Rakesh Juneja and Anr v. M/S Maruti Suzuki India Ltd and Anr

117+203 IN T

¶1Rakesh June

M/s Maruti Suz

¶2Rakesh June

M/s J.D Sons an

¶3Rakesh June

M/s Hansraj St

¶4Rakesh June

M/s J.D Sons an

THE HIGH COURT OF PUNJ AT CHANDIGAR

C

D eja and another

versus zuki India Ltd. and another

eja and another

versus nd another

eja and another

versus teels and another

eja and another

versus nd another

JAB AND HARYANA RH Date of decision: 05.08.2025

...Petitioners

...Respondents CRM-M-5460-2020(O&M)

...Petitioners

...Respondents CRM-M-7169-2020(O&M)

...Petitioners

...Respondents CRM-M-10748-2020(O&M)

...Petitioners

...Respondents

¶5Rakesh June

M/s J.D Sons an

¶6Rakesh June

M/s Maruti Suz

¶7Rakesh June

M/s Auto Tech

¶8Rakesh June

M/s Maruti Suz

¶9Rakesh June

M/s J.D. Sons a

CRM-M eja and another

versus nd another

eja and another

versus zuki India Ltd. and another

C

eja and another

versus Engineers and another

C

eja and another

versus zuki India Ltd. and another

eja and another

versus and another

M-10737-2020(O&M)

...Petitioners

...Respondents CRM-M-13335-2022(O&M)

...Petitioners

...Respondents CRM-M-40603-2024(O&M)

...Petitioners

...Respondents CRM-M-47161-2021(O&M)

...Petitioners

...Respondents CRM-M-11004-2020(O&M)

...Petitioners

...Respondents

¶10Rakesh Jun

M/s Maruti Suz

¶11Rakesh Jun

M/s Dinesh Ent

¶12Rakesh Jun

M/s Maruti Suz

¶13Rakesh Jun

M/s J.D Sons. a

CORAM: HO Present: Mr

the

Mr

and

CR

CR

neja and another

versus zuki India Ltd. and another

CR

neja and another

versus terprises and another

CR

neja and another

versus zuki India Ltd. and another

neja and another

versus and another

ON'BLE MR. JUSTICE HARP . Sardavinder Goyal and Mr. Nis petitioner(s) in respective case(s . Anand Chhibber, Sr. Advocate d Mr.Utkarsh Khatana, Advocate RM-M-10540-2021, 13361-2022, 161-2021. RM-M-47253-2021(O&M)

...Petitioners

...Respondents RM-M-8713-2020(O&M)

...Petitioners

...Respondents RM-M-13361-2022(O&M)

...Petitioners

...Respondents CRM-M-10673-2020(O&M)

...Petitioners

...Respondents PREET SINGH BRAR shant Sindhu, Advocate for s). with Mr. Gursher Bhandal es for the respondent(s) in , 47253-2021, 13335-2022,

Mr

HARPREET SI

1.

Thi petitions as they brevity, the facts

2.

The of Criminal Pr continuation of Act, 1881 (herei

3.

Bri of respondent N petitioners, appr sell finished pr agreement to th However, in the No.1 of their in financial circum provide financia No.2, issued 09 and assured resp reimburse it in a dated 31.12.201 Branch, Faridab

. Kunal Dawar, Advocate for the 60-2020 & 7169-2020. *** INGH BRAR, J. (Oral) is order of mine shall dispose y arise from a similar factual ma s are taken from CRM-M-10540 e present petition has been filed rocedure, 1973 seeking issuan proceedings under Section 138 inafter 'NI Act'), against the corp efly, the facts, as alleged, are th No.2-Dee Ess Buhin Pvt. Ltd. roached respondent No.1 with an roducts to be used in Maruti his effect was entered between t e month of February, 2017, the p nability to supply the products mstances. In response to the sam al assistance to them. The petiti post-dated cheques totaling for pondent No.1 that the same cou a time bound manner. According 8 for a sum of Rs. 25,00,000/- bad, Haryana was presented fo e respondent(s) in CRM-M-e of all the above-mentioned atrix. However, for the sake of 0-2021. under Section 482 of the Code nce of directions prohibiting of the Negotiable Instruments porate debtor. hat the petitioners are directors Respondent No.2, through the n intention to manufacture and Suzuki cars. Accordingly, an the said parties on 03.03.2008. petitioners informed respondent s agreed upon due to adverse me, respondent No.1 agreed to oners, representing respondent an amount of Rs.2,60,00,000/- uld be encashed if they fail to gly, cheque bearing No.190701 drawn on Canara Bank, MCB for encashment. However, the same was dish 'account blocke in the time perio a complaint bea 138 read with S filed by respond

4.

