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Reply To 96 IBC Application

effect of section 96 IBC on proceedings under 138 NI

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18 views

Reply To 96 IBC Application

effect of section 96 IBC on proceedings under 138 NI

Uploaded by

varun
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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IN THE COURT OF MRS.

KIRANDEEP KAUR, MM, WEST


TIS HAZARI DISTRICT COURT, DELHI
IN CC NO. 8075/2019

IN RE:

Gnanapragasam Bartholomew Regis …


Complainant

Versus

C and C Towers Ltd. & Ors. … Accused


Persons

SHORT REPLY ON BEHALF OF THE COMPLAINANT TO THE


APPLICATION FILED BY THE ACCUSED PERSONS SEEKING
SINE DIE ADJOURNMENT IN LIGHT OF THE PROVISIONS
OF SECTION 96 OF THE INSOVENCY AND BANKRUPTCY
CODE, 2016.

Most Respectfully Showeth :-

1. That the present application has been filed by the accused

persons seeking sine die adjournment of the proceedings

at hand by adverting to benefits arising out of the

provisions of section 96 IBC, 2016 whereby an interim

moratorium commences on the date of an insolvency

application made against a guarantor pursuant to which all

the pending legal proceedings against the said guarantor

are stayed qua all the debts that he had incurred.

2. That at the foremost, it is humbly submitted that the

aforesaid issue is no more res integra as the Apex court in


its judgment titled as Ajay Kumar Radheyshyam Goenka

Vs. Tourism Finance Corporation of India Ltd.

(MANU/SC/0244/2023) has shunned any and every

ambiguity surrounding the very conundrum of moratorium

as provided for by Sections 14 and 96 of the IBC, 2016.

The relevant extract is extracted below:

“16. We have no hesitation in coming to the

conclusion that the scope of nature of proceedings

under the two Acts and quite different and would not

intercede each other. In fact, 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. We are unable to appreciate the plea of the

learned Counsel for the Appellant that because

Section 138 of the N.I. Act proceedings arise from a

default in financial debt, the proceedings Under

Section 138 should be taken as akin to civil

proceedings rather than criminal proceedings. We

cannot lose sight of the fact that Section 138 of the


N.I. Act are not recovery proceedings. They are penal

in character. A person may face imprisonment or fine

or both Under Section 138 of the N.I. Act. It is not a

recovery of the amount with interest as a debt

recovery proceedings would be. They are not akin to

suit proceedings.

17. 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 before us 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.

18. We are unable to accept the plea that if

proceedings against the company come to an end

then the Appellant as the Managing Director cannot

be proceeded against. We are unable to accept the

plea that Section 138 of the N.I. Act proceedings are

primarily compensatory in nature and that the

punitive element is incorporated only at enforcing the

compensatory proceedings. The criminal liability and

the fines are built on the principle of not honouring a

negotiable instrument, which affects trade. This is

apart from the principle of financial liability per se. To

say that under a scheme which may be approved, a

part amount will be recovered or if there is no

scheme a person may stand in a queue to recover

debt would absolve the consequences Under Section

138 of the N.I. Act, is unacceptable.”

3. That the present application is nothing but an attempt by

the accused persons/applicants to delay the incumbent

proceedings under the NI Act with an intent to


PRAYER

In light of the above facts and circumstances and the

submissions made hereinabove, it is prayed that the

application of the accused persons be dismissed with cost.

Proceedings in the matter be taken further.

Complainant/Respondent

Through

Place: Varun Gupta and Anshit Dua


Dated: Counsels for the complainant
Mob: 9873721515/9312061400

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