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2023 (6) TMI 534 - HC - Indian LawsDishonour of Cheque - in view of the moratorium, the cheques were incapable of encashment - prior to presentation of cheques, not only the mortarium kicked in but the IRP had also sent the effective letter - petitioners can be liable for prosecution under Section 138 of the NI Act or not - HELD THAT:- In the present case, admittedly, CIRP proceedings were admitted against M/s Ajanta on 04.02.2020. In my opinion in view of the CIRP proceeding, the moratorium under Section 14 kicks in on the same day. The IRP vide email dated 07.02.2020 had, in accordance with the provisions of the IBC, directed all the financial institutions not to permit any debit transactions from the account of M/s Ajanta without written approval - once the CIRP proceedings have been admitted, the proceedings against the corporate debtor cannot continue. Whether the petitioners can continue to be prosecuted under Section 138 of the NI Act in view of them being natural persons? - HELD THAT:- The observation of the Bombay High Court in ASMITA SARANG VERSUS YOGESH BADONI, SENTHIL KUMAR KARMEGAM & ANR. [2023 (2) TMI 1149 - BOMBAY HIGH COURT] agreed upon, wherein the High Court has held 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. Since from the date of the admission of the CIRP proceedings, it was the IRP who was In-Charge of and responsible for the conducting the business of the company at the time when the cheques were presented for encashment, it is thus clear that the role of the natural persons had ceased - The instrument, namely, the cheque on the basis of which the complaint was filed could not have been encashed by the financial institutions in view of the mandate of Section 14 IBC read with Section 17 and 18 IBC - On the basis of the combined reading, it is the IRP who had the authority to operate the bank accounts and on the date of presentation, the petitioners cannot be stated to be in control and management of the affairs of M/s Ajanta. In the judgment of P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT] the facts are distinguishable from that of the present case. In P. Mohanraj, 51 cheques were issued by the company in favour of the respondent towards amounts payable from 21.09.2015 to 11.11.2016. On 31.03.2017, the respondent issued a statutory demand notice under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The order admitting the application was passed on 06.06.2017 by the Adjudicating Authority directing commencement of the corporate insolvency resolution process with respect to the company and putting a moratorium in terms of Section 14 of the IBC. Hence in judgment of P. Mohanraj, the moratorium commenced from 06.06.2017. Prior to that not only the cheques had bounced but demand notices were also issued - In the present case, prior to presentation of cheques, not only the mortarium kicked in but the IRP had also sent the effective letter. As a result, the cheques became incapable of encashment. The petition needs to be allowed.
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