The Allahabad High Court observed that moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 ( IBC ) applies only to Corporate Debtor.
The opposite party No.2 had filed an application under Section 138 N.I. Act against the applicant and his company, namely, M/s Saraya Industries Ltd. Learned trial court, after perusal of the complaint and other evidences on record, issued summon to the present applicant being the active director of the company by order dated 8.2.2021. That order was challenged by the applicant by way of Revision before Addl. District & Sessions Judge, Gorakhpur, but the said revision was also rejected by order. Feeling aggrieved by both the orders, the applicant has filed the present application.
The contention of learned counsel for the applicant is that the applicant is the director of the company on whose behalf the cheque in question was issued. As the insolvency proceeding is going on against the company under IBC, therefore, as per Section 14 of I.B.C. any proceeding including the proceeding under Section 138 N.I. Act cannot be executed or proceeded further against the company and the applicant, being the director, has not given any guarantee for any amount payable under cheque in question. It was also submitted that no finding was recorded that the applicant being the director has an active role in day to day business.
The A.G.A. has submitted that Section 14 of I.B.C. prohibits the execution only against the company and not against the natural person. It is further submitted that specific allegations were made against the applicant who actively played role in persuading opposite party No.2 to invest money in the company of the applicant.
A Single Bench of Justice Arun Kumar Singh Deshwal observed that “It is clear that on commencement of insolvency resolution process, the moratorium under Section 14 of I.B.C. prohibiting the proceeding under Sections 138/141 N.I. Act will be applicable only against the corporate debtor and not against the natural persons like the directors of the company for their vicarious liability. Therefore, this judgement does not help the applicant”.
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