Lea respondent No. Insolvency Reso Code, 2016 (for the learned Nati same, Mr. Parm

(IRP) and a mor learned trial Cou respondent No.2 33(2) of the IBC allowed by the N dated 19.02.201 'account blocke Section 14 of th in the reply date 2) issued by it. the complaint ( commencement

honoured vide memo dated 1 ed.' Since the petitioners failed t od stipulated by legal notice date aring No. NACT-18092-2019 da ection 141 of the NI Act and Se dent No.1. arned counsel for the petition .2 i.e. the accused company olution process (CIRP) under th r short 'IBC) vide order dated 1 onal Company Law Tribunal, N od Goyal was appointed as the I ratorium was declared. The sam urts where complaints under the

¶2However, the CIRP failed and C was moved for liquidation of NCLT vide order dated 03.09.20 19 whereby the cheque was di d' as a moratorium had been pla he IBC. The same was also com ed 08.04.2019 (Annexure P-4) to As such, the learned trial Court (supra) against the petitioners of CIRP and it was the IRP wh

9.02.2019 with the remarks-to make the requisite payment ed 15.03.2019 (Annexure P-2), ated 29.04.2019 under Section ctions 406, 420 of the IPC was ners inter alia contends that was admitted to Corporate he Insolvency and Bankruptcy

15.01.2019 (Annexure P-1) by New Delhi. In furtherance of the Interim Resolution Professional me was also informed to all the e NI Act were pending against d an application under Section f respondent No.2, which was 019 (Annexure P-2). The memo ishonoured bore the remarks-aced on respondent No.2 under mmunicated to respondent No.1 o the legal notice (Annexure P-t ought not to have entertained as it was instituted after the behalf of respo cannot be implic is placed on the Mittal vs. M/s S Vinay Devann R.C.R.(criminal suits as well any corporate debtor

5.

Hav the record with was issued on 3 No.2 on 15.01.2 subsequent to in is dated 19.02.2 the CIRP had a the petitioners w disputed cheque

6.

Per 3(8), which read

Sec

(8)

deb

ndent No.2, who failed to do cated in the complaint under the judgment rendered by the Hon' Shakti Trading Company 2025 a Nayak vs. Ryot Sewa Sa l) 249. Lastly, Section 14 of the y other civil or criminal proceedi r. ving heard learned counsel for th his able assistance, it appears th

31.12.2018 while CIRP had bee 2019. However, the said cheque nitiation of CIRP, as the memo v

¶019The complaint (supra) was already commenced against the were directors in the said com e in that capacity. rtinently, the IBC defines 'cor ds as follows: ction 3. Definitions "corporate debtor" means a c bt to any person so. Therefore, the petitioners NI Act. Reliance in this regard ble Supreme Court in Vishnoo 5(2)R.C.R.(Criminal) 371 and ahakari Bank Ltd. 2001(1) e IBC proscribes filing of civil ings arising out of the debt of a he petitioner and after perusing hat the disputed cheque(supra) en initiated against respondent was presented for encashment vide which it was dishonoured s instituted on 29.04.2019 after respondent No.2. Admittedly, mpany and had also issued the rporate debtor' under Section

¶7Fur

and came Sec

(1) Cod a c com sha suc app reso con the corp app sub par Lia in d Act resp or a was offe inve pro

rther, Section 32-A was added t into effect from 28.12.2019. Th ction 32A. Liability for prior off Notwithstanding anything to t de or any other law for the time corporate debtor for an offe mmencement of the corporate all cease, and the corporate deb ch an offence from the date t proved by the Adjudicating Auth olution plan results in the ch ntrol of the corporate debtor to a

