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TMI Blog2025 (3) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1973 ('CrPC'), seeking quashing of proceedings initiated under Section 138 of Negotiable Instruments Act, 1881 ('NI Act') against the appellant, has been dismissed. 3. Admittedly, the appellant was the director of M/s Xalta Food and Beverages Private Limited (hereinafter 'corporate debtor'). There was a contract between the corporate debtor and the Respondent- M/s Shakti Trading Company where the respondent was to function as a super stockist of the corporate debtor. As a consequence of the business relationship between the two companies, the appellant, in his capacity as director of the corporate debtor, had drawn eleven cheques in favour of the respondent of varying amounts, the total amount being Rs.11,17,326/- (approximately). These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is presently facing insolvency proceedings before the National Company Law Tribunal (NCLT) and a moratorium order was issued on 25.07.2018 under Section 14 of the IBC. The relevant portion of Section 14 of the IBC reads as under: "14. Moratorium. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the moratorium order issued under Section 14 of the IBC can only be obtained by a Corporate Debtor and not by a natural person such as the present appellant, who was the Director of the Corporate Debtor. In para 102 of the said judgement, this Court had noted: "... for the period of moratorium, since no Sections 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Sections 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier; (iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (vi) the drawe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional..." 11. The bare reading of the above provision shows that the appellant did not have the capacity to fulfil the demand raised by the respondent by way of the notice issued under clause (c) of the proviso to Section 138 NI Act. When the notice was issued to the appellant, he was not in charge of the corporate debtor as he was suspended from his position as the director of the corporate debtor as soon as IRP was appointed on 25.07.2018. Therefore, the powers vested with the board of directors were to be exercised by the IRP in accordance with the provisions of IBC. All the bank accounts of the corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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