# In the matter of Nag Leathers Pvt. Ltd. Vs. Muzain Hides Crl. O.P. Nos.17954, 17976, 24110, 25561 & 25573 of 2018
and
Crl.M.P.Nos.9357, 9358, 9381, 9382, 13607, 13610, 14587,
14589,14607 & 14608 of 2018

> HC judgment dated 2022-01-03. Citation: TCN-2022-HC-00068. The Criminal Original Petitions were filed to quash criminal proceedings in S.T.C.Nos. 200, 344,…

- **Court:** HC
- **Order date:** 3 Jan 2022
- **Citation:** TCN-2022-HC-00068
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/gauhati-high-court-kohima/nag-leathers-pvt-ltd-vs-muzain-hides-crl-op-nos17954-17976-24110-25561-25573-of-49599fe2

## Summary

### Background

The Criminal Original Petitions were filed to quash criminal proceedings in S.T.C.Nos. 200, 344, 219, 551 and 496 of 2018 pending before the Judicial Magistrate / Fast Track Courts in Erode. The petitioners are accused of offences under Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused company failed to honor cheques issued for the supply of "Wet Blue Cow Hides". The petitioners argued that insolvency proceedings had commenced against the accused company, and therefore, the complaints were not maintainable.

## Facts

M/s. Nag Leathers Pvt. Ltd. and its directors (petitioners) are facing criminal proceedings under Section 138, 141, and 142 of the Negotiable Instruments Act, 1881, due to dishonored cheques issued to M/s. Muzain Hides (respondent) for the supply of "Wet Blue Cow Hides". The cheques were dishonored with the endorsement "Payment Stopped by the Drawers". The petitioners argued that the respondent did not issue a legal notice as required under the Negotiable Instruments Act. Furthermore, the petitioners contended that the National Company Law Tribunal (NCLT), Chennai, had initiated Corporate Insolvency Resolution Process (CIRP) against the accused company on 10.07.2017, and a public announcement was issued by the Insolvency Resolution Professional on

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## Issues and analysis

### Issue 1: Whether the criminal proceedings under Section 138 and 141 of the Negotiable Instruments Act can …

**Ratio:** The moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code

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**Reasoning:** The court relied on the Supreme Court's decision in P.Mohanraj Vs. Shah Brothers Ispat

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**Interpretation:** Section 14 of the IBC imposes a moratorium that prohibits the initiation or

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**Application:** In this case, since the NCLT had initiated the Corporate Insolvency Resolution

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## Parties

- **Judges:** N. SATHISH…
- **Respondents:** M/s. Nag Leathers…; M/s. Muzain…

## Timeline

- **2017-07-10 — Initiation…**: National Company Law Tribunal (NCLT), Chennai, initiated Corporate Insolvency Resolution…
- **2017-07-24 — Public Annou…**: Insolvency Resolution Professional issued a public announcement regarding the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 138 — Discharge order](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-138)

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