AJAY KUMAR RADHEYSHYAM GOENKA versus TOURISM FINANCE CORPORATION OF INDIA LTD.

Citation: [2023] 4 S.C.R. 986 · Decided: 15-03-2023 · Supreme Court of India · Bench: SANJAY KISHAN KAUL · Disposal: Dismissed

Cited by 3 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 4 S.C.R.
[2023] 4 S.C.R. 986
986
AJAY KUMAR RADHEYSHYAM GOENKA
v.
TOURISM FINANCE CORPORATION OF INDIA LTD.
(Criminal Appeal No. 172 of 2023)
MARCH 15, 2023
[SANJAY KISHAN KAUL, ABHAY S. OKA AND
J. B. PARDIWALA, JJ.]
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,
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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.
Dismissing the appeals, the Court
Per SANJAY KISHAN KAUL, J. (For himself and ABHAY
S. OKA, J.)
HELD: 1. A bare reading of Section 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 under Section 138 of the N.I. Act. It
cannot be said that the process under the IBC whether under
Section 31 or Sections 38 to 41 which can extinguish the debt
would ipso facto apply to the extinguishment of the criminal
proceedings. No doubt in terms of the Scheme under the IBC
there are sacrifices to be made by parties to settle the debts, the
company being liquidated or revitalized. The Appellant has been
roped in as a signatory of the cheque as well as the Promoter and
Managing Director of the Accused company, which availed of the
loan. The loan agreement was also signed by him on behalf of the
company. What the Appellant seeks is escape out of criminal
liability having defaulted in payment of the amount at a very early
stage of the loan. In fact, the loan account itself was closed. So
much for the bona fides of the Appellant. [Paras 16 and 17][997-
D-E, G-H; 998-A-B]
Per J.B. PARDIWALA, J. (Concurring)
HELD: 1. Section 141 of the NI Act states that if the person
committing an offence under Section 138 is a company, every
person who, at the time the offence was committed, was in charge
of, and was responsible to the company for the conduct of the
AJAY KUMAR RADHEYSHYAM GOENKA v. TOURISM
FINANCE CORP. OF INDIA LTD.
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[2023] 4 S.C.R.
business of the company, as w

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