LexRAKESH BHANOT versus M/S. GURDAS AGRO PVT. LTD
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[2025] 4 S.C.R. 573 : 2025 INSC 445 Rakesh Bhanot v. M/s. Gurdas Agro Pvt. Ltd. (Criminal Appeal No. 1607 of 2025) 01 April 2025 [J.B. Pardiwala and R. Mahadevan,* JJ.] Issue for Consideration Issue arose whether the proceedings initiated against the appellants u/s.138 rw s.141 of the Negotiable Instruments Act should be stayed in view of the interim moratorium u/s.96 of the Insolvency and Bankruptcy Code, 2016 having come into effect upon the appellants filing applications u/s.94 IBC. Headnotes† Insolvency and Bankruptcy Code, 2016 – ss.94 and 96 – Negotiable Instruments Act, 1881 – ss.138 and 141 – Moratorium – Interim moratorium – Complaint u/s.138 NI Act upon failure of the appellant-accused to make payment after cheques were dishonoured due to insufficiency of funds – Appellant filed an application u/s.94 IBC for personal insolvency – During pendency, the appellant filed an application for adjourning s.138 proceedings sine die, in view of the pendency of s.94 IBC petition as well as the injunctive provision u/s.96 IBC – Trial court rejected application – Appellant then filed criminal petition – High Court dismissed the same – Interference with: Held: Not called for – Prayer of the appellants to stay the prosecution u/s.138 of the NI Act relying on the interim moratorium u/s.96 IBC, cannot be entertained – Moratorium provisions under the IBC offer protection only to the corporate debtor-company, and is not intended to shield individuals from personal criminal liabilities arising from their actions outside the scope of corporate debt restructuring – Appellants having filed insolvency applications as personal guarantors u/s.94 IBC, cannot extend this protection to avoid prosecution u/s.138 – Object of moratorium or for that purpose, the provision enabling * Author 574 [2025] 4 S.C.R. Digital Supreme Court Reports the debtor to approach the tribunal u/s.94 is not to stall the criminal prosecution, but to only postpone any civil actions to recover any debt – Deterrent effect of s.138 is critical to maintain the trust in the use of negotiable instruments like cheques in business dealings – Criminal liability for dishonoring cheques ensures that individuals who engage in commercial transactions are held accountable for their actions – Thus, allowing the respective appellants to evade prosecution u/s.138 by invoking the moratorium would undermine the very purpose of the NI Act, which is to preserve the integrity and credibility of commercial transactions Personal responsibility persists, regardless of the insolvency proceedings and its outcome – Scope and nature of the proceedings under the IBC may result in extinguishment of the actual debt by restructuring or through the process of liquidation – But such extinguishment will not absolve its directors from the criminal liability – Statutory liability against the directors u/s.138 is personal and hence, continues to bind natural persons, irrespective of any moratorium applicable to corporate debtor. [Paras 11-13, 17, 19] Insolvency and Bankruptcy Code, 2016 – ss.14, 96, 101 – Moratorium – Interim Moratorium – Object – Explained. [Paras 10.1, 17] Insolvency and Bankruptcy Code, 2016 – ss.94, 96 – Interim moratorium to partners – Interim Moratorium to Company – Difference between: Held: There is a subtle difference in the protection of interim moratorium available to Directors and Partners – For a partnership firm, the interim moratorium protects not only the firm, but also the partners – But for a company, such protection is available only to the company and not to its directors. [Para 10.1] Case Law Cited Dilip B. Jiwrajka v. Union of India (2023) SCC OnLine SC 1530:(2024) 5 SCC 435 – Distinguished. P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. (2021) 6 SCC 258; State Bank of India v. V. Ramakrishnan [2018] 10 SCR 974 : (2018) 17 SCC 394; Dena Bank v. Bhikhabhai Prabhudas Parekh and Co. & Ors. [2000] 3 SCR 509 : (2000) 5 SCC 694; Narinder Garg and Others v. Kotham Mahindra Bank Ltd. and Others (2022) SCC [2025] 4 S.C.R. 575 Rakesh Bhanot v. M/s. Gurdas Agro Pvt. Ltd. OnLine SC 517; Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corpn. of India Ltd. (2023) 10 SCC 545 : (2024) 1 SCC (Cri) 128 : 2023 SCC OnLine SC 266 – referred to. List of Acts Negotiable Instruments Act, 1881; Insolvency and Bankruptcy Code, 2016. List of Keywords Noscitur a sociis; Moratorium; Interim moratorium; Personal insolvency
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