# In the matter of Nag Leathers Pvt. Ltd. vs. Dynamic Marketing Partnership, Rep. By Its Partners & Another

> SC judgment dated 2021-11-18. Citation: TCN-2021-SC-00009. This criminal appeal challenges the judgment and order dated 02.04.2019 passed by the High Court of…

- **Court:** SC
- **Order date:** 18 Nov 2021
- **Citation:** TCN-2021-SC-00009
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/nag-leathers-pvt-ltd-vs-dynamic-marketing-partnership-rep-by-its-partners-anothe-ca43ad73

## Summary

### Background

This criminal appeal challenges the judgment and order dated 02.04.2019 passed by the High Court of Judicature at Madras in Crl. O.P. No.8869 of 2018. The appellant preferred a Criminal Original Petition under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of pending proceedings initiated by the respondents under Section 138 of the Negotiable Instruments Act, 1881, on the ground that the debt in question was not enforceable and was only in the nature of a security. The challenge having been negated, the instant appeal has been filed in this Court.

## Facts

M/s. Nag Leathers Pvt. Ltd. filed a criminal appeal against M/s. Dynamic Marketing Partnership, challenging a judgment and order by the High Court of Judicature at Madras. The appellant had initially filed a Criminal Original Petition seeking to quash proceedings initiated by the respondents under Section 138 of the Negotiable Instruments Act, arguing that the debt was not enforceable. The NCLT had issued a moratorium order dated 10.07.2017, prohibiting any suit or continuation of pending suits against the corporate debtor. The statutory notice under Section 138 of the Negotiable Instruments Act was issued on 21.12.2017, and the reply dated 2.1.2018 disclosed the moratorium. The complaint was filed only against the corporate entity, and not against any natural persons

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## Issues and analysis

### Issue 1: Whether proceedings under Section 138/141 of the Negotiable Instruments Act can continue against a …

**Ratio:** Proceedings under Sections 138/141 of the Negotiable Instruments Act against a corporate

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**Reasoning:** The court relied on its previous decision in P. Mohanraj & Others v. Shah Brothers

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**Interpretation:** Section 14(1)(a) of the IBC imposes a moratorium on the institution or

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**Application:** The court applied the ratio to the facts of the case, noting that a moratorium

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## Parties

- **Judges:** UDAY UMESH…; S. Ravindr…
- **Appellants:** M/s. Nag Leathers…
- **Respondents:** M/s. DYNAMIC…
- **Advocates:** Nagam…; Tushar…

## Timeline

- **2017-07-10 — Moratorium…**: NCLT, Division Bench, Chennai issued a moratorium order prohibiting any suit or…
- **2017-12-21 — Statutory Noti…**: Statutory notice under Section 138 of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14(1) — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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