(a) a promoter or in the m corporate debtor or a related

(b) a person with regard to w authority has, on the basis reason to believe that he ha commission of the offence, report or a complaint to the Court: Provided that if a prosecuti corporate insolvency resolu rporate debtor, it shall stand proval of the resolution plan su b-section having been fulfilled: Provided further that every rtner as defined in clause (j) ability Partnership Act, 2008 (6 default, as defined in clause (60) t, 2013 (18 of 2013), or was in ponsible to the corporate debtor associated with the corporate d s directly or indirectly involve ence as per the report submitt estigating authority, shall co osecuted and punished for such to the IBC vide Act 1 of 2020 he same is reproduced below: fences, etc.— the contrary contained in this e being in force, the liability of ence committed prior to the insolvency resolution process tor shall not be prosecuted for the resolution plan has been hority under section 31, if the hange in the management or a person who was not-- management or control of the d party of such a person; or whom the relevant investigating of material in its possession, ad abetted or conspired for the and has submitted or filed a relevant statutory authority or ion had been instituted during ution process against such discharged from the date of ubject to requirements of this person who was a designated of section 2 of the Limited of 2009), or an officer who is ) of section 2 of the Companies n any manner incharge of, or r for the conduct of its business debtor in any manner and who ed in the commission of such ted or complaint filed by the ontinue to be liable to be corp liab

(2) deb com the reso sec deb pro was Exp clar

(3)

(2), corp ass deb any

rporate debtor notwithstanding bility has ceased under this sub-No action shall be taken agains btor in relation to an offen mmencement of the corporate in corporate debtor, where such olution plan approved by the tion 31, which results in the cha btor to a person, or sale of ovisions of Chapter III of Part II s not--

(i) a promoter or in the m corporate debtor or a related

(ii) a person with rega investigating authority has, possession reason to belie conspired for the commiss submitted or filed a report o statutory authority or Court. planation.--For the purposes of rified that,--

(i) an action against the prop relation to an offence shall in retention or confiscation of as may be applicable to the c

(ii) nothing in this sub-sectio action against the property corporate debtor or a per property through corporate or liquidation process und requirements specified in th an action may be taken applicable. Subject to the provisions cont , and notwithstanding the immu rporate debtor and any person w istance under such law as may b btor or person, shall extend all a y authority investigating an off g that the corporate debtor's -section. st the property of the corporate nce committed prior to the nsolvency resolution process of property is covered under a Adjudicating Authority under ange in control of the corporate liquidation assets under the I of this Code to a person, who management or control of the d party of such a person; or ard to whom the relevant on the basis of material in its eve that he had abetted or sion of the offence, and has or a complaint to the relevant f this sub-section, it is hereby perty of the corporate debtor in nclude the attachment, seizure, such property under such law corporate debtor; on shall be construed to bar an of any person, other than the rson who has acquired such insolvency resolution process der this Code and fulfils the is section, against whom such under such law as may be tained in sub-sections (1) and unity given in this section, the who may be required to provide be applicable to such corporate assistance and co-operation to com pro

¶8only forbi prior to c such, the consequen three Judg Union of Justice K. "32 out Cou ope the stak attr offe if t corp gro tho awa liab new on imp rev app refe CIR the Res

mmencement of the corpo ocess.(emphasis added) A perusal of Section 32A of ids prosecution of the corporate ommencement of CIRP, and no directors and the signatory can nces of their wrongdoings. The s ge bench of the Hon'ble Suprem f India and another (2021) 5 SC .M. Jospeh, the following was he

¶26We are of the clear view tha t to seek invalidation of Section urt's jurisdiction are clear. The w en to judicial review. Having reg e experience of the working of keholders including most impo ract resolution applicants who fering reasonable and fair value the legislature thought that i rporate debtor as also its pro ound for this this Court to interf ought out. It is not as if the w ay. They remain liable. The ex bility of the corporate debtor is w management to make a clean a clean slate. We must also not pugned provision is part of verence courts justifiably hold plicable in the instant case as w ference to offences committed pri RP. With the admission of the a corporate debtor passes int solution Professional and ther orate insolvency resolution f the IBC would indicate that it debtor for offences committed ot the individuals involved. As nnot be allowed to escape the same has also been upheld by a me Court in Manish Kumar vs. CC 1, where speaking through eld: at no case whatsoever is made n 32A. The boundaries of this wisdom of the legislation is not gard to the object of the Code, f the code, the interests of all ortantly the imperative need to o would not shy away from e as part of the resolution plan immunity be granted to the operty, it hardly furnishes a fere. The provision is carefully wrongdoers are allowed to get xtinguishment of the criminal s apparently important to the n break with the past and start overlook the principle that the an economic measure. The such laws in cannot but be well. The provision deals with ior to the commencement of the application the management of to the hands of the Interim Res Com pro Hav man

