Bombay High Court
Mr. Yatendra Singh S/O Rajendra Singh … vs Ganga Iron And Steel Trading Company … on 3 July, 2025
2025:BHC-NAG:6254
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
CRIMINAL APPLICATION (APL) NO.1679 OF 2024
WITH
CRIMINAL APPLICATION (APL) NO.1680 OF 2024
WITH
CRIMINAL APPLICATION (APL) NO.1681 OF 2024
WITH
CRIMINAL APPLICATION (APL) NO.1685 OF 2024
WITH
CRIMINAL APPLICATION (APL) NO.1686 OF 2024
WITH
CRIMINAL APPLICATION (APL) NO.1687 OF 2024
CRIMINAL APPLICATION (APL) NO.1679 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
.....2/-
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2
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
Mukesh Omprakash Agrawal. ..... Non-applicant.
CRIMINAL APPLICATION (APL) NO.1680 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
.....3/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
3
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
Mukesh Omprakash Agrawal. ..... Non-applicant.
CRIMINAL APPLICATION (APL) NO.1681 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
.....4/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
4
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
Mukesh Omprakash Agrawal. ..... Non-applicant.
CRIMINAL APPLICATION (APL) NO.1685 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
.....5/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
5
Mukesh Omprakash Agrawal. ..... Non-applicant.
CRIMINAL APPLICATION (APL) NO.1686 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
Mukesh Omprakash Agrawal. ..... Non-applicant.
.....6/-
Judgment
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6
CRIMINAL APPLICATION (APL) NO.1687 OF 2024
1. Mr.Yatendra Singh s/o
Rajendra Singh Panwar,
aged about 68 years, occupation : Nil.
2. Smt.Neha Panwar,
aged about 40 years, occupation: Nil.
3. Mr.Shivam Panwar,
aged about 30 years, occupation:Nil.
4. Mr.Narendra Singh s/o
Rajendra Singh Panwar,
aged about 65 years, occupation: Nil.
All r/o c/o Rajendra Singh Panwar,
349, galli No.13/1, Gandhi Colony,
Muzaffarnagar, UP-251001. ..... Applicants.
:: V E R S U S ::
Ganga Iron and Steel Trading
Company Limited,
incorporated under Companies Act
1956, having registered address at 29-
A, Small Factory Area, Bagadganj,
Nagpur-8, through its director
Mukesh Omprakash Agrawal. ..... Non-applicant.
Shri Yash Venkatraman, Counsel &
Ms.Pragya Nawandar, Adv. for Applicants.
Shri Darasingh Sindhu, Counsel for the Non-applicant.
.....7/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
7
CORAM : URMILA JOSHI-PHALKE, J.
CLOSED ON : 23/06/2025
PRONOUNCED ON : 03/07/2025
COMMON JUDGMENT
1. These applications are filed by applicants for
quashing Criminal Case Nos.691/2023; 696/2023;
695/2023; 693/2023; 692/2023; and 694/2023 filed
under Section 138 read with 141 of the Negotiable
Instruments Act (the NIA).
2. Brief facts necessary for disposal of applications are
as under:
Applicants were Directors of company namely
“Venus Rolling Mills Private Limited” which is arraigned
as accused No.1 in above mentioned criminal cases. The
non-applicant company is also involved in business of
manufacturing and processing of Steel and Iron Goods.
In the year 2015, accused No.1 company
…..8/-
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421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
8
and the non-applicant company entered into business for
purchasing goods from the non-applicant company. As
per allegations, the accused company obtained goods on
credit and huge amount was due from the accused
company. Allegedly, applicant No.1, being Director of the
said company, against the said dues issued 16 cheques
drawn on Federal Bank, Nagpur Branch, which came to be
“dishonoured”. Cheque Nos.003874, 003875, and
003876 drawn in favour of the non-applicant company
dated 29.10.2022 of Rs.25.00 lacs each were issued in
favour of the non-applicant company. The said cheques
were returned with endorsement “account closed” and,
therefore, Criminal Complaint No.691/2023 was
registered against accused No.1 company and applicant
Nos.1 to 4.
Cheque Nos.004340, 004341, and 004342 dated
31.10.2022 of Rs.25.00 lacs drawn on the Federal Bank
…..9/-
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421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
9
were also deposited and the same were returned as
“dishonoured” and, therefore, Criminal Complaint
No.696/2023 was registered.
Cheque Nos.004554 and 004555 dated 2.11.2022
of Rs.50.00 lacs each were also returned as “dishonoured”
with endorsement “account closed”. Regarding the same,
Criminal Complaint No.695/2023 was registered.
Cheque Nos.003871; 003872; and 003873 dated
28.10.2022 of Rs.25.00 lacs each and cheque
Nos.003868; 003869 and 003870 dated 27.10.2022 of
Rs.25.00 lacs each and cheque Nos.004343 and 004344
dated 1.11.2022 were also returned with endorsement
“account closed” and, therefore, Criminal Complaint
No.693/2022; 692/2023, and 694/2023 were registered.
The process is issued in all complaints by the
Additional Chief Judicial Magistrate, Nagpur.
…..10/-
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10
3. As per contentions of applicants, applicant No.1
Mr.Yatendra Singh s/o Rajendra Singh Panwar was
Director from 3.6.2005, till commencement of CIRP
Proceeding, applicant No.2 was Director from 4.3.2014 to
10.6.2017; applicant No.3 was Director from 14.5.2015
till commencement of proceeding of Corporate Insolvency
Resolution Process (CIRP); and applicant No.4 was
Director from 3.6.2005 to 21.5.2015.
