In a recent judgment delivered by the Supreme Court of India
(“Supreme Court“) in the case of
P. Mohanraj & Ors. Vs. M/S Shah Brothers Ispat Pvt.
Ltd1, it has been held that the declaration of a
moratorium under Section 14 of the Insolvency and Bankruptcy Code,
2016 (“IBC“) covers criminal
proceedings for dishonour of cheque under Section 138 of the
Negotiable Instruments Act, 1881 (“NI
Act“). In doing so, the Supreme Court has widened
and settled the scope of the applicability of Section 14 of the
IBC.
Brief Facts of the Case
In the present case, about fifty-one cheques issued by Diamond
Engineering Pvt. Ltd (“Company“) in
favour of the respondent M/S Shah Brother Ispat Pvt. Ltd.
(“Respondent“) were returned
dishonoured by reason of insufficient funds. As a result, the
Respondent issued a statutory demand notice under Section 138 and
141 of the NI Act, calling upon the Company and its directors to
pay the outstanding amounts. Thereafter, two cheques for a