9.

and the re Sec fun ma mon disc retu mon hon pai suc sha pun to t of t

Wh comprom be overloo to impose failure to cheque to

¶10concept an the rule.

solution Professional subject und mmittee of Creditors. As far a operty is concerned there is c ving regard to the object of th nifest arbitrariness in the provis Further, a study of Section 1 elevant part of the same is reprod ction 138. Dishonour of cheq nds in the account.— Where any cheque drawn intained by him with a banker f ney to another person from charge, in whole or in part, of urned by the bank unpaid, eith ney standing to the credit of t nour the cheque or that it excee id from that account by an agr ch person shall be deemed to ha all, without prejudice to any ot nished with imprisonment for a two years, or with fine which m the cheque, or with both. (emph

hile the recent amendments ise and swift settlement thereby oked that the legislative intention e criminal liability. It aims at pun o honour the commitment mad discharge a legally enforceable Further still, the doctrine o nd its applicability in criminal ca The doctrine of vicarious liabil doubtedly to the control by the as protection afforded to the clearly a rationale behind it. he statute we hardly see any sion." (emphasis added) 138 of the NI Act is warranted duced below: que for insufficiency, etc., of by a person on an account for payment of any amount of out of that account for the f any debt or other liability, is her because of the amount of that account is insufficient to eds the amount arranged to be reement made with that bank, ave committed an offence and ther provision of this Act, be a term which may be extended ay extend to twice the amount hasis added) to the NI Act encourage y assisting recovery, it must not n behind Section 138 NI Act is nishing the erring party for the de by them on issuance of a debt. of vicarious liability is a civil ases is an exception rather than Qui Facit in the cou and in pri NI Act is in the ac Section 1 Judge Be Vora and signature liability u Raveeend "20. The p

(i) I Dir that con ave Join pref wer con

(ii) sign mak resp com con che rise

t per Alium Facit per, which mea urse of his employment is consid inciple, the master is also liable concerned, the persons responsi ccused company are sought to

¶41In that vein, it would be pr ench of the Hon'ble Supreme C d another (2009) 10 SCC 48 of a Director of the company under Section 141(2), NI Act. S dran, the following was observed position under section 141 of the If the accused is the Managing rector, it is not necessary to make t he is in charge of, and is respo nduct of the business of the co erment is made that the accused nt Managing Director at the rel fix 'Managing' to the word 'Dir re in charge of and are respon nduct of the business of the comp In the case of a director or a ned the cheque on behalf of the ke a specific averment that he ponsible to the company, for the mpany or make any specific nnivance or negligence. The ve eque was signed by him on beha e to responsibility under sub-sec xxx xxx ans any act done by the servant dered to be done by the master e for the said act. As far as the ible for the conduct of business be made liable by virtue of rofitable to mention that a two Court in K.K. Ahuja vs. V.K. 8 has categorically held that y would automatically attract Speaking through Justice R.V. d: e Act can be summarised thus : Director or a Joint Managing ke an averment in the complaint onsible to the company, for the ompany. It is sufficient if an was the Managing Director or evant time. This is because the rector' makes it clear that they nsible to the company, for the pany. n officer of the company who e company, there is no need to e was in charge of and was e conduct of the business of the c allegation about consent, ery fact that the dishonoured alf of the company, would give ction (2) of Section 141. xxx" (emphasis added)

¶11a morator entity that with it. S liable by v them in th that the pr initiated a Act, even process. R by a three vs. M/s S speaking opined: "10 mor whi corp aga pro Ane imp imp aga mor or stat aga Neg