4. As per contentions of applicants, applicant No.2
Smt.Neha Panwar resigned as Director of the accused
company on 10.6.2017 and applicant No.4 Mr.Narendra
Singh s/o Rajendra Singh Panwar resigned as Director on
21.5.2015. Their resignation letters along with DIR-11
i.e. notice of resignation are filed on record. In the year
2018, the accused company issued said cheques as
security to the non-applicant company. Thereafter, the
accused company in the year 2019 suffered major losses
…..11/-
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421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
11
in business and, therefore, applied for initiation of
proceeding by filing CP No.(IB) 350/MB/C-III/2019
before the National Company Law Tribunal, Mumbai (the
NCLT Mumbai). Vide order dated 22.4.2019, the NCLT
Mumbai admitted the petition of the company and
declared moratorium thereby prohibiting initiation or
continuation of any suits or proceedings against the
accused company. One Mr.Devendra Singh was appointed
as Resolution Professional for the purposes of the CIRP,
thereby suspending applicant Nos.1 and 3 as Directors of
the company in the year 2019. On 3.5.2019, Resolution
Professional made public announcement notifying the
initiation of the CIRP and intimated the non-applicant
company also. On 9.5.2019, Resolution Professional
intimated the non-applicant company not to deposit
cheques. The Committee of Creditors (COC) constituted
by the Resolution Professional could not reach a
…..12/-
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12
successful Resolution Plan for the accused company. It
unanimously resolved to liquidate the accused company.
Accordingly, the Resolution Professional filed an
application under Section 33 of the Insolvency
Bankruptcy Code 2016 (IBC 2016) before the NCLT
Mumbai to initiate liquidation of the accused company
and appointed Resolution Professional as official
liquidator. On 25.10.2022, the non-applicant company
issued statutory notice under Section 138 of the NIA to
applicants along with the accused company alleging that
cheques issued against discharge of liability are
“dishonoured”.
5. As per contentions of applicants, applicant Nos.2
and 4, resigned long back of issuance of cheques and,
therefore, they were not persons incharge of the company
and holding any responsibilities towards issuance of said
cheques. Applicant Nos.1 and 3 ceased to be incharge of
…..13/-
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13
the business since CIRP was initiated by order of NCLT
Mumbai. Cheques were presented on 29.10.2022 despite
of the non-applicant company was informed by Resolution
Professional as to initiation of the CIRP and the accused
company was undergoing liquidation, the criminal
complaints were filed. Subsequent to the criminal
complaints, on 30.3.2023, the accused company was sold
to one company namely “Shantech International Private
Limited”. Accordingly, the said certificate was issued on
14.9.2023. The liquidation proceeding was closed on
18.6.2024. “Shantech International Private Limited” filed
IA No.610/2024 denying liability to pay dues prior to the
liquidation proceeding, but the same was rejected by the
NCLT Mumbai vide its order dated 18.6.2024 by holding
that any remaining dues or debts against erstwhile
accused company shall be paid by the successful auction
purchaser.
…..14/-
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421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
14
6. Thus, contentions of applicants are that at the time
of issuance of cheques in the year 2022, they were not the
incharge of the said company and, therefore, they cannot
be held liable to pay said dues and on that ground seeking
quashing of criminal proceedings.
7. The said applications are strongly opposed by the
non-applicant company on the ground that cheques were
issued against discharge of Legal and Enforceable Debt.
Said cheques were dishonoured. Demand notices were
issued by the non-applicant company and as dues are not
paid, applicant Nos.1 to 4 being Directors of the said
company and were incharge of the said company are
liable to pay the said amount and, therefore, the process
is rightly issued against them. In view of that,
applications deserve to be rejected.
…..15/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
15
8. Heard learned counsel Shri Yash Venkatraman for
applicants, who submitted that applicant Nos.2 and 4
ceased to be Directors as they resigned long back.
Applicant No.2 resigned on 10.6.2017. Whereas,
applicant No.4 resigned on 21.5.2015 and, therefore, they
ceased to be Directors since the date of resignation and
they had no control over accused No.1 company. There
was a bar in operation of the account maintained by the
company.
As far as applicant accused Nos.1 and 3 are
concerned, they ceased to be incharge of the business
since CIRP was initiated by order of the NCLT, Mumbai.
There was a bar in operation of the account maintained
by accused No.1 company. Thus, applicant No.1 ceased to
have any authority for signing cheques. He submitted
that the entire proceeding under Section 138 of the NIA
was initiated after moratorium was declared by the NCLT
…..16/-
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421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
16
Mumbai thereby prohibiting initiation or continuation of
any suit or proceeding against the accused. Despite the
non-applicant company was intimated on 9.5.2019 not to
deposit said cheques, cheques were deposited. He further
submitted that from declaration of moratorium on
22.4.2919 the authority for signing the cheques remained
with the Resolution Professional and therefore, cheques in
question which are subject matter of the complaints were
not valid cheques and, therefore, there was no question of
dishonour of cheques and consequent proceedings under
Section 138 of the NIA.
In support of his contentions, he placed reliance on
following decisions:
1. Vishnoo Mittal vs. Shakti Trading Company,
reported in 2025 SCC OnLine Sc 558;
2. Criminal Writ Petition No.1134/2023 (Manoj
Toshniwal and ors vs. Alucast Engineering Pvt.Ltd.
and anr) decided on 5.12.2023;
…..17/-
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17
3. DCM Financial Services Limited vs. J.N.Sareen
and anr, reported in (2008)8 SCC 1, and
4. Nikhil P.Gandhi vs. State of Gujarat and anr,
reported in 2016 SCC OnLine Gujarat 1856.
9. Per contra, learned counsel for the non-applicant
company submitted that cheques were issued against
discharge of Legal and Enforceable Debt which came to be
dishonoured. By complying necessary requirements, the
complaints are filed by the non-applicant company. He
submitted that issue is covered under Section 141(1) of
the NIA. The applicants are Directors of the said company
and were responsible for the day to day affairs of the
company and, therefore, they are responsible to pay the
amount. Thus, vicarious criminal liability can be inferred
against the applicants who are Directors of the said
company. Therefore, applications are devoid of merits and
liable to be rejected.
…..18/-
Judgment
421 apl1679; 1680; 1681; 1685; 1686; & 1687.24
18
In support of his contentions, learned counsel for
the non-applicant company placed reliance on following
decisions:
1. P.Mohanraj vs. Shah Brothers, reported in AIR
2021 SCC 1308;
2. Ajaykumar Radheshyam Goenka vs. Tourism
Finance Corporation of India Ltd., reported in AIR
OnLine 2023 SC 437;
3. Criminal Application (APL) No.1478/2023 (K &
K Foundry Pvt.Ltd. And ors vs. M/s.Goyal Iron and
Steel (Nagpur) Pvt.Ltd.) decided by this court on
29.4.2024;
4. Sunita Palita and ors vs. M/s.Panchami Stone
Quarry, reported in 2022 LiveLaw (SC) 647;
5. S.P.Mani and Mohan Dairy vs. Dr.Snehalatha
Elangovan, reported in 2022 LiveLaw (SC) 772;
6. K.K.Ahuja vs. V.K.Vora and anr, reported in AIR
2011 SC (CRI) 2259;
7. Nag Leathers Pvt.Ltd. vs. Dynamic Marketing
Partnership, reported in AIR OnLine 2011 SC 675;
…..19/-
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19
8. Bir Singh vs. Mukesh Kumar, reported in AIR
OnLine 2019 SC 577, and
9. Sunil Todi and ors vs. State of Gujarat and anr,
reported in AIR 2022 SC 147.
