Dishonored Cheques Under Section 138 Cannot Proceed When Corporate Moratorium Exists Under IBC Section 14

In a case involving dishonored cheques, the SC held that proceedings against the appellant should be quashed where the cause of action under Section 138 of the NI Act arose after a moratorium was issued under Section 14 of the IBC. The Court determined that when the demand notice was issued, the appellant lacked capacity to fulfill payment obligations as he was suspended as director after the IRP's appointment. The appellant could not access corporate bank accounts as they operated under IRP instructions pursuant to Section 17 of the IBC. The SC set aside both the HC's order and the summoning order, ruling that Section 482 of the CrPC should have been exercised to quash proceedings against the appellant. .....

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