The discussion above makes rium and appointment of an IR t has filed for insolvency and no Such private persons have been virtue of Section 141 of the NI A he name of the corporate entity roceedings under the NI Act can against the accused arraigned by n after the accused company i Reliance in this regard can be pla e Judge bench of the Hon'ble S Shah Brothers Ispat Pvt. Ltd through Justice Rohinton Fali

¶02Since the corporate debto ratorium provision contained ich continuation of Section 138 rporate debtor and initiation of ainst the said debtor during the c ocess are interdicted, what is stat eeta Hada (supra) would then pediment contained in Section 1 possible for such proceeding ainst the corporate debtor. ratorium, since no Section 138/ be initiated against the corp tutory bar, such proceedings c ainst the persons mentioned in gotiable Instruments Act. This s it clear that the imposition of RP only protects the corporate ot the private persons involved specifically made vicariously Act for the acts perpetuated by y. Further still, it is settled law nnot only be continued but also virtue of Section 141 of the NI is admitted to the insolvency aced on the judgment rendered upreme Court in P. Mohanraj d. (2021) 6 SCC 258 where, Nariman, the following was or would be covered by the in Section 14 of the IBC, by 8/141 proceedings against the f Section 138/141 proceedings corporate insolvency resolution ted in paragraphs 51 and 59 in become applicable. The legal 14 of the IBC would make it to continue or be instituted Thus, for the period of 8/141 proceeding can continue porate debtor because of a can be initiated or continued section 141(1) and (2) of the being the case, it is clear that the wou men und (em

¶12Kumar R India Lim Kishan K "16 scop diff rea nat incl pro app bec defa Sec than sect are or b the The

¶17und deb pro ther com has Pro ava on b

moratorium provision contain uld apply only to the corporate ntioned in Section 141 contin der Chapter XVII of the N mphasis added) A three Judge bench of the H Radheyshyam Goenka vs. Tour mited (2023) 10 SCC 545, spe aul, the following was observed:

¶6We have no hesitation in com pe of nature of proceedings u ferent and would not intercede ding of Section 14 of the IBC ture of proceedings which have lude criminal proceedings, oceedings under section 138 of t preciate the plea of the learned cause section 138 of the N.I. A fault in financial debt, ction 138 should be taken as ak n criminal proceedings. We can tion 138 of the N.I. Act are no penal in character. A person m both under section 138 of the N amount with interest as a debt r ey are not akin to suit proceeding It cannot be said that the pr der Section 31 or Sections 38 to bt would ipso facto apply to the oceedings. No doubt in terms o re are sacrifices to be made by mpany being liquidated or revita s been roped in as a signatory omoter and Managing Director o ailed of the loan. The loan agre behalf of the company. What the ned in Section 14 of the IBC e debtor, the natural persons nuing to be statutorily liable Negotiable Instruments Act." Hon'ble Supreme Court in Ajay rism Finance Corporation of eaking through Justice Sanjay : ming to the conclusion that the under the two Acts and quite e each other. In fact, a bare would make it clear that the to be kept in abeyance do not which is the nature of the N.I. Act. We are unable to counsel for the Appellant that Act proceedings arise from a the proceedings under kin to civil proceedings rather nnot lose sight of the fact that ot recovery proceedings. They may face imprisonment or fine N.I. Act. It is not a recovery of recovery proceedings would be. gs. rocess under the IBC whether o 41 which can extinguish the extinguishment of the criminal of the Scheme under the IBC parties to settle the debts, the alized. The Appellant before us of the cheque as well as the of the Accused company, which eement was also signed by him of c a ve clos

¶18the Dir acc prim inco The not Thi say will a q sect

Ren Goenka(S "10 whe alre the diss pen diss pers sect IBC of sect to man sign

criminal liability having defaulte ery early stage of the loan. In fa sed. So much for the bona fides o We are unable to accept the pl company come to an end then t rector cannot be proceeded cept the plea that section 138 of marily compensatory in nature a orporated only at enforcing th e criminal liability and the fine t honouring a negotiable instr is is apart from the principle of that under a scheme which ma l be recovered or if there is no s ueue to recover debt would abs tion 138 of the N.I. Act, is unac ndering a concurring opinion in Supra), Justice Jamshed Burjor P

¶08Thus, the upshot of all the ere the proceedings under se eady commenced with the Magi complaint and during the p solved, the signatories/director nal liability under section 138 solution. What is dissolved, is rsonal penal liability of th tion 141 of the NI Act.