10. On hearing both sides, it reveals that the issue
involved in all these applications is as to whether criminal
proceedings are maintainable after moratorium is
declared and initiation of all proceedings and
continuation or any suits or proceedings against the
accused company is prohibited in view of order passed by
the NCLT Mumbai dated 22.4.2019.
11. The allegations in the complaint can be
summarized as follows:
1. Present applicants are Directors who are
managing functions of the accused company;
…..20/-
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20
2. Applicant No.1 had issued total 16 cheques on
behalf of the accused company for purchasing
goods from the non-applicant company;
3. Applicant No.1 executed agreement to sale in
favour of the non-applicant company for plot
No.RM29, Butibori Industrial Area, Nagpur, in
order to pay for the outstanding amount;
4. It is alleged that said cheques presented to the
bank were dishonoured with the endorsement of
account closed; and
5. The non-applicant company through his various
complaints claims Rs.7,04,10,101/- which includes
interests at 24% p.a., the statutory notice under
section 138 of the NIA to that effect has been
issued on 25.10.2022.
These allegations are to be considered in the light
of the following facts:
…..21/-
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21
1. applicant No.2 was Director for the period
4.3.2014 to 10.6.2017 and on 10.6.2017 she
tendered her resignation and DIR Form No.11 is on
record;
2. Applicant No.4 was Director for the period
3.6.2005 to 21.5.2025 and tendered his resignation
on 21.5.2025, the DIR Form No.11 is on record;
3. In the year 2019, the accused company initiated
CIRP by filing CP No.(IB) 350/MB/C-III/2019
before the the NCLT Mumbai;
4. Vide order dated 22.4.2019, the NCLT Mumbai
admitted the petition of the company and declared
moratorium thereby prohibiting initiation or
continuation of any suit or proceedings against the
accused company;
…..22/-
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22
5. By the said order, Mr.Devendra Singh was
appointed as Resolution Professional for the
purposes of the said CIRP, thereby suspending
applicant Nos.1 and 3 as Directors of the company
in the year 2019;
6. On 3.5.2019, Resolution Professional made
public announcement notifying initiation of CIRP in
respect of the accused company;
7. On 9.5.2019, the Resolution Professional
intimated the non-applicant company not to
deposit cheques;
8. The Committee of Creditors (COC) constituted
which could not reach a Successful Resolution Plan
for the accused company and, therefore, Resolution
Professional filed an application under Section 33
of the IBC 2016 before the NCLT Mumbai to
…..23/-
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23
initiate the liquidation of the accused company and
appoint Resolution Professional as the official
liquidator;
9. On 25.10.2022, the non-applicant company
issued statutory notice under Section 138 of the
NIA and process was issued by the Additional Chief
Judicial Magistrate on 31.10.2022 against
applicants.
10. On 30.3.2023, the accused company was sold
to another company i.e. “Shantech International
Private Limited” and Sale certificate was issued on
14.9.2023;
11. Liquidation proceedings closed on 18.6.2024;
and
12 The NCLT Mumbai vide order dated 18.6.2024
while rejecting IA No.610/2024 filed by the said
…..24/-
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24
“Shantech International Private Limited” thereby
holding that any remaining liabilities or debts
against erstwhile company shall be paid by the
successful auction purchaser.
12. Before adverting to the issue raised in these
applications, it is necessary to advert relevant provisions
of the NIA as well as the IBC 2016.
13. Section 3(7) of the IBC, defines “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.
…..25/-
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25
14. Section 3(8) defines “Corporate Debtor”, reads as
follows: –
“Corporate debtor” means a corporate person who
owes a debt to any person.”
15. Section 3(19) of the Insolvency and Bankruptcy
Code, 2016 (IBC) defines an “insolvency professional” as a
person who is: (1) enrolled under Section 206 with an
insolvency professional agency (IPA) as a member, and
(2) registered with the Insolvency and Bankruptcy Board
of India (IBBI) (the Board) as an insolvency professional
(IP) under Section 207.
16. Section 14 of the IBC deals with moratorium which
reads as under:
“Section 14: Moratorium.
14. (1) Subject to provisions of sub-sections (2)
and (3), on the insolvency commencement date,
the Adjudicating Authority shall by order declare…..26/-
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26
moratorium for prohibiting all of the following,
namely:–
(a) the institution of suits or continuation of
pending suits or proceedings against the
corporate debtor including execution of any
judgment, decree or order in any court of law,
tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or
disposing of by the corporate debtor any of its
assets or any legal right or beneficial interest
therein;
(c) any action to foreclose, recover or enforce
any security interest created by the corporate
debtor in respect of its property including any
action under the Secularization and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or
lessor where such property is occupied by or in
the possession of the corporate debtor.”
…..27/-
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27
17. Section 17 of the IBC deals with management of
affairs of corporate debtor by interim resolution
professional, which is reproduced as under:
“17. (1) From the date of appointment of the
interim resolution professional,–
(a) the management of the affairs of the
corporate debtor shall vest in the interim
resolution professional;
(b) the powers of the board of directors or the
partners of the corporate debtor, as the casemay be, shall stand suspended1 and be
exercised by the interim resolution
professional;
(c) the officers and managers of the corporate
debtor shall report to the interim resolution
professional and provide access to such
documents and records of the corporate debtor
as may be required by the interim resolution
professional;
…..28/-
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28
(d) the financial institutions maintaining
accounts of the corporate debtor shall act on
the instructions of the interim resolution
professional in relation to such accounts and
furnish all information relating to the corporate
debtor available with them to the interim
resolution professional.
