NDLI: Ajay Kumar Radheyshyam Goenka Vs. Tourism Finance Corporation of India Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	corporate loan IBC CIRP demand-cum-legal notice u/s. 138 of the NI Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Indian Contract Act, 1872 (9 of 1872) Insolvency and Bankruptcy Code, 2016 (31 of 2016) Negotiable Instruments Act, 1881 (26 of 1881) Companies Act, 1956 (1 of 1956)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Insolvency and Bankruptcy Code 2016 – ss. 1(3), 7, 8, 9, 13, 14, 15, 29, 30, 31, 32A, 53, 61, 238 – Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 – Rule 6 – Negotiable Instruments Act, 1881 – ss. 138, 139, 141, 142, 147 – Code of Criminal Procedure, 1973 – ss. 190, 200, 256, 257, 305, 482 – A demand-cum-legal notice u/s. 138 of the NI Act was issued on behalf of the respondent calling upon the company as accused no.1 and appellant herein as accused no.2 to settle the debt advanced by way of corporate loan – Amount was not paid – Criminal complaint was filed u/s.190 Cr.P.C. r/w. ss. 138, 141 and 142 of the NI Act – One company, styling itself as ‘operational creditor’, filed an application u/s. 9 of 2016 Code r/w. r. 6 of IB Rules, 2016 with the request to initiate CIRP against the accused company, treating it as the corporate debtor – Insolvency application was admitted – Application filed for discharge of complaint case by appellant was dismissed – Criminal revision was also dismissed – On appeal, held: Per Sanjay Kishan Kaul, J. (For himself and Abhay S. Oka,J. ): A bare reading of s.14 of the IBC would make it clear that the nature of proceedings which have to be kept in abeyance do not include criminal proceedings, which is the nature of proceedings u/s. 138 of the N.I. Act – It cannot be said that the process under the IBC whether u/s. 31 or ss. 38 to 41 which can extinguish the debt would ipso facto apply to the extinguishment of the criminal proceedings – The Court cannot accept the plea that if proceedings against the company come to an end then the appellant as the Managing Director cannot be proceeded against – Per J.B. Pardiwala, J. (Concurring): Where the proceedings u/s. 138 of the NI Act had already commenced with the Magistrate taking cognizance upon the complaint and during the pendency, the company gets dissolved, the signatories/directors cannot escape from their penal liability u/s. 138 of the NI Act by citing its dissolution – What is dissolved, is only the company, not the personal penal liability of the accused covered u/s. 141 of the NI Act – After passing of the resolution plan u/s. 31 of the IBC by the adjudicating authority & in the light of the provisions of s. 32A of the IBC, the criminal proceedings u/s. 138 of the NI Act will stand terminated only in relation to the corporate debtor if the same is taken over by a new management – s.138 proceedings in relation to the signatories/directors who are liable/covered by the two provisos to s. 32A(1) will continue in accordance with law.
Judge	Hon'ble Mr. Justice J.B. Pardiwala Hon'ble Mr. Justice Sanjay Kishan Kaul
Neutral Citation	2023 INSC 232
Petitioner	Ajay Kumar Radheyshyam Goenka
Respondent	Tourism Finance Corporation Of India Ltd.
SCR	[2023] 4 S.C.R. 986
Judgement Date	2023-03-15
Case Number	172

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Ajay Kumar Radheyshyam Goenka Vs. Tourism Finance Corporation of India Ltd.

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