Published on: October 14, 2023 at 13:20 IST
Court: High Court of Delhi
Citation: Sandeep Gupta v. Shri Ram Steel Traders (2023)
Honourable High Court of Delhi has held that natural persons, as defined under Section 141 of the Negotiable Instruments Act 1881, who are also accused as being in charge of and responsible for the affairs of the corporate debtor, can continue to be tried under Section 138/141 of the Negotiable Instruments Act 1881 despite the commencement of insolvency proceedings against the corporate debtor and the imposition of a moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC).
It is held by the Hon’ble Court that an independent statutory liability of a director / person in charge of and responsible for the business of a company, i.e., the liability of a ‘Natural Person’ under Section 141 of the 1881 Act, with the coextensive liability of the company under insolvency.
18. The case would have been different if the personal liability of the petitioner was in question. In that case, the moratorium will apply to the petitioner. But in the present case, the proceedings pending before the MM were for bouncing of cheques issued by company where petitioner was the Managing Director. The debt of the Respondent No. 2 company is not the personal debt of the petitioner. The petitioner is arrayed as an accused in his capacity as a Managing Director.
19. The petitioner has been summoned for offence u/s 138 NI Act being the Managing Director of Respondent No. 2 on whose account the cheque in question had been drawn.
25. In the present case as well, the petitioner is seemingly trying to escape his liability by trying to urge that his application u/s 94 of the IBC in his individual capacity would stay the complaint under section 138 NI Act against him. It is clear that the petitioner is facing criminal proceedings for being signatory to the cheque which has been dishonoured. He is covered under natural person under section 141 NI Act.
26. The debt in the present case is not of the petitioner but that of Respondent No. 2. Section 141 of the NI Act fastens liability on every officer of the company who was in management and control of the affairs of the company.
Drafted By Abhijit Mishra