(2) The interim resolution professional vested with
the management of the corporate debtor shall–
(a) act and execute in the name and on behalf
of the corporate debtor all deeds, receipts, and
other documents, if any;
(b) take such actions, in the manner and
subject to such restrictions, as may be specified
by the Board;
(c) have the authority to access the electronic
records of corporate debtor from information
utility having financial information of the
corporate debtor;
…..29/-
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29
(d) have the authority to access the books of
account, records and other relevant documents
of corporate debtor available with
government authorities, statutory auditors,
accountants and such other persons as may be
specified; and
(e) be responsible for complying with the
requirements under any law for the time being
in force on behalf of the corporate debtor.
18. Section 32A deals with liability for prior offences
etc, which is reproduced as under:
Section 32A. Liability for prior offences, etc.
(1) Notwithstanding anything to the contrary
contained in this Code or any other law for the
time being in force, the liability of a corporate
debtor for an offence committed prior to the
commencement of the corporate insolvency
resolution process shall cease, and the corporate
…..30/-
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debtor shall not be prosecuted for such an offence
from the date the resolution plan has been
approved by the Adjudicating Authority under
section 31, if the resolution plan results in the
change in the management or control of the
corporate debtor to a person who was not–
(a) a promoter or in the management or control of
the corporate debtor or a related party of such a
person; or
(b) a person with regard to whom the relevant
investigating authority has, on the basis of material
in its possession, reason to believe that he had
abetted or conspired for the commission of the
offence, and has submitted or filed a report or a
complaint to the relevant statutory authority or
Court:
…..31/-
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Provided that if a prosecution had been instituted
during the corporate insolvency resolution process
against such corporate debtor, it shall stand
discharged from the date of approval of the
resolution plan subject to requirements of this sub-
section having been fulfilled:
Provided further that every person who was a
designated partner as defined in clause (j) of
section 2 of the Limited Liability Partnership Act,
2008 (6 of 2009), or an officer who is in default,
as defined in clause (60) of section 2 of the
Companies Act, 2013 (18 of 2013), or was in any
manner incharge of, or responsible to the corporate
debtor for the conduct of its business or associated
with the corporate debtor in any manner and who
was directly or indirectly involved in the
commission of such offence as per the report
…..32/-
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submitted or complaint filed by the investigating
authority, shall continue to be liable to be
prosecuted and punished for such an offence
committed by the corporate debtor
notwithstanding that the corporate debtor’s
liability has ceased under this sub-section.
(2) No action shall be taken against the property of
the corporate debtor in relation to an offence
committed prior to the commencement of the
corporate insolvency resolution process of the
corporate debtor, where such property is covered
under a resolution plan approved by the
Adjudicating Authority under section 31, which
results in the change in control of the corporate
debtor to a person, or sale of liquidation assets
under the provisions of Chapter III of Part II of this
Code to a person, who was not–
…..33/-
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33
(i) A promoter or in the management or control of
the corporate debtor or a related party of such a
person; or
(ii) A person with regard to whom the relevant
investigating authority has, on the basis of material
in its possession reason to believe that he had
abetted or conspired for the commission of the
offence, and has submitted or filed a report or a
complaint to the relevant statutory authority or
Court.
Explanation.–For the purposes of this sub-section,
it is hereby clarified that,–
(i) An action against the property of the corporate
debtor in relation to an offence shall include the
attachment, seizure, retention or confiscation of
…..34/-
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34
such property under such law as may be applicable
to the corporate debtor;
(ii) Nothing in this sub-section shall be construed
to bar an action against the property of any person,
other than the corporate debtor or a person who
has acquired such property through corporate
insolvency resolution process or liquidation process
under this Code and fulfills the requirements
specified in this section, against whom such an
action may be taken under such law as may be
applicable.
(3) Subject to the provisions contained in sub-
sections (1) and (2), and notwithstanding the
immunity given in this section, the corporate
debtor and any person who may be required to
provide assistance under such law as may be
…..35/-
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35
applicable to such corporate debtor or person, shall
extend all assistance and co-operation to any
authority investigating an offence committed prior
to the commencement of the corporate insolvency
resolution process.]
19. Section 33 deals with limitation of liquidation,
which is reproduced as under:
Section 33. Initiation of liquidation. (1) Where
the Adjudicating Authority,–
(a) before the expiry of the insolvency resolution
process period or the maximum period permitted
for completion of the corporate insolvency
resolution process under section 12 or the fast
track corporate insolvency resolution process
under section 56, as the case may be, does not
…..36/-
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36
receive a resolution plan under sub-section (6) of
section 30; or
(b) rejects the resolution plan under section 31 for
the non-compliance of the requirements specified
therein, it shall–
(i) pass an order requiring the corporate debtor to
be liquidated in the manner as laid down in this
Chapter;
(ii) issue a public announcement stating that the
corporate debtor is in liquidation; and
(iii) require such order to be sent to the authority
with which the corporate debtor is registered.
(2) Where the resolution professional, at any time
during the corporate insolvency resolution process
but before confirmation of resolution plan,
intimates the Adjudicating Authority of the
…..37/-
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37
decision of the committee of creditors 1[approved
by not less than sixty-six per cent. of the voting
share] to liquidate the corporate debtor, the
Adjudicating Authority shall pass a liquidation
order as referred to in sub-clauses (i), (ii) and (iii)
of clause (b) of sub-section (1).
[Explanation.– For the purposes of this sub-
section, it is hereby declared that the committee of
creditors may take the decision to liquidate the
corporate debtor, any time after its constitution
under sub-section (1) of section 21 and before the
confirmation of the resolution plan, including at
any time before the preparation of the information
memorandum.]
(3) Where the resolution plan approved by the
Adjudicating Authority 3[under section 31 or
…..38/-
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38
under sub-section (1) of section 54,] is
contravened by the concerned corporate debtor,
any person other than the corporate debtor, whose
interests are prejudicially affected by such
contravention, may make an application to the
Adjudicating Authority for a liquidation order as
referred to in sub-clauses (i), (ii) and (iii) of clause
(b) of sub-section (1).
(4) On receipt of an application under sub-section
(3), if the Adjudicating Authority determines that
the corporate debtor has contravened the
provisions of the resolution plan, it shall pass a
liquidation order as referred to in sub-clauses (i),
(ii) and (iii) of clause (b) of sub-section (1).
