9911796707
TMI Blog2025 (5) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the business of motion picture, radio, television and other entertainment activities. 3. In 2021, respondent No.2 filed a complaint numbered as C.C.No.996/2021 against the petitioner and three others before the Judicial First Class Magistrate Court-XII, Thiruvananthapuram alleging offence under Section 138 of the Negotiable Instruments Act, 1881. The petitioner is accused No.1 in this case. Accused No.2 is the petitioner's former Chief Executive Officer. Accused Nos.3 and 4 are the petitioner's former Directors. 4. M/s. Amar Constructions (operational creditor) approached the National Company Law Tribunal (NCLT) by presenting an insolvency petition on 28.11.2022 in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short `the Code') for initiating the Corporate Insolvency Resolution Process against the petitioner (corporate debtor). As a consequence thereof, the petitioner has been admitted to the Insolvency Resolution Process. An interim resolution professional has also been appointed. The NCLT, Indore Bench, where the proceedings are pending, has declared a moratorium under Section 14 of the Code vide order dated 22.3.2024 in C.P.(IB)/81/MP/2022. 5. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the corporate debtor including execution of any judgement, 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 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. xx xx xx" 11. A Three-Judge Bench of the Supreme Court in P. Mohanraj (supra) has considered the question whether a Section 138/141 proceeding under the Negotiable Instruments Act against a corporate debtor is covered by Section 14(1)(a) of the Code. In P. Mohanraj (supra), the Supreme Court held thus:- "Whether natural persons are covered by Section 14 IBC 101. As far as the Directors/persons in management or control of the corporate debtor are concerned, a Sections 138/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of offence by the Company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the Company" appearing in the section make it absolutely unmistakably clear that when the Company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the Company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on may face imprisonment or fine or both under Section 138 of the NI Act. It is not a recovery of the amount with interest as a debt recovery proceedings would be. They are not akin to suit proceedings. 18. It cannot be said that the process under IBC whether under Section 31 or Sections 38 to 41 which can extinguish the debt would ipso facto apply to the extinguishment of the criminal proceedings. No doubt in terms of the scheme under IBC there are sacrifices to be made by parties to settle the debts, the company being liquidated or revitalised. The appellant before us has been roped in as a signatory of the cheque as well as the Promoter and Managing Director of the accused Company, which availed of the loan. The loan agreement was also signed by him on behalf of the Company. What the appellant seeks is escape out of criminal liability having defaulted in payment of the amount at a very early stage of the loan. In fact, the loan account itself was closed. So much for the bona fides of the appellant." 13. In Ajay Kumar Radheyshyam Goenka the Apex Court further held thus:- "108. Thus, the upshot of all the decisions referred to above is where the proceedings under Section 138 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
