- Case
- RAKESH BHANOT v. M/S GURDAS AGRO PVT. LTD. (Supreme Court of India, 01-04-2025)
- Law
- Insolvency and Bankruptcy Code, Negotiable Instruments Act, Code of Criminal Procedure, Companies Act.
Insolvency and Bankruptcy Code, 2016 (IBC): The judgment extensively discusses several sections of the IBC. Section 14 IBC, concerning moratorium for corporate debtors, is analyzed, clarifying its applicability only to the corporate debtor and not extending to personal guarantors. The judgment distinguishes between "Corporate Insolvency Resolution Process" and "Personal Insolvency Resolution Process". Section 94 IBC, which allows a debtor to initiate insolvency resolution, is mentioned in the context of personal guarantors. Section 95 IBC, allowing a creditor to initiate insolvency resolution against an individual, is also referenced. Section 96 IBC, concerning interim moratorium, is a central point of discussion, with the court clarifying its purpose is to protect debtors from legal actions concerning debts, not to stall unrelated criminal proceedings. The judgment interprets Section 96(1)(b) IBC, emphasizing that the moratorium applies "in respect of any debt" and is intended for civil claims, not criminal actions. Section 100 IBC is mentioned in relation to the acceptance of a report by the resolution professional. Section 101 IBC, concerning moratorium after admission of application, is discussed, clarifying that it does not bar criminal action. The court also refers to Section 238 IBC, stating that the provisions of Cr.P.C shall have effect notwithstanding anything inconsistent therewith. The judgment also mentions Sections 97 to 119 IBC, which outline the procedures to be followed when an application under Section 94 is taken out by a debtor.
The Negotiable Instruments Act, 1881: The judgment discusses Section 138 of the N.I. Act, 1881, concerning dishonour of cheques, clarifying that proceedings under this section are distinct from corporate insolvency proceedings and aimed at upholding commercial integrity. It states that Section 138 proceedings are criminal in nature and not covered by the moratorium under IBC. Section 141 of the N.I. Act, 1881, which extends liability to individuals responsible for the conduct of a company's business, is also discussed. The court clarifies that the moratorium under IBC does not absolve directors from criminal liability under Section 138/141. The judgment emphasizes that the cause of action for prosecution under Section 138 commences on the dishonour of the cheque and the failure to pay the amount unpaid.
Code of Criminal Procedure, 1973: Section 482 Cr.P.C. is mentioned in the context of the appellant approaching the High Court by filing a criminal petition under this section. The judgment also refers to Section 305(2) CrPC, stating that where a corporation is the accused person, it may appoint a representative for the purpose of the inquiry or trial.
Companies Act, 2013: Section 2(20) of the Companies Act, 2013, is mentioned to define "Corporate Person".
