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2021 (7) TMI 234 - HC - Indian LawsDishonor of Cheque - stay on Trial - the Company of which the petitioners are the Directors is under moratorium under Section 14 of the IBC - Whether the order of moratorium under Section 14 of the IBC interdicts a criminal proceeding under Section 138 of the NI Act or not? - HELD THAT:- The moratorium under Section 14 is intended to keep the corporate debtor's assets together for successful insolvency resolution and hence, a criminal proceeding which may result in the assets of the corporate debtor being depleted as a result of having to pay compensation, which can amount to twice the amount of the cheque that has bounced, would directly impact the corporate insolvency resolution process in the same manner as the institution, continuation or execution of a decree in such suit in a civil Court for the amount of debt or other liability. Section 141 of the NI Act speaks of persons in charge of and responsible to the company for the conduct of the business of the company "as well as the company". The words "as well as the company" appearing in Section 141 of NI Act make it absolutely clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be held vicariously liable for the offence. The legal impediment contained in Section 14 of the IBC would make it impossible for such proceeding to continue against the corporate debtor. Thus, during the period of moratorium, such proceeding can continue against the persons mentioned in Section 141(1) and (2) of the NI Act. The complaint under Section 138 of the NI Act was filed in 2015 against the company and the petitioners herein, who have been arraigned as original accused Nos.2 & 3, for being the Directors of the company - The petitioners, being the Directors of the company, could be dealt with vicariously under the NI Act. This Court is of the opinion that the trial Court has not committed any error in rejecting the applications filed by the petitioners - Petition dismissed.
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