# In the matter of Mr. A.R. Asaithambhee & Anr. Vs. S. Thangavel Crl.O.P.No.30253 of 2018 and Crl.M.P.Nos.17780 of 2018 & 5031 of 2019

> HC judgment dated 2022-01-12. Citation: TCN-2022-HC-00066. The case involves a petition to quash proceedings initiated against the petitioners under Section…

- **Court:** HC
- **Order date:** 12 Jan 2022
- **Citation:** TCN-2022-HC-00066
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/mr-ar-asaithambhee-anr-vs-s-thangavel-crlopno30253-of-2018-and-crlmpnos17780-of-6dad0071

## Summary

### Background

The case involves a petition to quash proceedings initiated against the petitioners under Section 138 of the Negotiable Instruments Act. The complaint alleges that the petitioners, directors of a private limited company, borrowed Rs. 27,00,000/- from the complainant in February 2016. When the complainant insisted on repayment in February 2018, the petitioners issued three cheques dated 19.04.2018, each for Rs. 9 lakhs. These cheques were returned unpaid on 20.04.2018 due to insufficient funds. The petitioners argue that the company is under Corporate Insolvency Resolution Process (CIRP) since 13.06.2017, when the National Company Law Tribunal (NCLT) passed a moratorium order. They contend that Section 17 of the Insolvency and Bankruptcy Code (IBC), 2016, suspends the

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## Facts

In February 2016, Accused No. 1, a private limited company, through its directors (Accused No. 2 and 3), borrowed Rs. 27,00,000/- from the complainant, S. Thangavel. Accused No. 2 is the Managing Director, and Accused No. 3 is a Director. In February 2018, upon the complainant's insistence, the accused issued three cheques dated 19.04.2018, each for Rs. 9 lakhs, drawn on State Bank of India, Tiruchengode Branch. When presented for collection on 19.04.2018, the cheques were returned unpaid on 20.04.2018, marked "Funds Insufficient." The complainant issued a statutory notice on 17.05.2018, and subsequently filed a complaint. The petitioners (Accused No. 2 and 3) sought to quash the proceedings, arguing that the company is under Corporate Insolvency Resolution

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## Issues and analysis

### Issue 1: Whether the proceedings under Section 138 of the Negotiable Instruments Act can be quashed against …

**Ratio:** The moratorium under Section 14 of the IBC applies only to the corporate debtor, not to

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**Reasoning:** The court relied on the Apex Court's judgment in P. Mohanraj and Others vs. Shah Brothers

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**Interpretation:** The interpretation of Section 14 of the IBC, as clarified by the Supreme Court,

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**Application:** In this case, the court applied the ratio by holding that even though the

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## Parties

- **Judges:** N. SATHISH…
- **Appellants:** A.R. Asaith…
- **Respondents:** M/s. Summer India…; S. Than…

## Timeline

- **2016-02-01 — Loan Bor…**: Accused No.1 borrowed…
- **2018-02-01 — Complainant Insisted on…**: The complainant approached and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 17 — Management of affairs of corporate debtor by…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-17)

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