(5) Subject to section 52, when a liquidation order
has been passed, no suit or other legal proceeding
…..39/-
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39
shall be instituted by or against the corporate
debtor:
Provided that a suit or other legal proceeding may
be instituted by the liquidator, on behalf of the
corporate debtor, with the prior approval of the
Adjudicating Authority.
(6) The provisions of sub-section (5) shall not
apply to legal proceedings in relation to such
transactions as may be notified by the Central
Government in consultation with any financial
sector regulator.
(7) The order for liquidation under this section
shall be deemed to be a notice of discharge to the
officers, employees and workmen of the corporate
debtor, except when the business of the corporate
…..40/-
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40
debtor is continued during the liquidation process
by the liquidator.
20. Section 138 of the NIA, defines as to the dishonour
of cheques for insufficiency etc. of funds in the account.
For constituting an offence in terms of the said provision,
the following ingredients are to be satisfied:-
(1) A cheque must be drawn;
(2) It must be presented and returned unpaid inter
alia with the remarks “insufficient funds”;(3) A notice for payment should be served on the
accused;
(4) The accused has failed to make the payment of
the said amount to the payee within 15 days from
the date of receipt of notice”.
21. Section 141 of the NIA deals with offences by
companies, which is reproduced as under:
…..41/-
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41
“141. Offences by companies. —
(1) If the person committing an offence under
section 138 is a company, every person who, at the
time the offence was committed, was in charge of,
and was responsible to the company for the
conduct of the business of the company, as well as
the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against
and punished accordingly:Provided that nothing
contained in this sub-section shall render any
person liable to punishment if he proves that the
offence was committed without his knowledge, or
that he had exercised all due diligence to prevent
the commission of such offence:Provided further
that where a person is nominated as a Director of a
company by virtue of his holding any office or
employment in the Central Government or State
…..42/-
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42
Government or a financial corporation owned or
controlled by the Central Government or the State
Government, as the case may be, he shall not be
liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-
section (1), where any offence under this Act has
been committed by a company and it is proved that
the offence has been committed with the consent
or connivance of, or is attributable to, any neglect
on the part of, any director, manager, secretary or
other officer of the company, such director,
manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be
liable to be proceeded against and punished
accordingly.
…..43/-
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43
Explanation. –For the purposes of this section, —
(a) “company” means any body corporate and
includes a firm or other association of individuals;
and (b) “director”, in relation to a firm, means a
partner in the firm”.
22. Thus, what is required under Section 141 is that
the persons who are sought to be made criminally liable
under Section 141 should be, at the time the offence was
committed, in charge of and responsible to the company
for the conduct of the business of the company. Every
person connected with the company shall not fall within
the ambit of the provision. It is only those persons who
were in charge of and responsible for the conduct of
business of the company at the time of commission of an
offence, who will be liable for criminal action. It follows
from this that if a director of a company who was not in
…..44/-
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44
charge of and was not responsible for the conduct of the
business of the company at the relevant time, will not be
liable under the provision. The liability arises from being
in charge of and responsible for the conduct of business of
the company at the relevant time when the offence was
committed and not on the basis of merely holding a
designation or office in a company. Conversely, a person
not holding any office or designation in a company may
be liable if he satisfies the main requirement of being in
charge of and responsible for the conduct of business of a
company at the relevant time.
23. Thus, liability depends on the role one plays in the
affairs of a company and not on designation or status. If
being a director or manager or secretary was enough to
cast criminal liability, the section would have said so. If
being Director, Manager, Secretary are not liable by their
designations, they are liable if they are discharging the
…..45/-
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45
duty by holding responsibility in the day to day affairs of
the company and, therefore, only persons who can be said
to be connected with the commission of crime who are
incharge of the said company.
24. Section 141 of the NIA, provides for constructive
liability to launch a prosecution, therefore, against the
alleged Directors there must be a specific allegation in the
complaint as to the part played by them in the
transaction. There should be clear and unambiguous
allegation as to how the Directors are in-charge and
responsible for the conduct of the business of the
company.
25. In the light of the above legal provisions, there is
no dispute that there was business transaction between
the accused company and the non-applicant company
since 2015. As per allegations, 16 cheques were issued
…..46/-
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46
against the outstanding amount of Rs.7,04,10,101/-. The
said cheques bear various dates mentioned in the
complaints. The cheques were issued, admittedly, on
various dates in the year 2022. Undisputedly, prior to
issuance of alleged cheques, in the year 2015, i.e. on
21.5.2015, applicant No.4 tendered his resignation.
Thus, he ceased to be Director since 21.5.2015. The
resignation letter and Form No.DIR-11 is at Annexure-II.
Similarly, applicant No.2 Neha also tendered her
resignation on 10.6.2017. Her resignation letter and DIR
Form No.11 are also below Annexure-II. The order passed
by the NCLT Mumbai on 22.4.2019 discloses that the
company petition is filed by accused company under
Section 10 of the IBC 2016 read with Rule 7 of the IBC
(application to adjudicating authority) and Rules 2016 for
initiation of CIRP. The NCLT Mumbai on perusal of the
petition and documents came to conclusion that there are
…..47/-
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47
debts and corporate applicant has committed default in
repayment of debts and passed the order, which is
reproduced as under-
“(i) That this Bench hereby prohibits the institution
of suits or continuation of pending suits or
proceedings against the Corporate Applicant
including execution of any judgment, decree, or
order in any court of law, tribunal, arbitration
panel or other authority; transferring,
encumbering, allenating or disposing of by the
Corporate Applicant any of its assets or any legal
right or beneficial interest therein; any action to
foreclose, recover or enforce any security interest
created by the Corporate Applicant in respect of its
property including any action under the
Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2022; the recovery of any property by an owner of
lessor where such property is occupied by or in the
possession of the Corporate Applicant.
…..48/-
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48
(ii) That the supply of essential goods or services
to the Corporate Applicant; if continuing, shall not
be terminated or suspended or interrupted during
moratorium period.
(iii) That the provisions of sub-section (1) of
Section 14 shall not apply to such transactions as
may be notified by the Central Government in
consultation with any financial sector regulator.
(iv) That the order of moratorium shall have effect
from 22.04.2019 till the completion of the
corporate insolvency resolution process or until
this Bench approves the resolution plant under
sub-section (1) of Section 31 or passes an order for
liquidation of Corporate Applicant under Section
33, as the case may be.
