Thursday, January 23, 2020

Acceptance Of Corporate Insolvency Resolution Not A Ground To Quash Case Under Sec 138 NI Act: Madras HC

In a significant ruling, the Madras High Court has held that acceptance of the Corporate Insolvency Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 cannot be a ground for quashing the prosecution initiated under Section 138 of the Negotiable Instruments Act, 1881 against the corporate debtor and its socials. "No clause in the Corporate Insolvency Resolution Plan even if accepted by the adjudicating authority/appellate Tribunal can take away the power and jurisdiction of the criminal court to conduct and dispose of the proceedings before it in accordance with the provisions of the Code of Criminal Procedure," a single-Judge bench of Justice GR Swaminathan held.
The observations have been made in an application led under Section 482 of CrPC, seeking to quash Section 138 proceedings as non-est in the eyes of law and to direct the Complainant-Respondent to pursue their remedies under IBC. The Petitioner-company had undergone the Corporate Insolvency Resolution Process under Section 31 of the Code and moratorium in terms of Section 14 of the Code was declared, during the pendency of complaints about the dishonor of cheque.

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