¶9I may draw my final conclusion

9.1 After passing of the resolutio C by the adjudicating authority & Section 32A of the IBC, the tion 138 of the NI Act will stan the corporate debtor if the sa nagement.

9.2 Section 138 proceedings natories/directors who are liabl ed in payment of the amount at act, the loan account itself was of the Appellant. lea that if proceedings against the Appellant as the Managing against. We are unable to f the N.I. Act proceedings are and that the punitive element is he compensatory proceedings. es are built on the principle of trument, which affects trade. f financial liability per se. To ay be approved, a part amount scheme a person may stand in solve the consequences under cceptable." (emphasis added) n Ajay Kumar Radehyshyam Pardiwala, opined as follows: decisions referred to above is ection 138 of the NI Act had istrate taking cognizance upon pendency, the company gets rs cannot escape from their of the NI Act by citing its s only the company, not the he accused covered under ns as under: on plan under Section 31 of the & in the light of the provisions criminal proceedings under nd terminated only in relation ame is taken over by a new in relation to the le/covered by the two provisos to (em

¶13in Rakes R.C.R.(Cr signatorie under Sec IBC. Spea was obser "10 "Co 2(2 Par pro a p firm pro dire diff It i acti sur wor sec mo clai pre only tow

¶12Cod reso the

Section 32A(1) will continue mphasis added) Recently, a two Judge bench sh Bhanot vs. M/s Gurdas riminal) 485 has also categori es of dishonoured cheques can ction 138 NI Act by invoking m aking through Justice Jamshed B rved:

0.1. From the above provision orporate Person" includes a com 20) of the Companies Act, 20 rtnership. However, there is otection available to the Director artnership firm, the interim mo m, but also the partners. But otection is available only to t ectors. That apart, the object of ferent from that of the moratoriu is also clear from Section 14 t ion during the period of mora rety or in other words, to a perso rds "all the debts" and "in r ction (1) of Section 96 is not ratorium is intended to offer im to recover the debt. Hence escribed under Section 14 or 96 ly to protection against civil wards recovery and not from crim xxx

xxx The legislative intent behind th de (IBC) is to provide a st olution of corporate debtors' f ir rehabilitation and ensuring th in accordance with law." of the Hon'ble Supreme Court s Agro Pvt. Ltd. 2025(2) ically held that directors and nnot escape criminal liability moratorium imposed under the Burjor Pardiwala, the following ns, it is clear that the term mpany as defined under Section 013, and a Limited Liability a subtle difference in the rs and the Partners. In case of oratorium protects not only the in case of a company, such the company and not to its f interim moratorium can be no um specified under Section 14. that the protection from legal torium is not available to the onal guarantor. The use of the respect of any debt" in Sub-t without a purpose, as the protection only against civil e, such period of moratorium is restricted in its applicability l claims which are directed minal action.

xxx he Insolvency and Bankruptcy tructured framework for the financial distress, facilitating The III by a to d pro Sec rep rec The the an adm ope mor bre reo cre shie the The app can Sec und to p deb pro be pro pro acti any to b rela nos con the rec pen Thi deb

e application under Section 94 o of the IBC. An application und a debtor in the capacity of a per declare him/her as insolvent, is t ocedures in Sections 97 to 119 ction 94 is scrutinized by the R port is submitted as contem ommending either the approval e interim moratorium which com application will expire on the a order of the adjudicating autho mission, the moratorium und eration. The interim moratoriu ratorium under Section 101 I eathing space to the corporat organize their financial affairs w editor actions. However, this m eld individuals from personal cr ir actions outside the scope of e respective appellants / petitio plications as personal guaran nnot extend this protection ction 138 of the N.I. Act, 1881. der section 94 IPC, a moratoriu protect the debtors from any l bts. Specifically, Section 96 I oceedings pending against the de deemed to have been stayed. T oceedings" does not mean oceedings". In sub-clauses 96 (b ion or proceedings" are follow y debt". The term "legal action be understood to include such ating to recovery of debt by scitur a sociius. The purpo ntemplated under Section 96 is to act, which is not to stall the overy of the debt. The protec nal actions, the object of whic is moratorium serves as a crit btor to reorganize their financial or 95 would fall under Chapter der Section 94, when taken out rsonal guarantor of a company, to be disposed by following the