(v) That the public announcement of the corporate
insolvency resolution process shall be made
immediately as specified under Section 13 of the
Code.
…..49/-
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49
(vi) That this Bench hereby appoints Mr.Devendra
Singh, registration No. as IBBI/IPA-002/IP-
N00001/2016-17/10001 having address at ATS
Greens Paradiso, Flat No.02054, Tower 2, Plot
NO.GH-03, Sector ChI-04, Greater Noida 201308
e-mail [email protected] as interim
Resolution Professional to carry the functions as
mentioned under the Code.
(vii) Accordingly, this petition is admitted.
(viii) The Registry is hereby directed to
communicate this order to the Corporate Applicant
and the IRP immediately.
26. Thus, it reveals that prior to the issuance of
cheques in question, the NCLT Mumbai by order dated
22.4.2019 prohibited initiation of proceeding and
continuation of the proceeding in view of declaration of
moratorium. Annexure-IV shows that various steps were
taken by the Resolution Professional from 30.4.2019 till
…..50/-
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50
6.3.2020. It includes the public announcement made by
the Resolution Professional dated 3.5.2019 notifying the
initiation of the CIRP in respect of the accused company.
It also shows that the Resolution Professional intimated
the non-applicant company not to deposit the cheques
much prior to the dates mentioned by the non-applicant
company alleging that these cheques are issued from
27.10.2022 till 2.11.2022. Thus, contention of the non-
applicant company that cheques were issued for the
period 27.10.2022 to 2.11.2022 by applicant No.1
appears to be incorrect as steps taken by Resolution
Professional show that on 9.5.2019 itself the non-
applicant company was intimated not to deposit cheques.
Therefore, allegation of issuance of cheques on the above
said dates is falsified by the said document.
27. In view of Section 21 of the IBC, the Committee of
Creditors was constituted by the Resolution Professional
…..51/-
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51
which could not reach a Successful Resolution Plan for
the accused company and, therefore, it was resolved to
liquidate the accused company and, therefore, the
Resolution Professional filed an application IA
No.88/2021 under Section 33(3) read with 14 of the IBC
2016 before the NCLT Mumbai came to be disposed of on
9.6.2022. The NCLT Mumbai allowed the said IA and the
corporate debtor “Venus Rolling Mills Private Limited” is
ordered to be liquidated which is at Annexure-V. The
operative portion of order passed by the NCLT Mumbai is
hereby reproduced for reference:
“ORDER
a. Mr.Devendra Singh, having Registration
No.IBBI/IPA-002/IP-N00001/2016-17/10001 and
having office at ATS Greens Paradiso, Flat
No.02054, Tower – 2 , Plot No.GH-03, Sector – CHI
…..52/-
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– 04, Greater Noida, UP – 201308 is hereby
appointed as the Liquidator as provided under
Section 34(1) of the Code.
b. That the Liquidator for the conduct of
Liquidation proceedings would be entitled to a
remuneration of Rs.38,27,000/- according to
Liquidation fees (B) as per Regulation 4 of the IBBI
(Liquidation Process) Regulation 2016.
c. The Liquidator appointed in this case to initiate
liquidation process as envisaged under Chapter-III
under Chapter-III of the Code by following the
liquidation process given in the Insolvency &
Bankruptcy Board of India (Liquidation Process)
Regulations, 2016.
d. The Liquidator appointed under section 34(1) of
the Code will have powers of the board of
…..53/-
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53
directors, key managerial personnel and partners
of the Corporate Debtor, as the case may be, shall
cease to have effect and shall be vested with the
liquidator.
e. That the Corporate Debtor to be liquidated in
the manner as laid down in the Chapter by issuing
Public Notice stating that the Corporate Debtor is
in liquidation with a direction to the Liquidator to
send this order to the ROC under which this
Company has been registered.
f. All the powers of the Board of Directors, key
managerial persons, the partners of the Corporate
Debtor hereafter ceased to exist. All these powers
henceforth vest with the Liquidator.
g. That the personnel of the Corporate Debtor are
directed to extend all co-operation to the
…..54/-
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54
Liquidator as required by him in managing the
liquidation process of the Corporate Debtor.
h. That on having liquidation process initiated,
subject to Section 52 of the Code, no suit or other
legal proceeding shall be instituted by or against
the Corporate Debtor save and except the liberty to
the liquidator to institute suit or other legal
proceeding on behalf of the Corporate Debtor with
prior approval of this Adjudicating Authority.
i. This liquidation order shall be deemed to be a
notice of discharge to the officers, employees and
workmen of the Corporate Debtor except to the
extent of the business of the Corporate Debtor
continued during the liquidation process by the
Liquidator.
…..55/-
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55
With the above directions, this application i.e.
I.A.No.88 of 2011 is hereby allowed and disposed
of.”
28. Thus, it reveals that moratorium was declared vide
order dated 22.4.2019 and liquidation process was
initiated and liquidator was appointed by the NCLT
Mumbai vide order dated 9.6.2022 much prior to the
alleged issuance of cheques dated 27.10.2022 to
2.11.2022. The legal notice is also issued by the non-
applicant company on 25.10.2022 calling upon present
applicants to pay the amount. In fact, by order dated
9.6.2022, it is specifically directed by the NCLT Mumbai
that liquidator appointed under Section 34(1) of the Code
will have all powers of the Board of Directors, Key
Manager Personnel and the partners of the corporate
debtor, as the case may be, shall cease to have effect and
shall be vested with the liquidator. It is specifically held
…..56/-
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56
that by the NCLT Mumbai that all powers of the Board of
Directors, key managerial personnel, partners of the
corporate debtor cease to exist. All these powers
henceforth vest with the liquidator.
