are being disposed off by this common order. 2. For brevity and with consent of both sides, the facts are being noticed from CRM-M-52874-2023 (Jitender Singh Sodhi another Vs. Deputy Commissioner of Income Tax another). 3. Petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 (for short, Cr.P.C. ) for quashing of the impugned order dated 21.08.2023 (P-1), passed by learned Judicial Magistrate First Class, Chandigarh (for short, JMIC ), whereby, an application of petitioner for stay of proceedings in Complaint No.NACT/3656/2015, under Section 138 of the Negotiable Instruments Act, 1881 (for short, NI Act ), was declined. 3.1. Precisely, the application was moved for stay of proceedings in terms of Section 96 of the Insolvency and Bankruptcy Code, 2016 (for short, IBC ). In order to oppose the aforesaid application, a written response was filed by the respondents. Learned JMIC, after hearing both sides and examining the matter, dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrate, Dera Bassi (for short, SDJM ) by the respondent No.1-Income Tax Department on account of dishonor of cheque No.398304 dated 25.02.2015 for an amount of Rs.1,00,00,000/-. It is alleged that above cheque was issued for discharging the liability towards payment of income tax due for the year 2012-13 and following persons were arrayed as accused:- 1. M/s Kudos Chemie Pvt. Ltd. 2. Jitender Singh (petitioner No.1 herein) 3. Gurmeet Sodhi (petitioner No.2 herein) 8.1. Learned SDJM after recording its satisfaction, passed the summoning order dated 11.05.2015 in the following manner:- Complaint U/S 138 of NI Act has been presented today it be registered in the relevant register CW-1 present and examined. Complainant closed his preliminary evidence. 2. Heard. The present complaint has been filed by the complainant with the averments that accused in discharge of his liability, issued cheque No.398304 dated 25.2.2015 amounting to Rs. 1 Crore drawn on UCO Bank, Dera Bassi, in favour of the complainant. Said cheque when presented in the bank for encashment were received back dishonoured due to the reasons Exceeds arrangement. The complainant also got issued legal notice dated 27.3.15, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners did not come forward and ultimately in pursuance of the non-bailable warrants, both the petitioners joined proceedings and they were released on bail by learned JMIC vide order dated 14.03.2016. 8.4. Also noteworthy that on 25.05.2016, learned JMIC taking into consideration the nature of controversy, observed that complaint be tried as a summons case (under Chapter XX of Cr.P.C.) and finding a prima facie case, issued notice of accusation against the accused, to which they pleaded not guilty and claimed trial. For reference, the order dated 25.05.2016 reads as under:- Both the parties have been examined orally. After hearing their submissions with regard to instant complaint, this Court is of the considered view that it would not be appropriate to try the instant case as a summary case as the matter requires thorough consideration. For proper adjudication of the matter, the accused needs fair opportunity to cross-examine the complainant and would also need opportunity to lead evidence in defence. Considering all these facts, this court find it proper to try the instant complaint as summons case under Chapter XX of Cr.P.C. Finding a prima facie case, notice of accusation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the continuation of moratorium period, in the interest of justice. Place : Chandigarh Applicant/Accused Dated : 30.07.2021 It seems that above application was filed just to delay the proceedings and that is the precise reason that later on, petitioners themselves decided not to pursue the same. On 20.05.2022, their counsel made the following statement:- I do not want to pursue with transfer application and I have no objection in proceedings with the present case. 8.8. Again, instead of leading any defence evidence and/or arguing the matter, petitioners filed present application on 20.05.2022, which was dismissed by learned JMIC vide impugned order dated 21.08.2023. 9. It is quite evident that petitioners are facing proceedings under Section 138 of the NI Act being Managing Director Director, respectively of the Company and both were stated to be incharge of and responsible to the Company i.e. Ms. Kudos Chemie Pvt. Ltd. for the conduct of its business. 10. It is noteworthy that Chapter XVII covering Sections 138 to 142 of the NI Act was inserted by way of an amendment (Act No.66 of 1988) w.e.f. 01.04.1989 with an object to enhance the acceptability of cheques in settlement of lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. 13. As per Section 3(8) of the IBC, Corporate Debtor means a corporate person who owes a debt to any person. 14. Again, Section 3(7) of the IBC says that corporate person means a company as defined in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider. 15. Recently, Hon ble the Supreme Court in Goenka s case (supra) while dealing with the scope of Section 14 of the IBC culled out the issue in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are unable to accept the plea that Section 138 of the N.I. Act proceedings are primarily compensatory in nature and that the punitive element is incorporated only at enforcing the compensatory proceedings. The criminal liability and the fines are built on the principle of not honouring a negotiable instrument, which affects trade. This is apart from the 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. Also worthwhile to mention here that Hon ble Mr. Justice J.B. Pardiwala in his concurrent opinion in Goenka s case (supra), while elaborately discussing P. Mohanraj s case, observed as under:- 85. Thus, the upshot of all the decisions referred to above is where the proceedings under Section 138 of the NI Act had already commenced with the Magistrate taking cognizance upon the complaint and during the pendency, the company gets dissolved, the signatories/directors cannot escape from their penal liability under Section 138 of the NI Act by citing its dissolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in dispute that charges have been framed by learned Special Judge, CBI in this case on 29.01.2024 under Sections 420, 467, 468, 471 120-B of the IPC Section 13(2) read with 13(d) of the PC Act and the trial is stated to be pending for prosecution evidence. 18. Needless to say that present petition filed under Section 482 Cr.P.C. is neither an appeal, nor a revision; hence, such a recourse can be entertained only to give effect to any order under the Cr.P.C.; OR to prevent abuse of the process of any Court; OR otherwise to secure the ends of justice; but not in a routine manner. 19. As discussed above, complaint under Section 138 of the NI Act is pending for the last 09 years; Hon ble the Supreme Court has repeatedly issued directions to expedite the proceedings under the NI Act. In the case in hand, notice of accusation was issued way back on 25.05.2016; cross-examination of the complainant was conducted on 04.06.2018, but the petitioners are delaying the proceedings on one pretext or the other. In such a scenario, this Court is of the considered opinion that present petition is complete misuse of the process of Court; hence, entertaining such a petition would not be in the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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