¶9The application filed under Resolution Professional and a mplated under Section 99 or rejection of the application. mmences on the presentation of admission of the application by ority under Section 100. Upon der Section 101 comes into um under Section 96 and the IBC are designed to offer a te debtor, allowing them to without the immediate threat of moratorium is not intended to riminal liabilities arising from f corporate debt restructuring. oners, having filed insolvency ntors under Section 94 IBC, to avoid prosecution under Upon filing of the application um comes into effect, designed legal actions concerning their IBC provides that any legal ebtor concerning any debt shall The term "any legal action or

"every legal action or

(b) (i) and (ii), the term "legal wed by the term "in respect of n or proceedings" would have h legal action or proceedings y invoking the principles of ose of interim moratorium o be derived from the object of proceedings unrelated to the ction is not available against ch is to not recover any debt. tical mechanism, allowing the thre of pro

¶13N.I resp The pro com the und by r exti liab pro resp alo dire and any acc imp und of t the will act the unp rec her unp The che und sign ope

eat of creditor actions. The cle this provision reflects the leg otective shield for debtors during On the other hand, the proceed I. Act, 1881, pertain to the dish pective appellants / petitioners ese proceedings are distinct fr oceedings and are aimed at mmercial transactions by holdin ir personal actions. The scope a der the IBC may result in extin restructuring or through the pr inguishment will not absolve it bility. Section 141 of the N. osecution of the persons in ponsible for the conduct of t ng with the company. The s ectors under Section 138 of th d hence, continues to bind na y moratorium applicable to ceptance of the resolution plan plementation thereof will have der Section 138 of the N.I. Act, 1 the report by the resolution profe moratorium under Section 10 l not bar the continual of any ion for prosecution under Sectio dishonor of the cheque and t paid because of dishonour, wit eipt of notice demanding paym re that the prosecution can be on paid by dishonour of the cheque e distinction between the right t eque by initiating a civil suit der Section 138 of the Nego nificant. In case of former, erate, but not in case of later." (e ar and unequivocal language gislative intent to provide a g the insolvency process. dings under Section 138 of the onor of cheques issued by the s in their personal capacity. from the corporate insolvency upholding the integrity of ng individuals accountable for and nature of the proceedings nguishment of the actual debt rocess of liquidation. But such ts directors from the criminal .I. Act, 1881 enables the charge of the affairs and the business of the company statutory liability against the e N.I. Act, 1881, is personal atural persons, irrespective of the corporate debtor. The under Section 31 IBC or its no effect on the prosecution 1881. Similarly, the acceptance fessional under Section 100 and 01, which reprises Section 96, criminal action. The cause of on 138 of NI Act commences on the failure to pay the amount thin 15 days from the date of ment. It is pertinent to mention nly with respect to the amount irrespective of the actual debt. to sue based on a dishonoured and launching a prosecution otiable Instruments Act is the interim moratorium can emphasis added)

¶14petitioner Mittal(sup stands se Radheysh Mohanraj approach in Nation SCC 680, was obser

¶21in P Pat In situ Jud larg Con

¶22Ben

The reliance placed by t r on the judgment rendered by a pra) is misconceived as this pa ettled not only by a three Ju hyam Goenka(supra) but also aj(supra) which held the field has also been conclusively up nal Insurance Company Limite , wherein, speaking through Just rved: In the context, we may fruitfu Pradip Chandra Parija and tnaik and others, 2002(1) RCR the said case, the Constitution uation where the two-Judge Ben dge Bench decision directed the ger Bench of five Judges of thi nstitution Bench stated:-"6. ... In our view, jud demands that a Bench of two a decision of a Bench of th Bench of two learned Judg judgment of three learned Ju in no circumstances can it b for it to adopt is to refer the three learned Judges setting the reasons why it could judgment. ..." In Chandra Prakash and other 02(2) S.C.T. 776 : (2002) 4 SC nch dealing with the concept of p the learned counsel for the a two Judge bench in Vishnoo articular legal question already udge bench in Ajay Kumar o a two Judge bench in P. from an earlier vantage. This held by a Constitution Bench ed vs. Pranay Sethi, (2017) 16 tice Dipak Misra, the following ully note what has been stated others v. Pramod Chandra (Civil) 551 : (2002) 1 SCC 1. n Bench was dealing with a nch disagreeing with the three-e matter to be placed before a is Court. In that scenario, the dicial discipline and propriety o learned Judges should follow hree learned Judges. But if a ges concludes that an earlier udges is so very incorrect that be followed, the proper course e matter before it to a Bench of g out, as has been done here, not agree with the earlier rs v. State of U.P. and another, CC 234, another Constitution precedents stated thus:-