29. The above said directions show that on the
issuance of the alleged cheques, applicant Nos.1 and 3
ceased to have powers of the Directors and they ceased to
be directors and all powers were vested with the
liquidator. Therefore, there is substance in the contention
that cheques were issued as a security in the year 2018
itself. After moratorium was declared, the steps taken by
the Resolution Professional specifically show that on
9.5.2019 itself the Resolution Professional intimated the
non-applicant company not to deposit cheques. The
record further shows that on 24.4.2019 itself the NCLT
Mumbai admitted the petition of the company and
declared moratorium thereby prohibiting initiation or
…..57/-
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57
continuation of any suits or proceedings against the
accused company. The order dated 9.6.2022 passed by
the NCLT Mumbai shows that having liquidation process,
subject to Section 52 of the Code, no suit or other legal
proceeding shall be instituted by or against the Corporate
Debtor save and except the liberty to the liquidator to
institute suit or other legal proceeding on behalf of the
Corporate Debtor with prior approval of this Adjudicating
Authority.
30. Now, the important question arises is, whether
criminal case under Section 138 and 141 of the NIA can
be said to be a proceeding said to be covered by the
moratorium provision Section 14 of the IBC. The said
aspect is considered by the Hon’ble Apex Court in the case
of P.Mohanraj vs. M/s.Shah Ispat Private Limited supra
wherein the Hon’ble Apex Court in paragraph No.14
observed as follows:
…..58/-
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“We now come to the language of Section 14(1)
(a). It will be noticed that the expression “or”
occurs twice in the first part of Section 14(1)(a)
– first, between the expressions “institution of
suits” and “continuation of pending suits” and
second, between the expressions “continuation of
pending suits” and “proceedings against the
corporate debtor…”. The sweep of the provision
is very wide indeed as it includes institution,
continuation, judgment and execution of suits
and proceedings. It is important to note that an
award of an arbitration panel or an order of an
authority is also included. This being the case, it
would be incongruous to hold that the expression
“the institution of suits or continuation of
pending suits” must be read disjunctively as
otherwise, the institution of arbitral proceedings
…..59/-
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59
and proceedings before authorities cannot be
subsumed within the expression institution of
“suits” which are proceedings in civil courts
instituted by a plaint (see Section 26 of the Code
of Civil Procedure, 1908). Therefore, it is clear
that the expression “institution of suits or
continuation of pending suits” is to be read as
one category, and the disjunctive “or” before the
word “proceedings” would make it clear that
proceedings against the corporate debtor would
be a separate category. What throws light on the
width of the expression “proceedings” is the
expression “any judgment, decree or order” and
“any court of law, tribunal, arbitration panel or
other authority”. Since criminal proceedings
under the Code of Criminal Procedure, 1973
[“CrPC“] are conducted before the courts
…..60/-
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60
mentioned in Section 6, CrPC, it is clear that a
Section 138 proceeding being conducted before a
Magistrate would certainly be a proceeding in a
court of law in respect of a transaction which
relates to a debt owed by the corporate debtor.
Let us now see as to whether the expression
“proceedings” can be cut down to mean civil
proceedings stricto sensu by the use of rules of
interpretation such as ejusdem generis and
noscitur a sociis”.
31. Thus, in view of the observations of the Hon’ble
Apex Court, the proceeding under the NIA would
certainly be proceeding in a court of law in respect of
transactions between the accused company (corporate
debtor) and the non-applicant company.
…..61/-
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32. Learned counsel for applicants submitted that since
the date of declaration of moratorium i.e. 22.4.2019 the
applicants had no control over the accused No.1 company.
By order dated 22.4.2019 itself the initiation or
continuation of any suits or proceedings against the
accused company is prohibited. In view of order passed
by the NCLT Mumbai dated 9.6.2022, the Board of
Directors, Key Managerial Personnel and partner of the
corporate debtor shall cease to have effect and the powers
are vested with the liquidator. It is further clarified by the
said orders that all powers of the board of directors, key
managerial personnel, and corporate debtor cease to
exist. All these powers from the date of order i.e.
9.6.2022 were vested with the liquidator. Thus, from
these dates the authority for signing cheques remained
with the Resolution Professional who was subsequently
appointed as a Liquidator and, therefore, cheques in
…..62/-
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62
questions which are subject matter of the complaints were
not valid cheques.
33. Learned counsel for the non-applicant placed
reliance on the decisions in the cases of P.Mohanraj vs. M/
s.Shah Ispat Private Limited supra; Ajaykumar
Radheshyam Goenka supra; and Criminal Application
(APL) No.1478/2023 supra wherein it was held that the
moratorium granted by the order issued under section 14
of the IBC can only be obtained by a corporate debtors
and not by natural person such as the present appellant
who was the director of the corporate debtor.
In para No.77 of the judgment, in the case of
P.Mohanraj vs. M/s.Shah Ispat Private Limited supra, the
Hon’ble Apex Court observed that for the period of
moratorium, since no Section 138/141 proceeding can
continue or be initiated against the corporate debtor
…..63/-
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63
because of a statutory bar, such proceedings can be
initiated or continued against the persons mentioned in
Section 141(1) and (2) of the NIA. This being the case, it
is clear that the moratorium provision contained in
Sectoin 14 of the IBC would apply only to the corporate
debtor, the natural persons mentioned in Sectoin 141
continuing to be statutorily liable under Chapter XVII of
the NIA.
34. In the case of Vishnoo Mittal supra, as relied by
learned counsel for applicants, the Hon’ble Apex Court
distinguished facts in the case of P.Mohanraj vs. M/s.Shah
Ispat Private Limited supra and observed that since the
facts of that case were completely different and the
present case is thus distinguishable from it. In P.Mohan
Raj supra, certain cheques drawn by the appellants
therein were dishonoured on 03.03.2017 and 28.04.2017.
Thereafter, demand notices dated 31.03.2017 and
…..64/-
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64
05.05.2017 were issued by the complainant. The
moratorium was imposed on 06.06.2017, which is clearly
after the lapse of 15 days from the date of demand
notices. In other words, in that case, the cause of action
under Section 138 of the NIA Act arose before the
imposition of the moratorium and on these facts, this
Court had held that Section 14 of the IBC bars or stays
proceedings only against the corporate debtor and
proceedings can be continued or initiated against the
natural persons.
35. In the case in hand, moratorium was declared
much prior to the issuance of the cheques on 22.4.2019.
Even, the application under Section 33 of the IBC was
decided by order dated 9.6.2022 in IANo.88/2021,
whereas various cheques were issued allegedly from
27.10.2022 to 2.12.2022. Therefore, the observations in
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65
the case of P.Mohan Raj supra are not helpful to the non-
applicant company.
