IBC Moratorium To Apply To Cheque Bouncing Cases

The Hon'ble Supreme Court of India on March 1, 2021 held that the criminal proceedings against cheque bouncing under Section 138 of the Negotiable Instrument Act, 1881 ('NI Act') shall remain stayed against the company during the period of moratorium applicable to insolvency proceedings of any company. The proceedings would however continue against the directors and other officials of the company who are made accused in cheque bouncing proceedings.

Section 14 of the Insolvency and Bankruptcy Code, 2016 ('IBC') specifies that when an order declaring moratorium is passed, the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, or arbitration panel would be prohibited.