¶15Court in

"22. ... The doctrine of bin importance in the administra promotes certainty and con Judicial consistency promo therefore, there is this n enunciation of legal princip Court. It is in the above co of Raghubir Singh, 1989(1) 754 held that a pronounceme of this Court is binding on a smaller number of Judges. ... xxx

x

¶24In Sandhya Educational of India and others, (201 observed that judicial decoru and, therefore, a coordina judgments and orders passed In Rattiram and others v. 2012(2) RCR (Criminal) 4 Judgments (R.A.J.) 99 : (201 upon the issue what would b latter decision which had be the earlier decisions. The C Raghubir Singh (supra) from Indian Oil Corpor Corporation, (1995) 4 SCC effect:- "8. ... The Division in Municipal Corpn. Dhanda was clearly in the decision of this C binding on it. In doing High Court did som coequal Bench of this do. ..." Moreover, a two Judge ben Union Territory of Ladakh nding precedent is of utmost ation of our judicial system. It nsistency in judicial decisions. tes confidence in the system, need for consistency in the iples in the decisions of this ontext, this Court in the case R.R.R. 552 : (1989) 2 SCC ent of law by a Division Bench Division Bench of the same or " xxx

xxx l Society and another v. Union 14) 7 SCC 701, it has been um and discipline is paramount te Bench has to respect the d by another coordinate Bench. State of Madhya Pradesh, 471 : 2012(2) Recent Apex 12) 4 SCC 516, the Court dwelt be the consequent effect of the een rendered without noticing Court noted the observations in and reproduced a passage ration Ltd. v. Municipal C 96 which is to the following Bench of the High Court ., Indore v. Ratnaprabha n error in taking the view that Court in Ratnaprabha was not g so, the Division Bench of the mething which even a later s Court did not and could not nch of the Hon'ble Supreme Kashmir speaking t "35 Cou judg larg hav defe Coo lay Hig law this pet refu a l con this Hig Com Cou circ

¶16any merit petitioner

¶17stand disp

connected

05.08.202

PC

(i)

(ii)

National Conference & Anr. through Justice Ahsanuddin Am

¶5We are seeing before us ju urts not deciding cases on t dgment of this Court on this su ger Bench or a review petition r ve also come across example ference to judgments of this Co ordinate Bench has doubted its down the position in law. We m gh Courts will proceed to decid w as it stands. It is not open, u s Court , to await an outcome ition, as the case may be. It is al fuse to follow a judgment by stati later Coordinate Bench. In a nflicting judgments by Benc s Court , it is the earlier one w gh Courts, as held by a 5-Judge mpany Limited v. Pranay Sethi, urts, of course, will do so with c cumstances of the case before it. In view of the discussion ab t in the arguments put forth b s. Accordingly, the present petiti Pending miscellaneous app posed of. Photocopy of this order be d cases.

(H

2023 SCC OnLine SC 1140, manullah, held as follows: udgments and orders by High the ground that the leading ubject is either referred to a relating thereto is pending. We es of High Courts refusing ourt on the score that a later correctness. In this regard, we make it absolutely clear that the de matters on the basis of the unless specifically directed by e of a reference or a review lso not open to a High Court to ing that it has been doubted by any case, when faced with ches of equal strength of which is to be followed by the e Bench in National Insurance , (2017) 16 SCC 680. The High careful regard to the facts and " (emphasis added) bove, this Court does not find y the learned counsel for the ion is dismissed. lication(s), if any, shall also e placed on the files of the HARPREET SINGH BRAR)

JUDGE