Similarly, in Ajaykumar Radheshyam Goenka
supra, moratorium was declared after initiation of 138
proceedings.
Similar is the situation in the case of K & K Foundry
Pvt.Ltd. And ors vs. M/s.Goyal Iron and Steel (Nagpur)
Pvt.Ltd. supra.
36. Perusal of the provisions of Section 138 of the NIA
reveals that cause of action arises only when amount
remains unpaid even after expiry of 15 days from the date
of receipt of the notice.
37. In the present case, notices are issued on
25.10.2022 i.e. after the application under Section 33 of
the IBC 2016 was decided by the NCLT Mumbai.
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66
38. Learned counsel for the non-applicant company
placed reliance on various decisions to show that persons
who are incharge of the company and are responsible to
the company for the conduct of the business are liable for
the penal action in view of Section 141 of the NIA.
39. Here, the facts of the present case show that on the
date of issuance of the alleged cheques, applicant Nos.1
and 3 ceased to be incharge of the business in view of the
order passed by the NCLT Mumbai dated 9.6.2022.
40. Thus, in the present case, on 22.4.2019 the NCLT
Mumbai declared moratorium and management of the
corporate debtor was taken over by the interim order by
the NCLT Mumbai as per Section 17 of the IBC.
41. A bare reading of Section 17 of the IBC shows that
the applicant Nos.1 and 3 and the accused company did
not have capacity to fulfill the demand raised by the non-
…..67/-
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67
applicant by way of notice issued under clause (c) of the
proviso to Section 138 of the NIA as issued after the
moratorium was declared. When the notice was issued to
the applicants, they were not incharge of the corporate
debtor as they were ceased to be Directors of the
corporate debtor. As soon as the Resolution Professional
was appointed by order dated 22.4.2019, the powers
vested with the Board of Directors were further ceased by
the order of the NCLT Mumbai dated 9.6.2022 I.e. prior
to issuance of cheques. Therefore, powers vested with
Board of Directors were to be exercised by the Resolution
Professional who subsequently were appointed as
liquidators in accordance with provisions of the IBC.
42. The Hon’ble Apex Court in the case of Asmita
Sarang vs. Yogesh Badoni and anr, reported in 2023 SCC
OnLine Bom 528 in paragraph Nos.31 and 32 observed as
follows:
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68
“31. Admittedly, NCLT, Bench at Mumbai vide its
order dated 08/01/2019, passed the prohibitory
order (referred hereinabove). As a consequence
thereof, the company was prohibited from
transferring or alienating or disposing of any of
its assets. Meaning thereby, the amount in the
bank account of the Corporate Debtor/company
came to be freezed. Insolvency Resolution
Professional was appointed. He took over the
charge of management of the Corporate
Debtor/company There is communication on
record indicating the Corporate Debtor to have
expressed its inability to pay the amount of
dishonoured cheques on account of moratorium
imposed vide order dated 08/01/2019. The
concern bank of Corporate Debtor/company was
also informed the operation of bank account was
taken over by Insolvency Resolution Professional.
As a consequence, the Insolvency Resolution
Professional became the authority to operate the
bank account. As a further consequence,
signature of earlier person, who was authorized
to operate the bank account, came to be replaced
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69
with that of the Insolvency Resolution
Professional. The cheques came to be presented
on 11/04/2019 and 02/05/2019 i.e. long after
moratorium was imposed. When the cheques
were presented for encashment, the respondents
were no longer in control and management of
day to day affairs of the Corporate Debtor. It is
not known as to whether there were sufficient
funds in the bank account of Corporate Debtor to
honour the cheques.
32. It is reiterated that the cheques were bounced
for the reason “Drawer’s Signature Differ”. In
view of this Court, the ingredients for
constituting the offence punishable under Section
138 of NI Act occurred post imposition of
moratorium. The respondents herein therefore
could not be blamed. True, mens-rea is not an
essential ingredient of the offence punishable
under Section 138 of NI Act. As such, ingredients
of the offence punishable under Section 138 read
with Section 141 of NI Act do not get attracted
against any of the respondents herein. The
…..70/-
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70
Revisional Court was therefore justified in setting
aside the order of issuance of process. This Court
is in respectful agreement with what has been
observed in the case of Rajesh Meena (supra)
(referred hereinabove). Reliance on the judgment
in the case of Narinder Garg (supra), would be of
no consequence, since no natural person was
arraigned as accused. Had they been there, what
would have been their defence and consequential
judgment thereon, is nothing but hypothesis. In
the case of Narinder Garg (supra), it is an order
and not the judgment. Full facts of said case are
not before this Court.”
43. Considering submissions, there is substance in the
submission that once the moratorium was imposed and
liquidation proceeding has been completed and powers of
the Directors in view of the order of the NCLT Mumbai
are assigned to the Resolution Professional appointed
subsequently as liquidator and applicant Nos.1 and 3
ceased to be Directors and powers vested with the Board
…..71/-
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71
of Directors were to be exercised by the
liquidator/Resolution Professional in accordance with the
provisions of the IBC. All transactions of the corporate
debtor to be carried out by the Resolution Professional,
hence applicant Nos.1 and 3 were not the person incharge
of the company and was not having any authority to sign
the cheques and, therefore, cheques in question which are
subject matter of the complaints were not valid cheques.
On the contrary, documents substantiate the contentions
of the applicants that cheques were issued in 2018 as a
security and while taking steps after moratorium was
declared on 9.5.2019, Resolution Professional intimated
the non-applicant not to deposit the cheques.
44. In the light of the above facts and circumstances,
all applications deserve to be allowed by setting aside and
quashing the orders impugned passed by learned
Additional Chief Judicial Magistrate and Special Judge
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Judgment
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72
under Section 138 of the NIA summoning orders of the
present applicants. Criminal Case Nos.691/2023;
696/2023; 695/2023; 693/2023; 692/2023; and
694/2023 pending before learned Additional Chief
Judicial Magistrate and Joint Civil Judge Court No.13 are
hereby quashed and set aside.
Criminal Applications stand disposed of
accordingly. Pending applications, if any, also stand
disposed of.
(URMILA JOSHI-PHALKE, J.)
!! BrWankhede !!
Signed by: Mr. B. R. Wankhede
Designation: PS To Honourable Judge …../-
Date: 04/07/2025 10:24:59