TMI Blog2022 (6) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... er of liquidation is passed, it is deemed to be notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the liquidation process by the liquidator. The above provisions makes it clear that the powers of the Board of Directors shall be suspended on the appointment of the Interim Resolution Professionals by the liquidator. But the question herein is whether the prosecution initiated against the company and directors maintainable in view of the above moratorium. The Apex Court in a judgment reported in P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] after dealing with various judgements of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, Tiruchengode in STC No.223 of 2018. 2. The allegations in the complaint is as follows: 2.a. Accused No.1 is a private limited company in which the Accused No.2 (1st Petitioner herein), is the Managing Director and the Accused No.3 (2nd Petitioner herein) is a Director. Both the Petitioners are taking active part in the conduct, business and day to day affairs of 1st accused company. 1st Accused Company borrowed an amount Rs.27,00,000/- in the month of February 2016 from the complainant. However, they have postponed the repayment as told and agreed to repay. Only in the month of February 2018, when the complainant approached and insisted the accused for repayment, the 2nd and 3rd accused represented by the 1st accused company issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bankruptcy Code, 2016 makes it clear that once the order of liquidation is passed and such order shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor. Therefore, it is his contention that when the cheques in question were issued on 19.04.2018, the complaint lodged thereafter, that too much after the moratorium was enforced and Resolution Professional was appointed, the prosecution under Section 138 of Negotiable Instruments Act is not maintainable and the same is liable to be quashed. 4. Learned counsel appearing the for the defacto complainant Mr.N. Manoharan submitted that the chques in question were issued in the year 2016. Even the Petition filed before this Court to quash the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the 1st Accused namely, M/s. Summer India Textiles Mills P. Ltd., is under the Corporate Insolvency Resolution Process (CIRP). Moratorium was declared by the National Company Law Board Tribunal (NCLT) on 13.06.2017. Thereafter Resolution Professional was also appointed. 7. It is relevant to note that Section 17 (b) of the Insolvency and Bankruptcy Code, 2016, makes it very clear that once interim resolution professional is appointed, the powers of the Board of Directors or the partners of the corporate debtor shall stand suspended and be exercised by the interim resolution professional. 8. Similarly, Section 33 particularly, sub-clause (7) of Section 33 of the Code makes it very clear that when the order of liquidation is passed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instrument 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.'' In such a view of the matter, the petitioners being the directors of the company, have to be prosecuted as per the above judgment. 11. The Apex Court in Bir Singh vs. Mukesh Kumar [Crl.A.No.230-231 of 2019 dated 06.02.2019 Supreme Court] in paragraphs 37 and 38 has held as follows: 37. A meaningful readin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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